Wall Street on Parade website, in an article on Oct. 3, reported that the U.S. Treasury had just announced buybacks of its own debt, in order to “provide liquidity to the Treasury market.”
The report that after the Treasury had planned $671 billion in debt issuance in the third quarter of this year, and $921 billion in the fourth quarter, Treasury Assistant Secretary for Financial Markets Josh Frost made the hair-raising statement Sept. 21 that “we expect that further gradual increases in coupon auctions sizes will likely be necessary in future quarters.” This gives an idea of how rapidly the U.S. Treasury is adding debt on declining tax revenue, with long-term interest rates rising so fast that the Federal Reserve governors think they no longer have to raise short-term rates to push the longer ones up.
Frost explained that the Treasury would be issuing new debt in order to buy back its existing debt. This is not something the Treasury has never done before, but for obvious reasons it has previously done it only when the interest rates it was paying were going down, not when they were going up.
The reason now is that it is worried about exhausting liquidity (or having it suddenly disappear, obviously) in that market, which has become a hedge fund market with dramatic volatility. Assistant Secretary Frost said on Sept. 21, “We believe buybacks can play an important role in helping to make the Treasury market more liquid and resilient by providing liquidity support.”
This, then, is the state of that market by which the Federal Reserve has drained capital from the rest of the world, forced austerity on developing nations by devaluing their currencies, and carried out currency warfare against the major BRICS nations, all in the name of “fighting inflation.”
Sergey Glazyev, Eurasian Economic Commission Minister in Charge of Integration and Macroeconomics, posted on his Telegram channel the apt comment of a fellow economist: “In a nutshell, at the moment, the situation on the American government debt market affects not only the situation on bond markets in other countries, but in general—almost everything.”
