The US Treasury’s Distress Signal. (A LAST RESORT MOVE).

From Greg M

The US Treasury’s Distress Signal. (A LAST RESORT MOVE).

Lions.

The TGA (Treasury General Account) is being blead down. This is a MAJOR problem.

What is the TGA?

(From Google Search). The Treasury General Account (TGA) is the primary operating account of the U.S. Department of the Treasury, maintained at the Federal Reserve. It acts as the government's "checking account," handling tax receipts, proceeds from Treasury securities sales, and disbursements of government payments. The TGA plays a crucial role in managing the government's cash flow, providing a buffer against potential debt ceiling crises, and impacting liquidity in the financial system.

Lions… The TGA drawing down cash, this is a clear sign that liquidity is drying up.

***The recent US debt downgrade is having a direct effect on foreign buyers OF US debt, and now they are demanding a higher premium. So, now that buyers are drying up, the LAST RESORT is that the TGA gets drawn down. (Simple CAUSE and EFFECT).

***The next Fed pivot may come from a FULL-ON liquidity crisis. Here, the Fed could potentially begin an aggressive/large scale rate cutting cycle and therefore accelerate currency devaluation. (I fully expect this to happen soon).

What’s Under the Surface?

Liquidity IS Drying Up FASTER… (And WE CALLED THIS YEARS AGO).

With less buyers of US debt, THE LAST RESORT is to NOW draw down The TGA (Treasury General Account). Makes sense?

Yes, for years now I have been screaming from rooftops on this. Real liquidity, (usable, productive capital) has been VANISHING, even as GLOBAL DEBT CONTINUES TO RISE.

Why? Because most of the "liquidity" pumped into the system has NOT been brought about by increased production, BUT TO PROP UP THE SYSTEM! Moreover, the actual velocity of money is deteriorating. Less real capital is flowing through the productive economy.

Their "Solution" More Debt. Go ahead, make it up.

Babylon knows no other tool. The entire beast system is based upon debt expansion. To solve a liquidity problem, they will

Cut rates aggressively.

Revive QE in some form.

Possibly go even deeper, into fiscal stimulus funded by central bank backstopping.

But this further destroys the currency’s real purchasing power, increases malinvestment, AND therefore exacerbates the overall problem. (It’s akin to a heroin addict whose tolerance is so high that the next shot will kill him, but he takes it anyway because the pain of withdrawal is worse).

Aggressive Rate Cuts = Accelerated Currency Devaluation.

The market is now pricing in that the Fed will slash rates as the global economic slowdown accelerates. But the consequence is that the dollar’s purchasing power will erode even faster and We the People LOSE.

You will likely see hard assets (precious metals, commodities) react upward, stocks initially celebrate, but ultimately sovereign debt crisis fears WILL escalate-BAD FOR STOCKS.

GM