WEBVTT - The Ticking Clock on US Treasury: Unveiling the Near-Failure Auction and Its Implications - Mark Moss Show 0:00:00.320 --> 0:00:02.800 Hello, Welcome back to another episode of The Mark Moss Show. 0:00:02.840 --> 0:00:05.480 We're always talking about building your wealth, building your freedom, 0:00:05.519 --> 0:00:09.000 and protecting both because times are changing and they are 0:00:09.200 --> 0:00:11.799 changing fast. Today, I want to talk about what happened 0:00:11.840 --> 0:00:16.560 last week with an almost failed US Treasury auction. Now 0:00:16.600 --> 0:00:19.760 that may sound very boring, but trust me, it is not. 0:00:19.960 --> 0:00:22.880 We are coming very close to the end game. As 0:00:22.920 --> 0:00:25.560 a matter of fact, mainstream has finally picked up on 0:00:25.600 --> 0:00:28.440 this narrative and they are calling for the endgame. In 0:00:28.560 --> 0:00:32.640 the endgame could be coming in the next ninety days. 0:00:32.720 --> 0:00:35.080 As a matter of fact, we have a chart that 0:00:35.120 --> 0:00:38.840 we are watching that predicts when this end game could come. 0:00:38.880 --> 0:00:41.800 That endgame is when, yes, the government runs out of money. 0:00:41.840 --> 0:00:45.080 We have a failed treasury auction, and even worse can happen. Now, 0:00:46.680 --> 0:00:49.920 let's dig into all this. What actually happened last week? 0:00:50.080 --> 0:00:52.599 How bad is it? What is the trend showing us? 0:00:52.840 --> 0:00:55.640 What is this chart that we're watching, What happens in 0:00:55.720 --> 0:00:58.440 ninety days that could cause us all to fall apart 0:00:59.080 --> 0:01:02.800 unless some big things are happening and done, which I 0:01:02.800 --> 0:01:04.880 think they will. Of course, I'm an inflation bowl. I'm 0:01:04.880 --> 0:01:07.080 gonna explain to you why all of that works. What's 0:01:07.120 --> 0:01:08.880 the big news here? Right off the bat, The big 0:01:08.880 --> 0:01:12.720 news is that last week we saw the US treasury 0:01:13.680 --> 0:01:16.320 auction almost fail, and so what does that mean. So 0:01:16.480 --> 0:01:18.720 the government is spending more than they're bringing in. You 0:01:18.800 --> 0:01:22.520 know that they finance that through deficits, the deficit spending. 0:01:22.680 --> 0:01:25.319 There is the amount of shortage that they have, and 0:01:25.360 --> 0:01:28.280 they finance that through borrowing money. The way they borrow 0:01:28.319 --> 0:01:30.440 money is by selling bonds, So then people have to 0:01:30.520 --> 0:01:34.880 come buy those bonds. Now, prices are always the equilibrium 0:01:34.920 --> 0:01:37.959 of supply and demand. So if there's more supply, if 0:01:37.959 --> 0:01:41.280 the government's trying to sell more debt, then there is demand, 0:01:41.319 --> 0:01:44.160 then there are buyers. The price has to go up 0:01:44.319 --> 0:01:48.680 to enhance entice the buyers. And that's exactly what we 0:01:48.760 --> 0:01:51.280 saw and it was catastrophic. As a matter of fact, 0:01:51.360 --> 0:01:53.559 it was the worst treasury auction that we've seen since 0:01:53.600 --> 0:01:58.440 twenty eleven. And the treasuries, what the government had to 0:01:58.440 --> 0:02:01.160 pay went up up so high that it created a 0:02:01.160 --> 0:02:03.360 massive tel I'm going to break this down. And it 0:02:03.440 --> 0:02:07.360 was so bad that the credit rating agencies Moodies came 0:02:07.400 --> 0:02:12.680 out and move the sentiment of the government down to negative, 0:02:12.960 --> 0:02:17.840 citing the very fact that they have unsustainable debt and 0:02:17.880 --> 0:02:20.280 they can't afford it. As a matter of fact, we 0:02:20.320 --> 0:02:22.720 saw Moody's, which is the one that did this. They 0:02:22.720 --> 0:02:25.480 lowered its outlook on the US credit rating to negative. 0:02:25.680 --> 0:02:30.400 It went from stable to negative, citing large fiscal deficits 0:02:30.400 --> 0:02:35.920 and a decline in debt affordability. So it is not 0:02:35.960 --> 0:02:38.440 crazy people like me on the internet, on YouTube and 0:02:38.440 --> 0:02:42.720 podcasts seeing this thing. The credit rating agency says, these 0:02:42.880 --> 0:02:45.320 large fiscal deficits, the amount of debt that you're short 0:02:45.360 --> 0:02:50.200 every year, and the declining in the affordability of your 0:02:50.240 --> 0:02:53.960 debt are major problems. Of course, the government didn't like it. 0:02:54.000 --> 0:02:57.120 President Biden got all mad about it. But look, it 0:02:57.160 --> 0:03:01.800 is what it is, they said. I said, it's a 0:03:01.840 --> 0:03:04.440 rising concern for investors, contributing to a sell off that 0:03:04.480 --> 0:03:06.560 took US government bond prices to the lowest level in 0:03:06.560 --> 0:03:11.080 sixteen years. According to the chief economist from the US 0:03:11.080 --> 0:03:14.680 at Natoxis, deficits will remain large as an interest costs 0:03:14.680 --> 0:03:16.880 take up a larger share of the budget. The debt 0:03:16.880 --> 0:03:20.160 burden will continue to grow. And it's not just continue 0:03:20.200 --> 0:03:23.080 to grow. It turns into a debt spiral. It turns 0:03:23.080 --> 0:03:26.400 into a coil that winds up and gets power and 0:03:26.440 --> 0:03:28.400 then blasts off. So we're going to talk about that, 0:03:28.400 --> 0:03:30.920 but let's just talk about what happened first of all. 0:03:31.160 --> 0:03:35.160 All right, So I don't want to go exactly all 0:03:35.200 --> 0:03:38.280 the way through exactly how this works, but let's just 0:03:38.320 --> 0:03:41.600 take a look at exactly what happened last week. So 0:03:41.920 --> 0:03:44.160 what we saw is that again the Treasury, we went 0:03:44.200 --> 0:03:46.360 to market to try to raise this money. Now there's 0:03:46.400 --> 0:03:47.960 a couple of things that are important that I want 0:03:47.960 --> 0:03:51.040 to start with first. So first of all, it's not 0:03:51.160 --> 0:03:53.720 just you and I seeing this. It's not just a 0:03:53.760 --> 0:03:57.160 moody seeing this. The Treasury itself already knows this. And 0:03:57.200 --> 0:03:59.240 how do I know that they know this. It's because 0:03:59.400 --> 0:04:01.920 they've said so. And what they're doing is they're trying 0:04:01.960 --> 0:04:04.560 to game the system. So what they do is they 0:04:04.760 --> 0:04:08.680 announce how much they're going to be borrowing. So what 0:04:08.720 --> 0:04:11.000 we saw is that the Treasury announced they would be 0:04:11.040 --> 0:04:16.120 borrowing seven hundred and seventy six billion for the fourth 0:04:16.160 --> 0:04:19.000 quarter of twenty twenty three. And the reason why it's 0:04:19.000 --> 0:04:20.840 important is because they announced that they're going to be 0:04:20.839 --> 0:04:25.080 borrowing less than they had borrowed the prior quarter. Seventy 0:04:25.120 --> 0:04:28.559 six billion dollars less. So what they're trying to say is, look, look, 0:04:28.600 --> 0:04:32.320 our deficit spending is going down. We're borrowing less money 0:04:32.400 --> 0:04:36.000 than we borrowed last time. Instead of eight hundred and 0:04:36.040 --> 0:04:39.440 fifty billion, now it's only seven hundred and seventy six billion. Okay, 0:04:39.520 --> 0:04:41.719 big deal, But they're trying to show that it's going down. 0:04:41.960 --> 0:04:46.200 But here's the thing. They're lying. And what do I mean 0:04:46.240 --> 0:04:48.600 by they're lying. What we can see is that they 0:04:48.680 --> 0:04:53.400 announce this number, but they go back and revise it later. Oh, 0:04:53.600 --> 0:04:55.280 turns out we needed to borrow more. We're going to 0:04:55.320 --> 0:04:58.520 borrow more than we had projected, and every quarter it's 0:04:58.560 --> 0:05:01.800 the same thing. It's not just that we see it. 0:05:02.520 --> 0:05:05.320 The Treasury actually told us this. Let's break this down. 0:05:05.680 --> 0:05:08.720 So what we can see is that they came out 0:05:08.760 --> 0:05:11.360 with an announcement and they said that, you know, we're 0:05:11.400 --> 0:05:14.679 going to be borrowing less money than projected. But there's 0:05:14.800 --> 0:05:18.480 more in this that I want to unpack. And what 0:05:18.600 --> 0:05:21.760 is that. Well, there's three things, three points that were 0:05:21.760 --> 0:05:23.480 in the statement from Janet l in the Treasury that 0:05:23.520 --> 0:05:25.520 I think we need to break down. First off, the 0:05:25.560 --> 0:05:30.080 first thing they said is quote primary dealers explicitly noted 0:05:30.080 --> 0:05:34.080 a high degree of uncertainty overall around the deficit and 0:05:34.160 --> 0:05:38.159 growth forecasts, reinforcing the Treasury's need to maintain flexibility in 0:05:38.200 --> 0:05:40.840 their issuance strategy. That's what this is what Jane Allen 0:05:40.880 --> 0:05:44.080 Treasury said. So what does that mean, Well, the primary 0:05:44.080 --> 0:05:46.680 dealers who's that? That's the banks. This is like the 0:05:46.680 --> 0:05:49.560 Golden Sacks. These are the buyers of last resort. These 0:05:49.600 --> 0:05:52.040 are the buyers that the government mandates to buy the 0:05:52.080 --> 0:05:55.600 debt for them. So they're saying that these buyers of 0:05:55.680 --> 0:05:58.559 last resort at the banks are seeing this high degree 0:05:58.560 --> 0:06:03.120 of uncertainty around the deficit and the growth forecast. Exactly 0:06:03.120 --> 0:06:06.760 what Moody said. So yelling herself is saying, we see 0:06:06.800 --> 0:06:09.560 they're saying this, and so what it means is that 0:06:09.600 --> 0:06:12.680 they're admitting that the primary dealers are uncomfortable with this. 0:06:12.720 --> 0:06:18.040 They're admitting that they're concerned about the demand for these treasuries. 0:06:18.080 --> 0:06:21.360 They're concerned with being stuck with this. They don't want 0:06:21.360 --> 0:06:24.240 to do that. Remember this point. We're going to come 0:06:24.279 --> 0:06:25.520 back to it at the end when we break down 0:06:25.520 --> 0:06:27.960 some of the math. Point Number two is that the 0:06:28.000 --> 0:06:33.080 Treasury anticipates that one additional quarter of increases to cupon 0:06:33.240 --> 0:06:37.920 auction sizes will likely be needed beyond the increases announced today. 0:06:38.839 --> 0:06:41.080 So what does that mean? That's what I was just saying. 0:06:41.480 --> 0:06:43.599 Every single time they announce how much they need to borrow, 0:06:43.680 --> 0:06:46.480 they go back and revise that. So what they're saying 0:06:46.839 --> 0:06:51.039 is that the Treasury is expecting to add to the 0:06:51.040 --> 0:06:54.320 amount they need to borrow this quarter beyond these estimates. 0:06:55.279 --> 0:06:57.919 So they're telling you right there that they're basically lying 0:06:57.960 --> 0:06:59.880 to you. They're saying, Hey, we're probably going to have 0:06:59.880 --> 0:07:01.400 to to this, so we're going to show you the 0:07:01.440 --> 0:07:03.279 short number we're probably going to add to it. I 0:07:03.320 --> 0:07:06.920 don't know who they're really fooling by this. I mean, 0:07:07.760 --> 0:07:09.440 you know, I'm just some guy on the internet here 0:07:09.640 --> 0:07:11.840 and I see that every month or every quarter they 0:07:11.840 --> 0:07:14.120 go back and revise this. They're telling us that they're 0:07:14.120 --> 0:07:16.000 going to do it right here, Who are they really 0:07:16.080 --> 0:07:19.920 fooling here? Number three, they said that the Treasury continues 0:07:20.000 --> 0:07:23.280 to make significant progress on its plans to implement a 0:07:23.320 --> 0:07:27.640 regular buyback program in twenty twenty four. That's the big one. 0:07:28.920 --> 0:07:31.840 What are they saying. They're saying that the Treasury is 0:07:31.920 --> 0:07:35.720 ready to implement a program to buy back their own debt, 0:07:35.800 --> 0:07:38.480 basically buy their own debt, sort of like what Japan does, 0:07:38.560 --> 0:07:41.800 sort of like a snake eating its own tail. What 0:07:41.840 --> 0:07:45.960 they're saying is, we're not done here. We have many 0:07:46.000 --> 0:07:48.680 more magic tricks up our sleeve. This is something I 0:07:48.680 --> 0:07:52.440 talk about a lot. You know, there's lots of brilliant 0:07:52.480 --> 0:07:54.720 market analysts out there, way more brilliant than me. One 0:07:54.760 --> 0:07:57.240 of my favorites has been Harry Dent Junior. I've read 0:07:57.280 --> 0:08:00.760 like five of his books. His research is so good 0:08:01.840 --> 0:08:05.920 I believe actual his research is correct. His assumptions have 0:08:06.000 --> 0:08:09.320 been wrong. His research is right, his assumptions are wrong. 0:08:09.520 --> 0:08:12.360 He's continually called for a crash, a crash, a crash, 0:08:12.400 --> 0:08:16.120 a crash, crash that never comes. And the reason why 0:08:16.760 --> 0:08:19.800 it never comes is because he just continues to fail 0:08:20.240 --> 0:08:23.360 to realize how many more tricks the FED has up 0:08:23.400 --> 0:08:29.120 their sleeve. If things worked normally, he would be right. 0:08:29.320 --> 0:08:32.199 But they don't. And what they're telling us right here 0:08:32.280 --> 0:08:35.160 is they have more magic tricks up their sleeve. This 0:08:35.200 --> 0:08:38.920 is why Harry Dan's wrong, This is why Peter Shift's wrong. 0:08:39.040 --> 0:08:41.480 This is why all of these people calling the Michael 0:08:41.520 --> 0:08:44.160 Burry's are wrong. They're all confists to happen, but they 0:08:44.240 --> 0:08:47.360 fail to realize how many more tricks they have up 0:08:47.400 --> 0:08:49.400 their sleeve. If you just tune in, you're listening to 0:08:49.480 --> 0:08:51.640 the Markmas Show. I have a whole lot more to 0:08:51.640 --> 0:08:53.480 cover when I come back about what is going on 0:08:53.520 --> 0:08:55.400 with the treasuries and where we're going. You don't want 0:08:55.400 --> 0:08:57.160 to miss it, don't go away, I'll we're back, all right, 0:08:57.160 --> 0:08:58.679 welcome back. If you just tune in, you're listening to 0:08:58.679 --> 0:09:01.360 the Mark mass Show. We're talking about what happened last 0:09:01.360 --> 0:09:04.400 week where we almost had a failed auction. So let's 0:09:04.440 --> 0:09:06.520 break down how that happened. So there was a thirty 0:09:06.600 --> 0:09:08.600 year auction, so you have everything from t bills up 0:09:08.640 --> 0:09:10.840 the bonds, and that's the duration anywhere from months to 0:09:10.920 --> 0:09:13.920 years or decades in this matter. And they sell these entranches. 0:09:14.240 --> 0:09:18.560 So in the thirty year auction, they wanted to sell 0:09:18.600 --> 0:09:21.760 twenty four billion dollars of that. And what happens is 0:09:21.800 --> 0:09:24.679 there's something called a bid to cover ratio. It's a 0:09:24.960 --> 0:09:27.800 BTC and that means how many bids, how much demand 0:09:27.840 --> 0:09:30.320 is there for the supply that they're offering, and what 0:09:30.480 --> 0:09:33.520 this is usually represented in a number and we saw 0:09:33.559 --> 0:09:35.880 that this one came in at two point two four percent, 0:09:35.960 --> 0:09:38.240 which doesn't really maybe mean anything to you. So we 0:09:38.280 --> 0:09:40.120 have to sort of look at history and we can 0:09:40.160 --> 0:09:42.400 see this is typically around two point five or two 0:09:42.440 --> 0:09:44.680 point six, So to go from two point six to 0:09:44.679 --> 0:09:47.679 two point two, that's very low. And what we can 0:09:47.720 --> 0:09:50.880 see is that it looks like foreign demand was off, 0:09:51.160 --> 0:09:53.760 but really I don't think it's exactly that. So what 0:09:53.800 --> 0:09:55.920 do I mean by this? What we can see from 0:09:55.920 --> 0:09:59.280 the Treasury report is there's basically three tranches of buyers 0:09:59.320 --> 0:10:01.960 that they tell us. One they tell us about the 0:10:02.000 --> 0:10:05.319 primary dealer. The primary dealers again are these buyers of 0:10:05.400 --> 0:10:08.400 last resort. These are these banks. The second one is 0:10:08.400 --> 0:10:11.640 what we call direct bidders. These are institutions and these 0:10:11.679 --> 0:10:15.600 are individuals. And then third we have indirect bidders. Indirect 0:10:15.600 --> 0:10:19.679 bidters are the foreign demand. These are foreign buyers. And 0:10:19.720 --> 0:10:22.200 what we can see for this thirty year auction, if 0:10:22.200 --> 0:10:25.160 we look back through a few auctions of this year January, October, 0:10:25.200 --> 0:10:28.440 and now November, we can see that in January, the 0:10:28.480 --> 0:10:30.840 primary dealers, which are the buyers of last resort, the 0:10:30.840 --> 0:10:35.560 ones mandated to buy, took up nine percent of the 0:10:35.559 --> 0:10:40.880 bonds in November. They well, actually before we talk about 0:10:40.960 --> 0:10:43.439 let's let's talk. Let's let's talk. Okay, Well, let's talk 0:10:43.440 --> 0:10:46.440 with that. So they bought nine percent in January. In 0:10:46.520 --> 0:10:50.520 November they were forced to pick up almost twenty five percent, 0:10:51.520 --> 0:10:53.760 so they have to suck up the difference. They had 0:10:53.800 --> 0:10:57.200 to buy nine in January twenty five percent. So what happened, Well, 0:10:57.280 --> 0:11:01.160 the indirect bidders, which are the foreign buyers, in January 0:11:01.200 --> 0:11:04.800 picked up seventy five percent. In November, they only picked 0:11:04.880 --> 0:11:08.880 up sixty percent. The direct bidders picked up sixteen percent 0:11:08.880 --> 0:11:11.240 in January and picked up fifteen percent November, So the 0:11:11.280 --> 0:11:14.839 direct bidders were about the same percentage. It was the 0:11:14.880 --> 0:11:17.600 indirect bidders that fell off from seventy five percent to 0:11:17.600 --> 0:11:19.520 sixty percent, and so the primary dealers had to pick 0:11:19.559 --> 0:11:21.920 up the difference from nine to twenty five percent. But 0:11:21.960 --> 0:11:25.320 that's not the whole story. What I really want to 0:11:25.360 --> 0:11:28.960 show you is that it's the amount of auction that 0:11:29.040 --> 0:11:32.040 the amount being auctioned off, it's the supply. So what 0:11:32.120 --> 0:11:36.160 we can see is that the foreign buyers, the indirect bidders, 0:11:36.559 --> 0:11:40.000 actually bought more bonds in November than in January. So 0:11:40.040 --> 0:11:43.640 in January they bought thirteen point four billion. In November 0:11:43.679 --> 0:11:46.760 they bought fourteen point three billions. They actually bought an 0:11:46.800 --> 0:11:50.720 extra billion dollars worth of bonds. The problem isn't as 0:11:50.800 --> 0:11:54.160 much the demand side. There's still demand. They actually bought 0:11:54.280 --> 0:11:57.320 a billion dollars more than they bought before. The problem 0:11:57.400 --> 0:12:00.760 is there's too much supply. The problem is the treasury 0:12:00.960 --> 0:12:05.280 is spending way too much money and borrowing too much. 0:12:05.640 --> 0:12:08.280 This is very important. As we get to this later part, 0:12:08.280 --> 0:12:10.520 you're going to understand why. But the problem is the 0:12:10.559 --> 0:12:15.240 government cannot and just will not stop spending. We're now 0:12:15.240 --> 0:12:17.800 fighting multiple wars. Janet Yellen's out there saying we can 0:12:17.840 --> 0:12:23.320 fight multiple wars. Sure, we're fighting a war on in Ukraine. 0:12:23.360 --> 0:12:25.160 We're fighting a war on Israel. We're fighting a war 0:12:25.240 --> 0:12:27.480 on terrorism, We're fighting a war on obesity, we're fighting 0:12:27.480 --> 0:12:29.760 a war on poverty, we're fighting war, We're fighting every 0:12:29.960 --> 0:12:31.880 single war you can imagine. And we're spending more and 0:12:31.920 --> 0:12:35.400 more money. And the problem is is there's not enough 0:12:35.440 --> 0:12:38.480 people willing to buy that debt. Now, like I said, 0:12:38.559 --> 0:12:40.920 it's not a demand problem. The demand actually went up. 0:12:40.960 --> 0:12:44.360 They actually bought more, But what happened because there was 0:12:44.440 --> 0:12:48.679 more supply than there was demand. Then the price that 0:12:49.360 --> 0:12:51.000 they had to offer the Treasury I had to offer 0:12:51.040 --> 0:12:54.240 the buyers went up. Now, this is what happened. This 0:12:54.280 --> 0:12:56.559 is what showed. This is how it shows how bad 0:12:56.600 --> 0:13:00.280 this was. And so in this bid tocover ratio, since 0:13:00.280 --> 0:13:02.760 there was enough buyers, the price had to go up. 0:13:02.800 --> 0:13:06.520 So basically, the Treasury was hoping to sell this debt 0:13:06.840 --> 0:13:08.920 for less than what they had to do it what 0:13:08.960 --> 0:13:11.440 they had to sell it at, and the tail went 0:13:11.559 --> 0:13:15.920 up by five basis points, five basis points. This is 0:13:15.960 --> 0:13:20.120 what we call a gigantic tail, five basis points. We 0:13:20.160 --> 0:13:23.320 haven't seen that since, like I said, two thousand and eleven. 0:13:23.400 --> 0:13:25.319 So let's put this into context here a little bit. 0:13:26.080 --> 0:13:28.680 If we had a lower bid to cover ratio and 0:13:28.720 --> 0:13:31.960 it went up let's say six percent, we're at five. 0:13:32.040 --> 0:13:34.560 If it went up to six percent, that'd pretty much 0:13:34.600 --> 0:13:37.800 be a complete disaster. And what that would show the 0:13:37.840 --> 0:13:41.280 world is that there's so much dysfunction the treasury market 0:13:41.480 --> 0:13:44.240 that they can't trust it anymore. All right, That's what 0:13:44.280 --> 0:13:48.280 it would show. Now because of that, because the yield 0:13:48.360 --> 0:13:51.400 went up, then the bonds went up as well, and 0:13:51.440 --> 0:13:53.960 they moved so much where it went down, they moved 0:13:53.960 --> 0:13:58.120 in opposite. We're seeing these move and five basis point 0:13:58.160 --> 0:14:02.560 move is sort of like risk asset that might be 0:14:02.600 --> 0:14:06.560 something like we might see in the cryptocurrency markets, not 0:14:06.679 --> 0:14:09.160 the US treasury bond market. The US treasure bond is 0:14:09.240 --> 0:14:11.839 the global reserve asset. It's supposed to be what we 0:14:11.840 --> 0:14:14.960 would consider a risk free asset. It's supposed to be 0:14:14.960 --> 0:14:18.480 the most secure asset in the world. It's not supposed 0:14:18.520 --> 0:14:21.440 to trade like a like a cryptocurrency, it's not supposed 0:14:21.440 --> 0:14:24.120 to trade a like a meme stock. But yet here 0:14:24.160 --> 0:14:27.720 it is. And this is the problem. We haven't seen 0:14:27.840 --> 0:14:31.720 this much dysfunction in the treasury market since the two 0:14:31.760 --> 0:14:34.840 thousand and eight financial crisis. Now we can see this 0:14:34.920 --> 0:14:39.600 in an index called the move INDEXMOVE and it measures 0:14:39.600 --> 0:14:43.240 this high volatility and it shows us how bad the 0:14:43.280 --> 0:14:45.920 market conditions really are. And like I said, we haven't 0:14:45.960 --> 0:14:48.880 seen this much dysfunction. We haven't seen this much problems 0:14:48.960 --> 0:14:53.560 in this treasury market, in the largest, deepest, most risk 0:14:53.640 --> 0:14:57.120 free market in the world, since twenty ten. And so 0:14:57.640 --> 0:15:01.720 it's no doubt that we're seeing investors booped from both 0:15:01.760 --> 0:15:03.160 the amount of debt that the Treasury is trying to 0:15:03.200 --> 0:15:07.240 issue as well as how bad that auction went. But 0:15:07.360 --> 0:15:11.720 here's where things really get interesting. What we're witnessing is 0:15:11.760 --> 0:15:16.040 we're witnessing a showdown, a showdown of the Federal Reserve 0:15:17.120 --> 0:15:19.880 and the Treasury, the US government. I've been talking about 0:15:19.920 --> 0:15:20.880 this for a while. As a matter of fact, I 0:15:20.920 --> 0:15:23.720 made a video, I want to say it was late 0:15:23.800 --> 0:15:26.640 last year on my main YouTube, pianel Mark Moss talking 0:15:26.640 --> 0:15:29.200 about this exact thing, how the Fed and Treasury were 0:15:29.240 --> 0:15:32.160 at war. They were battling each other. You see, the 0:15:32.200 --> 0:15:35.040 Treasury wants to continue to spend money. They want to 0:15:35.080 --> 0:15:38.800 continue to pay for UBI, and pay for more for welfare, 0:15:38.840 --> 0:15:40.560 and pay you not to work, and they want to 0:15:40.600 --> 0:15:42.240 pay for wars, and they want to pay for all 0:15:42.280 --> 0:15:44.680 these things, but they don't have the money to do it. 0:15:45.200 --> 0:15:47.840 The Federal Reserve. They want the Federal Reserve to give 0:15:47.920 --> 0:15:49.880 them the money, but the Fed doesn't want to. Why 0:15:50.400 --> 0:15:52.560 because the Fed wants to control the dollar. They want 0:15:52.600 --> 0:15:55.800 the dollar to remain strong. They're also trying to fight inflation. 0:15:56.200 --> 0:15:58.760 If the Fed continues to give the Treasury more money 0:15:58.800 --> 0:16:01.800 to spend than inflation continues to go up. So the 0:16:01.840 --> 0:16:04.800 Treasury wants to spend money causing inflation. The Fed's trying 0:16:04.800 --> 0:16:08.760 to bring inflation down. That's the battle. And so what 0:16:08.800 --> 0:16:10.240 the FED is trying to do is trying to make 0:16:10.280 --> 0:16:12.440 you and I broke, so you and I spend less 0:16:12.480 --> 0:16:14.640 money to help bring inflation down. What the problem is, 0:16:15.000 --> 0:16:17.400 You and I aren't the ones causing the massive amounts 0:16:17.440 --> 0:16:21.080 of inflation. It's the Treasury doing this. But as the 0:16:21.120 --> 0:16:25.080 Treasury is trying to sell these and there's not enough 0:16:25.080 --> 0:16:27.680 people buying them, where are they getting the money to 0:16:27.720 --> 0:16:30.560 do that? Because right now the FED is in what 0:16:30.600 --> 0:16:34.200 we call QT, or quantitative tightening. So the FED doesn't 0:16:34.240 --> 0:16:35.800 want to buy these bonds right now. As a matter 0:16:35.840 --> 0:16:38.720 of fact, the FED wants to sell the bonds. And 0:16:38.760 --> 0:16:40.240 at the same time they want to sell the bonds, 0:16:40.280 --> 0:16:43.200 they're trying to raise the rates. But how can the 0:16:43.240 --> 0:16:46.920 Fed be selling bonds into the market when the Treasury 0:16:46.960 --> 0:16:48.920 is trying to sell bonds in the market and there's 0:16:48.960 --> 0:16:52.720 not enough buyers for them. Well, one of the ways 0:16:52.720 --> 0:16:54.720 they've been doing is the Treasury has been tapping into 0:16:55.080 --> 0:17:01.240 the reverse repo facility. Now reverse repo facility was over 0:17:01.360 --> 0:17:04.880 two trillion dollars and they've been taking the money from 0:17:04.920 --> 0:17:07.520 the reverse repor facility, and it's been drained going into 0:17:07.640 --> 0:17:10.120 the short end what we call t bills of this 0:17:10.240 --> 0:17:13.160 of this debt, and this has been tapped, and it's 0:17:13.160 --> 0:17:15.160 been draining at a pretty rapid rate, and we're down 0:17:15.200 --> 0:17:18.359 to about one point four trillion in that right now. 0:17:18.960 --> 0:17:22.000 The problem is, at the rate we're going, this is 0:17:22.040 --> 0:17:24.040 going to run out very soon, and we know the 0:17:24.119 --> 0:17:26.159 exact date at the current run rate. I'm going to 0:17:26.240 --> 0:17:27.600 talk about that in a second when I come back. 0:17:27.640 --> 0:17:29.120 If you're just tuning in, you listening to the Mark 0:17:29.160 --> 0:17:31.879 Mass Show, talking through what happened with the Treasury almost 0:17:31.880 --> 0:17:33.760 failed auction last week and what this means. I'll be 0:17:33.760 --> 0:17:35.480 back with more a minute. Don't go away, We're back, 0:17:36.119 --> 0:17:37.479 all right, Welcome back. If you're just tune in your 0:17:37.480 --> 0:17:39.399 listening to the Mark Mash Show. We're talking about what 0:17:39.440 --> 0:17:42.280 happened last week with the Treasury auction, how it almost failed, 0:17:42.680 --> 0:17:45.160 and what this means and what to expect moving forward. Now. 0:17:45.359 --> 0:17:47.359 I was saying that the Treasury has been pulling money. 0:17:47.560 --> 0:17:49.120 Money has been coming out. I want to say they're 0:17:49.119 --> 0:17:50.879 pulling out, but money's been coming out of this reverse 0:17:50.920 --> 0:17:54.359 repo facility. And going into these short dated tea bills. 0:17:55.240 --> 0:17:58.359 The problem is, at the rate we're draining this facility down, 0:17:58.520 --> 0:18:00.919 it's looking to run out pretty quickly. As a matter 0:18:00.960 --> 0:18:03.320 of fact, at the current run rate we're at, this 0:18:03.359 --> 0:18:07.960 could be empty in the next ninety days. It's a 0:18:07.960 --> 0:18:11.399 pretty big deal. If that is empty and the Fed 0:18:11.480 --> 0:18:14.879 doesn't want to buy the debt, what's going to happen? Well, 0:18:14.920 --> 0:18:17.760 remember we talked about the statement that the Treasury put out, 0:18:17.920 --> 0:18:20.920 and in that statement they talked about a bond buy 0:18:20.960 --> 0:18:23.320 back program and talked about how they wanted to get 0:18:23.359 --> 0:18:25.800 it up and running. Well, my guess is that's the 0:18:25.840 --> 0:18:28.560 magic trick they have up their sleeve. If they run 0:18:28.560 --> 0:18:30.639 out of money in the reverse repol facility and the 0:18:30.640 --> 0:18:32.960 Fed won't buy it, what will they do, Well, they'll 0:18:33.000 --> 0:18:36.640 just buy it themselves. They'll just buy it themselves. They'll 0:18:36.680 --> 0:18:39.280 be able to buy whichever bonds they want to make 0:18:39.320 --> 0:18:43.600 sure there's enough liquidity in the treasury market. Who cares 0:18:43.640 --> 0:18:47.280 if nobody wants them, We'll just buy on ourselves, right, 0:18:47.560 --> 0:18:51.640 Why not? But how could you say? How could the 0:18:51.680 --> 0:18:55.040 Fed achieve what they're trying to achieve, which is selling 0:18:55.080 --> 0:18:58.840 off their bonds at a time when again there's no demand, 0:18:59.000 --> 0:19:02.320 and I don't see how their's a way. I don't 0:19:02.359 --> 0:19:06.240 see how the FED could possibly continue to raise rates 0:19:06.280 --> 0:19:09.720 in this environment and continue to sell off bonds at 0:19:09.720 --> 0:19:12.280 the same time. Now, this is what I've been saying. 0:19:12.320 --> 0:19:14.920 I made a video about it on my main YouTube, 0:19:14.920 --> 0:19:17.960 pianel Mark Moss, And today I saw a headline come 0:19:17.960 --> 0:19:20.760 out from what we call the Fed's mouthpiece, Nick Timrose. 0:19:21.040 --> 0:19:25.800 Nick Timrose is somebody that seems like the FED sort 0:19:25.800 --> 0:19:29.840 of leaks information to and then Timros leaks it out 0:19:29.880 --> 0:19:32.720 to the press. Why does this even happen, Well, because 0:19:32.760 --> 0:19:36.679 the FED doesn't want to surprise anybody. You know, I 0:19:36.720 --> 0:19:39.000 tell you what's going on, and I sort of read 0:19:39.000 --> 0:19:41.080 between the lines for a year. But it's not like 0:19:41.160 --> 0:19:45.200 this big secret. Guess the FED tells us this information. 0:19:45.440 --> 0:19:48.280 They have this information leaked out because they do not 0:19:48.440 --> 0:19:51.080 want to surprise the markets. They're trying to tell you 0:19:51.600 --> 0:19:54.400 months in advance of what's going to happen. So, for example, 0:19:54.800 --> 0:19:57.920 in November of twenty twenty one, they told us they 0:19:57.920 --> 0:20:01.720 were going to start raising rates. As soon as that happened, 0:20:01.880 --> 0:20:04.840 Bitcoin started selling off first, because it's the most sensitive 0:20:04.880 --> 0:20:08.160 to risk assets. Then the Nasdaq, which of the tech stocks, 0:20:08.200 --> 0:20:11.320 started selling off. But they didn't actually start raising rates 0:20:11.400 --> 0:20:14.040 until like February of the following year, so it was 0:20:14.080 --> 0:20:16.240 a couple of months. They told us they were going 0:20:16.280 --> 0:20:17.800 to do it, but they didn't actually do it for 0:20:17.800 --> 0:20:20.560 a couple of months. See, they want to give you 0:20:20.800 --> 0:20:25.200 plenty of time to start planning, so they're not trying 0:20:25.200 --> 0:20:28.199 to surprise the market, which is why they use people 0:20:28.280 --> 0:20:31.760 like Nick Timrose in the press to leak this information. 0:20:31.800 --> 0:20:35.320 And so today he said that the October payroll report 0:20:35.600 --> 0:20:38.880 and inflation report strongly suggests that the Fed's last rate 0:20:38.960 --> 0:20:41.600 rise was back in July. The big debate at the 0:20:41.640 --> 0:20:44.320 next FED meeting is shaping up to be over whether 0:20:44.800 --> 0:20:47.560 and how to modify the postmeding statement to reflect the 0:20:47.600 --> 0:20:53.200 obvious the central Bank is on hold, so the Fed whisper, 0:20:53.720 --> 0:20:57.320 he's telling us that the Fed is done hiking rates 0:20:57.359 --> 0:21:00.600