The two main holders of United States Treasuries, the countries of China and Japan, have dumped the dollar. Both nations have dramatically cut their ownership of notes and bonds in August, according to the latest figures from the US Treasury Department, released on Tuesday.
It appears that a dollar crash could be imminent, as no one wants to buy American debt anymore. Earlier this week, Goldman Sachs said that the United States’ policy of sanctions and tariffs against major economies, including Russia, China, and Iran, have dragged down the dollar’s share of global central-bank reserves. Meanwhile, the data from the International Monetary Fund confirms that the US dollar’s share in the global central-bank reserves dropped to 62.3 percent from April to June. Meanwhile, holdings in the euro, yen, and yuan gained as a share of allocated reserves.
According to a report by RT, China’s holdings of U.S. sovereign debt dropped to $1.165 trillion in August, from $1.171 trillion in July, marking the third consecutive month of declines. China, the world’s second-largest economy, has been bolstering its national currency amid an ongoing trade war with the U.S. China still remains the biggest foreign holder of US Treasuries, however, followed by long-time US ally Japan. That could all change though should the country continue to dump the dollar.
Tokyo also cut its holdings of U.S. securities to $1.029 trillion in August, the lowest since October 2011. In July, Japan’s holdings were at $1.035 trillion. According to the latest figures from the country’s Ministry of Finance, Japanese investors opted to buy British debt in August, selling US and German bonds. Japan reportedly liquidated a net $5.6 billion worth of debt.
Liquidating US Treasuries, one of the world’s most actively-traded financial assets, has recently become a trend among major holders. Russia dumped 84 percent of its holdings this year, with its remaining holdings as of June totaling just $14.9 billion. With relations between Moscow and Washington at their lowest point in decades, the Central Bank of Russia explained the decision was based on financial, economic and geopolitical risks.
Iran has also said the dollar has no place in their transactions while Turkey and India have followed Russia’s footsteps. Turkey has dropped out of the top-30 list of holders of American debt following a conflict with Washington over the attempted military coup in the country two years ago. While India remains among the top-30, the country has cut its US Treasury holdings for the fifth consecutive month, from $157 billion in March to $140 billion in August, according to RT.
I would dump them too. Keep stackin’ that silver! Pretty insane that we work our asses off all our lives for pieces of paper huh. And think we own property when all we do is rent it from the master. Humanity…… an epic failure.
Right on Genius.
That’s not true. I don’t work for pieces of paper. I have direct deposit and use credit/debit cards to pay for most things. So I work for bits and bytes in a computer somewhere. Don’t accuse me of the stupidity I don’t do, accuse me of the even bigger stupidity I actually do. Get it right.
LOL
“It appears that a dollar crash could be imminent, as no one wants to buy American debt anymore.”
NOT TRUE. FEAR PORN. 🙂
Didn’t your mother ask you to get out of her basement & get a job?
Nobody buying US government debt is not the same as the dollar crashing. Countries refusing to accept the dollar as payment for goods is what you need to crash the dollar. Or to have all those dollars in foreign hands entering the US to buy real stuff. But not just refusing to buy our debt.
“The current inflation rate for the United States is 2.7% for the 12 months ended August 2018, as published on September 13, 2018 by the U.S. Labor Department.”
So, explain to me why my phone bill, which includes only a land line and internet (no television), rose 15.8-percent in just 4-months. 15.8-percent!
That means in 12-months my phone bill doubles. What’s that all about?
In August I was paying $65.83 monthly. Now, in October my bill was $76.25.
All the additional charges are for fees, services and taxes. My basic services has remained constant.
Are these kinds of increases legal? Who do I complain to.
Called the phone company. They of course just blew me off.
Because the CPI numbers, like the BLS employment numbers & all the other “official” government economic numbers are fiction. Go to John Williams ShadowStats for your non-fiction economic data. http://www.shadowstats.com/
Yawn…
It’s hardly “dumping” when they sold 6 billion dollars worth of reserves and they hold 1.165 TRILLION dollars worth of reserves. Sensationalism at it’s best.
So, they sold some treasuries to help stabilize their currency. It happens all the time. They actually sold 36 billion dollars worth of reserves since August of 2017.
Hardly means “Dollar Crash Imminent…”
When countries reduce their reserves of FRNs they do it to stabilize their own currency or to pay off dollar denominated debt. They don’t do it to try and crash the dollar. It generally means the dollar is strong and their currency is weaker.
JRS
“It’s hardly “dumping” when they sold 6 billion dollars worth of reserves and they hold 1.165 TRILLION dollars worth of reserves.”
Single digit billion isn’t much nowadays. Ten to fifty raise slight attention. Scrutiny gets made at 100 billion; get real nervous at a trillion.
Its just a sign of how damn large the debt is.
According to Jim Willie, China is financing loans for their new silk road projects by using Treasuries as collateral. So, in effect, China is dumping them.
The reality is that the Fed is buying the vast majority of Treasuries by creating money out of thin air. Treasuries are junk bonds. Nobody should buy them.
No longer defend Japan against China and see how secure Japan feels. Sanction, sanction, sanction. No more imports and no more exports. So we suffer a little, we’ve led too soft of a life. This will get rid of the snowflakes.
it’s the old game of chicken but on an international scale
There’s no dollar crash imminent. Don’t believe the hype. Just look at the figures: The “Grand Total” of US Treasuries at foreign holders rose from 6251.6 in July 2018, to 6287.0 in August. There were some major buyers, like Brazil:
http://ticdata.treasury.gov/Publish/mfh.txt
Moreover, US entities and individuals are buying US debt, because it’s attractive with its rising yields:
https://wolfstreet.com/2018/10/16/who-bought-the-1-6-trillion-of-new-us-national-debt-treasury-securities-foreign-domestic/
The dollar will be the last one standing of the fiat currencies. Like it or not. So no panic please.
Brazil is not a buyer of Treasuries in the way you think they are. Treasuries are trade settlement paper for commodities contracts, and Brazil just happens to be the number one exporter in the world of five major commodities: Beef, coffee beans, cocoa beans, orange juice concentrate and soybeans. Treasuries proxy for the dollars used to pay for these commodities.
As for US buyers, anyone who buys a US gov’t bond in this environment, where interest rates are going in one direction, up, is a moron. You are guaranteed to lose money on your investment. Your bond is going to pay less than market rate. When you go to sell that bond, you’ll be selling it at a deep discount, so the next moron who buys it from you can get yield equivalent to market.
Tick tock. Just a matter of time.
One big gaping hole in all of this, is the link to a story from RT. RT, or Russia Today, is the modern equivalent to yesterday’s Pravda and should be believed as much. RT is a Russian propaganda machine, nothing more and seeing the link in this story confines this story to the BS category.
Very interesting. If not for the fact that you link to RT, this would have some truth. RT, Russia Today is a direct decedent of Pravda which was the news organ of the former USSR. Like the Pravda of old, the job of RT is to publish propaganda. Since several links in this story are to RT stories and other links go to other SHTF Plan stories that are backed up with links to RT, I would say the sky isn’t falling. I’m filing this under B for BS.