Daily Archives: July 16, 2010

Chinese Treasury Dump Brings Holdings to One Year Low

By -

Go here and read the Zero Hedge piece Chinese
Treasury Dump Brings Holdings to 1 Year Low
if you have not
already seen it: http://www.biiwii.com/analysis

If
England is allowing us to monetize our debt under some kind of covert
agreement, it is probably not much different than the tools that the US
would use to directly monetize its own debt, given the cozy relationship
with our friends in the UK.

What is next, the seemingly way out
there prospect of Congress directing individuals to hold these treasury
instruments in their IRA's? You hold an IRA, you are in bed with the
government as they extend to you tax benefits in exchange for your
compliance and adherence to convention.

A couple years ago we put
an addition on our house. How'd we fund it? A loan? Ha ha ha…
regular after tax brokerage savings? Are you kidding me, I worked hard
for that 'money' and paid my taxes on it. It's mine. No, I liquidated
funds from the IRA's and paid the penalty and taxes up front.

I
have not contributed squat to the IRA's since my financial awakening.
After a financial adviser lost us 60% of our IRA's in 2000/2001 and I
yanked them away to learn portfolio management on the job, they are up
about 240% – adjusted for withdrawals and what not. This is the NFTRH
"Speculative" (as opposed to "capital preservation") portfolio.

The main point is that I do not regard
IRA's as serious investment accounts (although they are mighty
convenient vehicles up until liquidation) and have been on alert for
years as to stirrings in Washington about policy that may target these
massive repositories in waiting should the inflators become yet more
desperate for treasury buyers. England is a lurch in that direction if
what Zero Hedge speculates is at all near target.

Either way,
this is inflationary. The confidence in the long bond is not what the
chart says it is.