TIC Report

7 posts / 0 new
Last post
memorrison's picture
memorrison
Status: Bronze Member (Offline)
Joined: Apr 16 2008
Posts: 90
TIC Report

Chris, or anyone that can explain this TIC report (Treasury International Capital).  Here is what todays report says:

Monthly net TIC flows were negative $97.5 billion. Of this, net foreign private flows were negative $131.3 billion, and net foreign official flows were $33.8 billion.

Full press release here:  http://www.ustreas.gov/press/releases/tg288.htm

I think we are now at 8 of the last 9 months the world is selling our treasuries.  These numbers are so unbelievable that I am soliciting help from Chris and anyone who reads this to help me understand these numbers.  It appears to me we are in BIG Trouble, and no one seems to notice this problem.  Chris has touched on this in the past because it all relates to the funding crisis that we are heading towards, but if anyone has some insight it would be greatly appreciated!

 

 

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5734
Re: TIC Report

You got it Mark:

The TIC report.

memorrison's picture
memorrison
Status: Bronze Member (Offline)
Joined: Apr 16 2008
Posts: 90
Re: TIC Report

Chris-

Thanks for the report - this report sent shivers down my spin!  Thanks for explaing it in more detail.  What bothers me is no one, and I mean no one in the media is addressing this topic.  I would have thought the WSJ would have at least a little article on this, but it has not been addressed by the media.  I recently sat down with a congressmen who is on the House Finance committee under Mr. Barney Frank.  I showed him the TIC report (several months ago) and specifically asked him to comment on if our Government is even talking about this or concerned.  He answered " I have never seen this report! We have not discussed this in the committee".... at least he was honest, but if our congressmen are not aware of this report and what it is warning, we you can take that to where you wish...

Thanks again for a great timely report Chris!

 

JAG's picture
JAG
Status: Diamond Member (Offline)
Joined: Oct 26 2008
Posts: 2492
Re: TIC Report

Dr. M, 

Is it possible to have serious deflation and a currency-crisis simultaneously? As far as the USD is concerned, aren't these two events opposing forces?

Please help me come to grips with this contradiction. Thanks in advanced.

Jeff

(I didn't see that the comments were enabled on your cited insider report, so I posted my question here)

Nichoman's picture
Nichoman
Status: Gold Member (Offline)
Joined: Nov 1 2008
Posts: 422
Re: TIC Report

We have a rising loss of confidence in the dollar.   Part of the reason PM's are rising?

We can corroberate this TIC report by information overseas (especially Asia) of widespread refusing to take the dollar in transactions in open markets...see  Larry Edelson post as one example.

Now, could rumours today of a pending Fed rate increase be partly related to this?

What would rising US interest rates do to the US economy...especially with unprecedented and increasing debt, plus rising delinquincies?

Would this impact our US financial system (i.e. banks)?   Conflict with government assumptions all areas (ranging from bailouts to future planning).

What does this do to Fed future plans (ending participation/support in next ~30 days)?

Are there past cases in history to compare this with?

Offer the reader needs to assess these.  Either way...does this result in a lower standing of living?

My take:

Another data point of unsustainability...leading to some form of world/local financial adjustment(s) sooner versus later...again quite possibly before end of the year.    The picture seems to becoming more clear...not less.

2 cents.

Nichoman

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5734
Re: TIC Report

JAG - comments now enabled...thank you for pointing out the oversight.

To answer your question here, I am not sure they are opposing forces depending on how we define things.  Let's call "deflation" the shrinking of the money supply which can be a result of wholesale debt destruction.

For example, consider a money market fund.  Is that money?  Most people think of their money market fund as "money" but it is in fact entirely composed of debt, except for the minor percentage of liquid funds required to meet day-to-day user's needs.

What would happen to all that "money" if the debt in it blew up?  It would evaporate.

So now imagine that there's a currency crisis, like the one in Argentina, where foreigners no longer want to hold either the currency or the government's sovereign debt. 

Two things happen; the currency sinks on the open market and the government has a funding crisis.  If the government defaults, as Argentina did, then the government bonds essentially evaporate as well.

So that's how one could have both a currency crisis and deflation at the same time.

However, all of the US' debt is denominated in its own currency so it is not at all clear to me that its even possible for the US to default.   Instead it will print to cover the difference which means that I would rather expect inflation to be the primary result or a currency crisis, not deflation.

Cloudfire's picture
Cloudfire
Status: Diamond Member (Offline)
Joined: Sep 29 2008
Posts: 1813
Re: TIC Report
cmartenson wrote:

However, all of the US' debt is denominated in its own currency so it is not at all clear to me that its even possible for the US to default.  

Hi, Dr. M;

Could you expand on this please?

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments