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US Treasury undertakes historic intervention in yen market

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Re: US Treasury undertakes historic intervention in yen market

#191

Post by estearum »

iamnothere wrote: post #184
Sabinus wrote: post #183

Earlier quoted context omitted.

>But I don’t really care who wins anyway, I’m not sure why I’m even engaging here. The democrats are so far from the 2008 version that you don't care if they lose? That Trump's activities are as bad as Biden's?

As I said earlier, Republicans are doing a pretty good job of dismantling the empire, and I care about that more than whatever either party is offering domestically (not much). So if they win, so be it. 2008 Dems had a large “liberaltarian” presence, which isn’t perfectly aligned with my views, but it was close enough that I was often in favor of their policies. Current Dems just want the war machine to focus more on…

"Current Dems just want our country to honor its commitments" is quite a criticism!

Maybe I'm just some war hungry lunatic, but I actually think that when the US tells a country it will defend its sovereignty in exchange for it not having nuclear weapons, it's very important that we honor those commitments.

That's probably because I prefer deterrence, and intermittent war required to assert deterrence, more than I like the idea of every nation in a race to build nuclear weapons and then every neighbor doing scrambling to prevent nuclearization. Basically a warmonger then ¯\_(ツ)_/¯

Re: US Treasury undertakes historic intervention in yen market

#192

Post by iamnothere »

estearum wrote: post #191
iamnothere wrote: post #184

Earlier quoted context omitted.

As I said earlier, Republicans are doing a pretty good job of dismantling the empire, and I care about that more than whatever either party is offering domestically (not much). So if they win, so be it. 2008 Dems had a large “liberaltarian” presence, which isn’t perfectly aligned with my views, but it was close enough that I was often in favor of their policies. Current Dems just want the war machine to focus more on…

"Current Dems just want our country to honor its commitments" is quite a criticism! Maybe I'm just some war hungry lunatic, but I actually think that when the US tells a country it will defend its sovereignty in exchange for it not having nuclear weapons, it's very important that we honor those commitments. That's probably because I prefer deterrence, and intermittent war required to assert deterrence, more than I li…

You also probably believe in strong regulation of the internet (including possibly ID verification), open borders, and other positions I don’t accept.

As I said, I’m not a fan of the current party, and I hope that the right continues to degrade state capacity until neither side has much left to work with.

Re: US Treasury undertakes historic intervention in yen market

#193

Post by estearum »

iamnothere wrote: post #192
estearum wrote: post #191

Earlier quoted context omitted.

"Current Dems just want our country to honor its commitments" is quite a criticism! Maybe I'm just some war hungry lunatic, but I actually think that when the US tells a country it will defend its sovereignty in exchange for it not having nuclear weapons, it's very important that we honor those commitments. That's probably because I prefer deterrence, and intermittent war required to assert deterrence, more than I li…

You also probably believe in strong regulation of the internet (including possibly ID verification), open borders, and other positions I don’t accept. As I said, I’m not a fan of the current party, and I hope that the right continues to degrade state capacity until neither side has much left to work with.

No, I actually don't. I always find it surprising when people not only just internally start ascribing irrelevant and probably-untrue things to their interlocutors so they can dismiss their ideas, but they actually say it out loud!

I don't understand what my prior comment has to do with any party at all. It was a direct response to your implicit claim about the US's obligations to Ukraine, and therefore to the rest of its security umbrella.

Re: US Treasury undertakes historic intervention in yen market

#194

Post by [deleted] »

estearum wrote: post #193
iamnothere wrote: post #192

Earlier quoted context omitted.

You also probably believe in strong regulation of the internet (including possibly ID verification), open borders, and other positions I don’t accept. As I said, I’m not a fan of the current party, and I hope that the right continues to degrade state capacity until neither side has much left to work with.

No, I actually don't. I always find it surprising when people not only just internally start ascribing irrelevant and probably-untrue things to their interlocutors so they can dismiss their ideas, but they actually say it out loud! I don't understand what my prior comment has to do with any party at all. It was a direct response to your implicit claim about the US's obligations to Ukraine, and therefore to the rest o…

[deleted]

Re: US Treasury undertakes historic intervention in yen market

#195

Post by iamnothere »

estearum wrote: post #193
iamnothere wrote: post #192

Earlier quoted context omitted.

You also probably believe in strong regulation of the internet (including possibly ID verification), open borders, and other positions I don’t accept. As I said, I’m not a fan of the current party, and I hope that the right continues to degrade state capacity until neither side has much left to work with.

No, I actually don't. I always find it surprising when people not only just internally start ascribing irrelevant and probably-untrue things to their interlocutors so they can dismiss their ideas, but they actually say it out loud! I don't understand what my prior comment has to do with any party at all. It was a direct response to your implicit claim about the US's obligations to Ukraine, and therefore to the rest o…

Well then you wouldn’t be in alignment with the mainstream of your party, who does seem to want that, at least if you look at blue state legislation.

As to how it has to do with the party, we were discussing the Democratic Party, Russia was a brief aside. But I do find that people’s position on the Russia/Ukraine conflict typically tends to say a lot about their other positions.

Re: US Treasury undertakes historic intervention in yen market

#196

Post by jordanb »

don_esteban wrote: post #186
jordanb wrote: post #180

Earlier quoted context omitted.

Either they spent euro reserves or bought euros with dollars so that's kinda irrelevant. This thread kicked off with an incorrect belief that Japan had leverage over the US with some threat to spend reserves. That leverage doesn't really exist because it can not have any more effect on the American fiscal position than the one the Treasury just took. In fact the Treasury is helping Japan maintain a stronger fiscal po…

Hm, maybe this is your misunderstanding: - the fiscal position (the amount of debt the US owes) does not change by Japan selling the US treasures to other (non US) party - but the party that bought the treasures from Japan will not be buying them from US, hence diminishing the demand for them, therefore raising the yield

* Japan liquidating its reserves to protect the Yen and its effect on US treasury yield or anything else can easily be undone by the Fed, if so desired. With an impact on the Fed's balance sheet for sure, but at a cost to Japan of liquidating its reserves

* Instead the US Treasury intervened to protect the Yen, allowing Japan to maintain its reserves while there still ended up being balance sheet consequences for the US

Re: US Treasury undertakes historic intervention in yen market

#197

Post by jordanb »

don_esteban wrote: post #185
jordanb wrote: post #180

Earlier quoted context omitted.

Either they spent euro reserves or bought euros with dollars so that's kinda irrelevant. This thread kicked off with an incorrect belief that Japan had leverage over the US with some threat to spend reserves. That leverage doesn't really exist because it can not have any more effect on the American fiscal position than the one the Treasury just took. In fact the Treasury is helping Japan maintain a stronger fiscal po…

We are going in circles. Anybody with large enough holding of US treasuries has leverage over the US: Large selling of those treasures will raise the yield on them, which is the last thing the US in its current situation needs. Of course, such selling will crash the treasuries, incurring huge losses to the seller. Still, hoping/pretending there is no leverage is closing your eyes to the reality. Reciprocally, US has…

> Anybody with large enough holding of US treasuries has leverage over the US: Large selling of those treasures will raise the yield on them, which is the last thing the US in its current situation needs.

No Japan or China or anyone else who owns treasuries can not control the yield on the US Treasuries because that is controlled by the Fed. The Fed has near infinite power to intervene to make the treasury yields be what they want.

If a country had a lot of US reserves they could increase the supply of dollars on the international markets through a lot of selling. But this is essentially what the US treasury is doing by using dollars to buy yen (with an extra step through Euros to make it more politically palatable)

Your mistake is assuming that the dollar supply and the treasury yield isn't a slider that can be zipped back and forth by the Fed.

Re: US Treasury undertakes historic intervention in yen market

#198

Post by estearum »

iamnothere wrote: post #195
estearum wrote: post #193

Earlier quoted context omitted.

No, I actually don't. I always find it surprising when people not only just internally start ascribing irrelevant and probably-untrue things to their interlocutors so they can dismiss their ideas, but they actually say it out loud! I don't understand what my prior comment has to do with any party at all. It was a direct response to your implicit claim about the US's obligations to Ukraine, and therefore to the rest o…

Well then you wouldn’t be in alignment with the mainstream of your party, who does seem to want that, at least if you look at blue state legislation. As to how it has to do with the party, we were discussing the Democratic Party, Russia was a brief aside. But I do find that people’s position on the Russia/Ukraine conflict typically tends to say a lot about their other positions.

Can you identify specific blue state legislation that creates or attempts to create open borders?

Are you referring to sanctuary policies which just say a locality won't expend local resources to enforce federal immigration law?

Not sure what you could possibly be referring to here.

You're aware that actual open borders is an extremely, extremely fringe position, right? The borders between US states are "open borders." Support for open international borders is unbelievably rare, across the entire political spectrum.

Re: US Treasury undertakes historic intervention in yen market

#199

Post by don_esteban »

jordanb wrote: post #197
don_esteban wrote: post #185

Earlier quoted context omitted.

We are going in circles. Anybody with large enough holding of US treasuries has leverage over the US: Large selling of those treasures will raise the yield on them, which is the last thing the US in its current situation needs. Of course, such selling will crash the treasuries, incurring huge losses to the seller. Still, hoping/pretending there is no leverage is closing your eyes to the reality. Reciprocally, US has…

> Anybody with large enough holding of US treasuries has leverage over the US: Large selling of those treasures will raise the yield on them, which is the last thing the US in its current situation needs. No Japan or China or anyone else who owns treasuries can not control the yield on the US Treasuries because that is controlled by the Fed. The Fed has near infinite power to intervene to make the treasury yields be…

> No Japan or China or anyone else who owns treasuries can not control the yield on the US Treasuries because that is controlled by the Fed. The Fed has near infinite power to intervene to make the treasury yields be what they want.

No. The yield is determined by what the buyers demand. The Fed can distort the market by buying treasures themselves. But that is not near infinite power. It fuels inflation and reduces credibility -> investors demand higher yields anyway. It can use other tricks (like 'leaked' Besson's memo), but those also have their limits.

Re: US Treasury undertakes historic intervention in yen market

#200

Post by maxglute »

jordanb wrote: post #197
don_esteban wrote: post #185

Earlier quoted context omitted.

We are going in circles. Anybody with large enough holding of US treasuries has leverage over the US: Large selling of those treasures will raise the yield on them, which is the last thing the US in its current situation needs. Of course, such selling will crash the treasuries, incurring huge losses to the seller. Still, hoping/pretending there is no leverage is closing your eyes to the reality. Reciprocally, US has…

> Anybody with large enough holding of US treasuries has leverage over the US: Large selling of those treasures will raise the yield on them, which is the last thing the US in its current situation needs. No Japan or China or anyone else who owns treasuries can not control the yield on the US Treasuries because that is controlled by the Fed. The Fed has near infinite power to intervene to make the treasury yields be…

Yield is determined by market demand, overwhelmingly by institutional (central banks) who were marginal buyers, i.e. when USD was geopolitically safe, countries/central banks would buy without question for liquidity which artificially lowered rates. Now US fucked around with USD geopolitics, institutional buyers crowding to gold/commodities leaving private buyers (hedge funds etc) to fill demand hole, and private buyers demand higher yields because they buy for returns not liquidity. This why US debt servicing exploding - FED selling to more discerning market buyers and less to unquestioning institutional buyers.

Where PRC comes in is they have large amount of USD reserves (and shadow USD from trade) used to parallel lend to governments (BRI etc) which replaces marginal FED USD demand with recycled PRC USD supply, which forces FEDS to find more market buyers, by increasing rates further to clear auctions. Every USD from PRC reserves that goes towards bilateral lending is one not bought from FED that has be be replaced by market buyer at higher yields. Net effect is PRC has functional influence over US treasury yield. Now fed has infinite power to move slider to compete on yield... but in practice that slider can only go the direction that makes US debt servicing more onerous. PRC leverage (JP limited geopolitically) = FED has little power to reverse debt trap but some power to go broke faster. Some power because at some point of $$$ brrrt printing buyers will realize US may not be able to honor commitments and price risk accordingly.

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