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U.S. Treasury Secretary Steve Mnuchin piled on to comments made recently by President Donald Trump by calling cryptocurrencies a “national security issue.” Bitcoin and crypto proponents more broadly have long wondered if (and how) the government of the United States would recognize the slow but steady encroachment of decentralized assets, and it appears to have begun. Facebook’s announcement of the Libra project on June 18, 2019, will likely prove the point on countless future historical timelines at which the U.S. government began a slow, ultimately ineffectiveassault upon the cryptocurrency realm.

Everything that Mnuchin attributed to Bitcoin — for one thing, that it has been used in concert with such “illicit activity [as] cyber crime, tax evasion, extortion … illicit drugs, and human trafficking” — can be said, and to degrees an order of magnitude or more larger, about the U.S. dollar. It’s an argument suitable for children.

All of this is extremely bullish for Bitcoin and the entire cryptocurrency complex. A bipartisan political salvo against crypto assets will undoubtedly accelerate the pace of innovation as well as increasing the value proposition, and ultimately the market price, of assets that ensure privacy. Higher prices will draw more crypto developers into the market and direct more resources at capturing market share, which means — as in any market — that consumers are the ultimate beneficiaries.

Mnuchin isn’t wrong, though. There is a tremendous risk to American national security where currencies are considered: the dollar. Those who habitually cite its reserve-currency status as a reason not to worry are making an argument that stands on increasingly precarious foundations: since 2010, the U.N. and other groups have cited the dollar’s downward slide in value, urging the adoption of an alternate system of reserves.

…click on the above link to read the rest of the article…

Treasury Announces Record Debt Sale In Upcoming Refunding Auction

October 31, 2018

Treasury Announces Record Debt Sale In Upcoming Refunding Auction

Treasury Secretary Steven Mnuchin is about to surpass Timothy Geithner’s achievement of selling a record amount of notes and bonds as he seeks to finance America’s soaring budget deficit.

According to the latest quarterly refunding statement, the US Treasury is about to sell a record amount of debt, surpassing levels seen both in the aftermath of the Great Depression and the Global Financial Crisis.

On Wednesday, the US Treasury Borrowing Advisory Committee unveiled that it will increase the amount of debt to be sold at the upcoming quarterly refunding auctions to $83 billion from $78 billion three months earlier. This will be the fourth straight quarter of increasing refunding auction sizes and is driven by the soaring US deficit shortfall, which in 2018 hit $779 billion the highest since 2012, as well as the Fed’s ongoing balance sheet shrinkage.

Here are the details of the TBAC’s proposal:

Auctions for 2-, 3- and 5-year notes will increase by $1 billion in both of the next two months; last quarter Treasury implemented increases in all three months
- As a result, the size of 2-, 3-, and 5-year note auctions will increase by $2 billion, respectively, by the end of January.
Auctions for 7-, 10-, 30-year notes to be raised by $1 billion in November and then kept steady through January
Auctions for 2-year floating-rate note will rise by $1 billion in November
Auctions for TIPS will see various changes with total tips issuance rising $20 billion-$30 billion in 2019, however there will be no TIPS supply changes over next three months; a new CUSIP 5-year will be added to the TIPS calendar, with the new security to be introduced October 2019

In total, the Treasury will sell $83 billion in long-term debt next week – consisting of $37BN in 3 Year notes, $27BN in 10 Year notes and $19BN in 30 Year notes, versus $78 billion in August’s refunding week sales.

…click on the above link to read the rest of the article…

Big Oil Walking A Tightrope As Prices Rise

October 23, 2018

Big Oil Walking A Tightrope As Prices Rise

Supermajors have had a great year so far, and their third-quarter results, to be released over the next couple of weeks, are likely to strengthen this impression. But this does not necessarily mean that investors will reward them. Investors have become a lot more careful in the past few years, and chances are they will want to see more proof of post-crisis flexibility and strict cost discipline before stock prices reflect an increase in trust.

On the face of it, Exxon, Shell, Chevron, and their likes have everything going for them: oil prices are higher, free cash flow is coming in at higher rates, and there have even been a few discoveries, most notable among them Exxon’s 4-billion-barrel elephant off the coast of Guyana. But Big Oil still needs to be cautious.

In a recent article for 24/7 Wall Street, its senior editor Paul Ausick noted the heightened prospects of even higher oil prices after a Reuters repor t revealed that OPEC has been having trouble lifting production by the promised 1 million bpd. From May to September, the cartel’s combined production plus Russia’s had fallen well short of that figure because of production declines in Venezuela, Iran, and Angola, among others. These, the internal OPEC document that Reuters saw, offset some substantial output hikes from Saudi Arabia, Russia, the UAE, Iraq, and Kuwait.

What this means is that there seems to be less spare capacity than optimists believed. This, in turn, means prices are likely to climb further, despite a fresh assurance from Treasury Secretary Steven Mnuchin that traders have already factored in the U.S. sanctions against Iran. Mnuchin’s warning that Washington will insist on importers cutting Iranian crude imports by more than 20 percent most certainly has not helped rein in prices, though its effect has yet to be fully acknowledged.

…click on the above link to read the rest of the article…

US Is Negotiating With SWIFT To Disconnect Iran From Network

October 21, 2018

US Is Negotiating With SWIFT To Disconnect Iran From Network

Treasury Secretary Steven Mnuchin said that unlike Obama’s 2013 Iran blockade, it would be harder for countries to get waivers on Iran oil sanctions as the US is already working on disconnecting Iran from the SWIFT network and dismissed concerns that oil prices could rise, saying the market had already factored in the output losses.

Speaking in an interview with Reuters in Jerusalem on Sunday at the start of a Middle East trip, Mnuchin said countries would have to reduce their purchases of Iranian oil by more than the roughly 20% level they did from 2013 to 2015 to get waivers. “I would expect that if we do give waivers it will be significantly larger reductions,” said the US Treasury Secretary.

To achieve the US goal of further isolating Iran from the global financial community, Mnuchin said that the U.S. Treasury was already in negotiations with the Belgian-based financial messaging service SWIFT which intermediates the bulk of the world’s cross-border dollar-denominated transactions, on disconnecting Iran from the network. Washington has been pressuring SWIFT to cut Iran from the system as it did in 2012 before the nuclear deal.

Validating European concerns that the US can and will weaponize the dollar at will and use the reserve currency as a global bargaining chip, Mnuchin’s threats confirmed that although the United States does not hold a majority on SWIFT’s board of directors, the Trump administration could impose penalties on SWIFT unless it disconnects from Iran, pressuring it to comply with US demands.

“I can assure you our objective is to make sure that sanctioned transactions do not occur whether it’s through SWIFT or any other mechanism,” he said, “Our focus is to make sure that the sanctions are enforced.”

…click on the above link to read the rest of the article…

Mnuchin’s Wrong: Here’s Why Investors Should Be Very Worried About Inflation

February 27, 2018

Mnuchin’s Wrong: Here’s Why Investors Should Be Very Worried About Inflation

Despite Treasury Secretary Steven Mnuchin’s bizarre insistence that there’s no connection between consumer-price inflation and rising energy prices and wages, these factors – plus a spate of others – are forcing some food companies to consider raising prices on goods from chicken to cereal, according to Reuters.

One of these factors, as Reuters explores in a wide-ranging feature published on Monday, involves US trucking and railroad operators foisting higher shipping rates on customers like General Mills Inc. and Hormel Foods Corp.

According to Reuters, transportation costs are climbing at double the rate of inflation.

These increases are catching food companies off guard. Struggling railroads and trucking companies haven’t expanded their capacity, choosing instead to focus on cost cuts – much to Wall Street’s delight.

Interviews with executives at 10 companies across the food, consumer goods and commodities sectors reveal that many are grappling with how to defend their profit margins as transportation costs climb at nearly double the inflation rate.

Two executives told Reuters their companies do plan to raise prices, though they would not divulge by how much. A third said it was discussing prospective price increases with retailers.

The prospect of higher prices on chicken, cereal and snacks costs comes as inflation emerged as a more distinct threat in recent weeks. The U.S. Labor Department reported earlier this month that underlying consumer prices in January posted their biggest gain in more than a year.

As US economic growth has revved up, railroads and truck fleets have not expanded capacity to keep pace – a decision applauded by Wall Street. Shares of CSX Corp, Norfolk Southern, and Union Pacific Corp have risen an average 22 percent over the past year as they cut headcount, locomotives and rail cars, and lengthened trains to lower expenses and raise margins.

…click on the above link to read the rest of the article…

“Strong Dollar,” “Weak Dollar,” What About a Gold-Backed Dollar?

February 21, 2018

“Strong Dollar,” “Weak Dollar,” What About a Gold-Backed Dollar?

gold backed dollar

The recent hullabaloo among President Trump’s top monetary officials about the Administration’s “dollar policy” is just the start of what will likely be the first of many contradictory pronoucements and reversals which will take place in the coming months/years as the world’s reserve currency continues to be compromised. So far, the Greenback has had its worst start since 1987, the year of a major stock market reset.

The brief firestorm was set off by Treasury Secretary Steven Mnuchin who said in response to the dollar’s recent slide, “Obviously, a weaker dollar is good for us, it’s good because it has to do with trade and opportunities.”* Mnuchin backtracked a bit as international financial leaders criticized the apparent shift in policy while Administration officials sought to clarify the Secretary’s remarks. President Trump weighted in on the matter saying, “Ultimately, I want to see a strong dollar” and added that Mnuchin’s comments were “taken out of context.”

While President Trump sought to allay jittery currency markets that monetary policy had not changed, candidate Trump supported the Federal Reserve’s suppression of interest rates and did not want to see a rising dollar:

I must be honest, I’m a low interest rate

person. If we raise rates and if the

dollar starts getting too strong, we’re going

to have some very major problems.**

Of course, the entire uproar about a strong dollar versus weak dollar is a sham. When the dollar (and for that matter all other national currencies) cannot be redeemed for either gold or silver, it is inherently “weak” and ultimately worthless. That this obvious fact is not recognized by the Trump Administration, international monetary authorities, and the financial press demonstrates just how unstable the dollar and world currencies actually are.

…click on the above link to read the rest of the article…

When Budget Deficits Will Really Go Vertical

February 17, 2018

When Budget Deficits Will Really Go Vertical

Mnuchin Gets It

United States Secretary of Treasury Steven Mnuchin has a sweet gig. He writes rubber checks to pay the nation’s bills. Yet, somehow, the rubber checks don’t bounce. Instead, like magic, they clear. How this all works, considering the nation’s technically insolvent, we don’t quite understand. But Mnuchin gets it. He knows exactly how full faith and credit works – and he knows plenty more.

Master of the Mint and economy wizard Steven Mnuchin and his wife at the annual ritual greenback burning festival. [PT]

In fact, Mnuchin’s wife, Louise Linton, says she admires him because “he understands the economy.” And Mnuchin, no doubt, admires Linton, a Scottish actress 18 years younger, because “she loves SoulCycle Snapchat filters that make people look like puppies and piglets.” Naturally, Mnuchin gets the importance of puppy and piglet filters and how this bizarre fad fits into the big picture of the economy.

Unlike Mnuchin, we find the economy, and its infinite and dynamic relationships, to be beyond comprehension. But that doesn’t deter us from attempting to make some sense of it each week. When it comes to Snapchat filters we know nothing – and we could care less. Still, who are we to question Snap Inc.’s $24 billion market capitalization?

What we do understand is simple arithmetic. So, too, we care a great deal about the increasingly precarious predicament the 115th U.S. Congress is putting the American people in. As far as we can tell, the approaching disaster is much closer than Mnuchin will publicly recognize.

US public debtberg-to-GDP ratio – cruising for a bruising. The growth in public debt in recent years is unprecedented in peace time (arguably, the term “peace time” is not an accurate description of the current era). Lettuce not forget, this is just the debt they actually admit to, so to speak.

…click on the above link to read the rest of the article…

“Strong Dollar”, “Weak Dollar” – What About a Gold-Backed Dollar?

February 8, 2018

“Strong Dollar”, “Weak Dollar” – What About a Gold-Backed Dollar?

Contradictory Palaver

The recent hullabaloo among President Trump’s top monetary officials about the Administration’s “dollar policy” is just the start of what will likely be the first of many contradictory pronouncements and reversals which will take place in the coming months and years as the world’s reserve currency continues to be compromised. So far, the Greenback has had its worst start since 1987, the year of a major stock market reset.

A modern-day reenactment of the famous “our currency, your problem” play that went over so extremely well in the 1970s… [PT]

The brief firestorm was set off by Treasury Secretary Steven Mnuchin who said in response to the dollar’s recent slide:

“Obviously, a weaker dollar is good for us, it’s good because it has to do with trade and opportunities.”*

Mnuchin backtracked a bit as international financial leaders criticized the apparent shift in policy while Administration officials sought to clarify the Secretary’s remarks. President Trump weighted in on the matter saying:

“Ultimately, I want to see a strong dollar” and added that Mnuchin’s comments were “taken out of context.”

“I must be honest, I’m a low interest rate person. If we raise rates and if the dollar starts getting too strong, we’re going to have some very major problems”.**

…click on the above link to read the rest of the article…

Trump’s China-Sanctions Madness Imperils the Dollar

September 20, 2017

Trump’s China-Sanctions Madness Imperils the Dollar

Last week US Treasury Secretary Steve Mnuchin warned the US will impose new sanctions on China if it doesn’t conform to UN sanctions on North Korea:

“If China doesn’t follow these sanctions, we will put additional sanctions on them and prevent them from accessing the U.S. and international dollar system, and that’s quite meaningful.”

In other words, the administration wants to sanction one of the US’s biggest trading partners, and the world’s second-largest economy.

China is the world’s third-largest recipient of Americans exports, behind only Canada and Mexico. China is the world’s largest source of imports for Americans, slightly ahead of both Mexico and Canada.

In 2016, Americans exported $169 billion in goods and services to China while importing $478 billion of goods and services. Every year, both consumers and producers benefit from the importation of Chinese electronics, machinery, food, footwear, and more.

Ratcheting up economic warfare with China could serve to cut off these avenues of trade and thus will only cost consumers and small business owners who currently benefit from lower-cost machinery, clothing, and more.

For the mercantilists in the Trump administration, of course, American consumers import “too much” from China anyway, and Americans and ought to be prohibited by the US government from purchasing what they want. The North Korea situation could serve as a convenient excuse for slapping prohibitions on American consumers in the name of “fair trade” while also serving as a foreign policy tool.

The last thing the US consumer needs is a trade war with China.

At this point, however, the US isn’t talking about cutting off trade in such a blunt manner.

As Mnuchin notes, the strategy here is to “prevent [the Chinese] from accessing the U.S. and international dollar system.” In practice, this would likely mean restricting access to the so-called SWIFT system which facilitates international transactions in dollars.

…click on the above link to read the rest of the article…

Gold Jumps After Mnuchin Says “Less Concerned About Inflation Than Economic Growth”

September 14, 2017

Gold Jumps After Mnuchin Says “Less Concerned About Inflation Than Economic Growth”

In a potentially revealing glimpse of what is to come from the next Fed head, Treasury Secretary Steven Mnuchin, speaking during a Politico forum, told the audience:

“Although we respect the Fed’s independence, we are concerned about economic growth. We’re doing everything we can — whether it’s tax reform, whether it’s regulatory relief, whether it’s trade — to create economic growth. And we’re less concerned about inflation at the moment.”

Seemingly suggesting that the administration will do “whatever it takes” to get economic growth (cough QE moar cough), no matter what inflationary impact.

The reaction was quick – Gold jumped to the high of the day and USDJPY spiked lower – but no follow through for now…

Mnuchin also replayed Trump’s comments on Yellen, saying he “respected her” and “enjoys working with her” perhaps in some further conditioning for the market that Yellen may be asked to stay around (as long as she remains uber-dovish, perhaps).

An Economic Lesson for China and Russia

September 14, 2017

An Economic Lesson for China and Russia

Is there anyone in Trump’s government who is not an imbecile?

After years of endless military threats against Russia—remember CIA deputy director Mike Morell saying on TV (Charlie Rose show) that the US should start killing Russians to give them a message, and Army Chief of Staff Mark Milley threatening “We’ll beat you harder than you have ever been beaten before”—now the US Treasury Secretary Steven Mnuchin threatens China. If China doesn’t abide by Washington’s new sanctions on North Korea, Mnuchin said the US “will put additional sanctions on them [China] and prevent them from accessing the US and international dollar system.”
https://www.rt.com/usa/403118-usa-china-sanctions-north-korea/

Here is the broke US government $20 trillion in public debt, having to print money with which to buy its own bonds, threatening the second largest economy in the world, an economy on purchasing power parity terms that is larger than the US economy.

Take a moment to think about Mnuchin’s threat to China. How many US firms are located in China? It is not only Apple and Nike. Would sanctions on China mean that the US firms could not sell their Chinese made products in the US or anywhere outside China? Do you think the global US corporations would stand for this?

What if China responded by nationalizing all US factories and all Western owned banks in China and Hong Kong?

Mnuchin is like the imbecile Nikki Haley. He doesn’t know who he is threatening.

Consider Mnuchin’s threat to exclude China from the international dollar system. Nothing could do more harm to the US and more good to China. A huge amount of economic transactions would simply exit the dollar system, reducing its scope and importance.

…click on the above link to read the rest of the article…

U.S. Treasury Secretary: I Assume Fort Knox Gold Is Still There

August 22, 2017

U.S. Treasury Secretary: I Assume Fort Knox Gold Is Still There

US Treasury Secretary Steve Mnuchin visits Fort Knox Gold
Later tweeted ‘Glad gold is safe!’
Only the third Treasury Secretary to visit the fortified vault, last visit was 1948
Last Congressional visit was 1974
Speculation over existence of gold in Fort Knox is rife
Concerns over Federal Reserves lack of interest in carrying to an audit on gold
Gold was last counted in 1953, nine years before Mnuchin was born
Mnuchin may be looking to prevent countries and states from worrying about and repatriating their gold

US Treasury Secretary ‘assumes’ the gold is still in Fort Knox, 64 years after it was audited.

The fortified facility is reportedly surrounded by 30,000 soldiers, tanks, armored personnel carriers, attack helicopters, and artillery. Despite this, there is still concern as to whether the gold is there.

As he headed in, Mnuchin told an audience “I assume the gold is still there…It would really be quite a movie if we walked in and there was no gold.”

With a background in Hollywood it was unsurprising that Mnuchin’s imagination appeared to be getting carried away with tales of finding the $200 billion of gold missing.

Missing gold: fact or fiction?

An empty Fort Knox is an issue far removed from the hills of Hollywood and has far more basis in reality than many give it credit for.

For many decades campaigns have been led for the US Treasury and government to audit the gold and to testify to its existence.

The gold has not been ‘counted’ since 1953. This was less than 20 years after Fort Knox was built. Since then there has been no official count or audit.

…click on the above link to read the rest of the article…

The Fed Will Blink

April 25, 2017

The Fed Will Blink

Honest Profession

GUALFIN, ARGENTINA – The Dow rose 174 points on Thursday. And Treasury Secretary Steve Mnuchin said we’d have a new tax system by the end of the year.

Animal spirits were restless. But which animals? Dumb oxes? Or wily foxes? Probably both.

Since Thursday there have been two additional very spirited up days with large gaps – this is very rare in the DJIA, particularly from such a high level after a ~240% rally since the lows made 8 years ago… it continues to feel like a blow-off (and it happens against the backdrop of a sharp slowdown in money supply growth) – click to enlarge.

But what caught our attention were the central bankers strutting across the yard and crowing with such numbskull cackles that even barnyard animals would be embarrassed by them. There was a time when central banking was an honest profession.

Central bankers provided financing for the government. They backed the banking system, too, by holding savings as reserves, which they lent to solvent member banks in emergencies. They were tight-lipped, tight-laced, and tightwads. Their role was to say “no” more often than “yes.”

When the king wanted money to fight in a war… or build a bridge… the banker would give the terse reply: “Sire, we don’t have any.” Real money was backed by gold. And credit had to be backed by real money, which meant it had to be saved. Savings were limited, as was money.

Cackling central planners – this reminds us of the “FOMC meeting laughtrack” of 2003-2007 – the more Fed members laughed at their meetings, the closer the economy and financial system came to the near fatal implosion of 2007-2009. Do today’s monetary bureaucrats have more of a clue than their predecessors just before the GFC? The answer is an emphatic no – they have simply doubled down and blown an even bigger credit and asset bubble.

…click on the above link to read the rest of the article…

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