We are on the Verge of Economic Catastrophe

[unapologetic]

Your source is Dr Oz, on Faux?
"What a maroon".

 

[Swammerdami]

Nothing new to report but This article from Reuters provides an eye-opening graph (shown below) which highlights an effect of the Triffin Dilemma.

Brief history review: By the 1930's the U.S. Dollar was so respected that people all around the world were selling their gold to the U.S. Treasury for what then seemed like the outrageously high price of $35 per ounce. Just a decade or two later, after the devastation of WWII, it seemed that the U.S.A. owned much of the world! Let's continue the story by quoting  Net international investment position

In 1980, the United States net international-creditor position was bigger than the total net creditor-positions of all the other countries in the world. Only six years later, in 1986, when the nation’s international investment position was at a year-end negative $107.4 billion, the U.S. became a net-debtor nation for the first time since 1914 ... By 1990, the U.S. was the world's largest debtor.

In just ten years the U.S. went from "owning much of the world" to being "the world's largest debtor"!!

The Wiki page has a table that can be sorted by NIIP as a % of GDP. At the top are well-known prosperous countries like Norway, Singapore, Switzerland, Germany, Japan. At the bottom are economic "basket cases" like Sudan, Greece, Nicaragua, and ... the USA. The U.S. NIIP is Negative $26 Trillion. As shown in the graph this is 85% of U.S. GDP. This is the NET investment position. It doesn't just mean that foreigners own $26 Trillion of U.S. real estate, stocks and bonds. It means they own $26T Plus X, where X is foreign-based assets owned by U.S. entities.

Is this a Bubble? Should we be worried that there will be a "fire sale" on U.S. assets if foreigners lose faith in U.S. governance?
I dunno. I report; you decide.

 

[bilby]

https://www.smbc-comics.com/comic/investment-2

 

[Loren Pechtel]

What's all this fuss I keep hearing about spending a billion dollars on healthcare for ill eagls (sic)? Can't some private avian 501c3 charity fund this instead of MY tax dollars? [/Emily Litella]

And I would prefer to live in a system that spends this money.

The alternative is delaying emergency treatment while identity and citizenship are determined and that will kill people. Citizens, not just illegals.

 

[Loren Pechtel]

Nothing new to report but This article from Reuters provides an eye-opening graph (shown below) which highlights an effect of the Triffin Dilemma.

Brief history review: By the 1930's the U.S. Dollar was so respected that people all around the world were selling their gold to the U.S. Treasury for what then seemed like the outrageously high price of $35 per ounce. Just a decade or two later, after the devastation of WWII, it seemed that the U.S.A. owned much of the world! Let's continue the story by quoting  Net international investment position

In 1980, the United States net international-creditor position was bigger than the total net creditor-positions of all the other countries in the world. Only six years later, in 1986, when the nation’s international investment position was at a year-end negative $107.4 billion, the U.S. became a net-debtor nation for the first time since 1914 ... By 1990, the U.S. was the world's largest debtor.

In just ten years the U.S. went from "owning much of the world" to being "the world's largest debtor"!!

The Wiki page has a table that can be sorted by NIIP as a % of GDP. At the top are well-known prosperous countries like Norway, Singapore, Switzerland, Germany, Japan. At the bottom are economic "basket cases" like Sudan, Greece, Nicaragua, and ... the USA. The U.S. NIIP is Negative $26 Trillion. As shown in the graph this is 85% of U.S. GDP. This is the NET investment position. It doesn't just mean that foreigners own $26 Trillion of U.S. real estate, stocks and bonds. It means they own $26T Plus X, where X is foreign-based assets owned by U.S. entities.

Is this a Bubble? Should we be worried that there will be a "fire sale" on U.S. assets if foreigners lose faith in U.S. governance?
I dunno. I report; you decide.

The problem here is that what you're actually showing is that people see American investments as a good thing. People think that American companies will do well. Especially from places like China where the citizens see domestic investment as unsafe. (Correctly--it's really far more about how the government will act vs the fundamentals of the company. Value is in the political winds.)

I do expect a big problem from this as The Felon plays bull in a china shop with our system, making US investment nowhere near as good at it used to be and that graph is going to do a hard snap turn.

 

[Jimmy Higgins]

According to the ADP, in the first two months of Trump's administration, the economy added about 115,000 jobs a month. Since the tariffs, over the last seven months it has added 180,000 jobs... total or about 26,000 a month.

 

[Swammerdami]

Background: In 1997 the Great Asian Financial Crisis reminded bankers worldwide of the problems of excess credit. The U.S.-dominated International Monetary Fund stepped forth to ensure that the big commercial banks would NOT bear the brunt of this disaster. Just a year later, the LTCM hedge fund went belly-up, its Nobel Prize-winning leader having never read the famous book Skies are not always blue; Distributions are not always Gaussian. Now the Federal Reserve took the lead to contain another disaster. But these were just minor crises. The End of History was upon us. Leverage upon leverage became the norm. Bernie Madoff performed his frauds while informed regulators looked away. What little regulation was left was reduced further. Wall Street traders whined when they were driving Ferraris while their colleagues all had Maseratis. Shenanigan upon shenanigan: But who cares? "We're too big too fail." And sure enough, when the house of cards came tumbling down the USG bought the most toxic assets, sacrificed home-owners and taxpayers, all to ensure that Wall St. could keep paying big bonuses.

In an effort to avoid repeats of such fiascos, the Democrats passed Dodd-Frank legislation. Much of this was eviscerated after the Tragedy in November 2016. In addition to the eviscerated regulation, a "shadow banking system" sprung up, with hedge funds, venture capitalists and "private equity" taking over much of the banks' functions but without regulation. Much of the lending done by regulated banks is made to the UNregulated shadow banks.

Crypto-currencies have some similarities to shadow banking. This especially applies to shadow-coins where financiers, including the Trump family, get access to huge sums to play with. Even when crypto and shadow transactions are non-criminal, insiders can siphon profits away with impunity using advance knowledge of which regulators have no evidence.

The head of the World Bank made a statement recently. Is he even aware of the dangers of shadow banking? All he wanted to talk about was "three bubbles": AI, Crypto, Debt. Trump is ballooning U.S. debt, ballooning Crypto, and is meddling with AI. Make America Great Again!

I read articles and watch YouTubes hoping to get a clue about the financial future. One pundit is worried about liquidity crises. I think FedRes has demonstrated that it will flood its Member Banks with all the liquidity they need. They not only force new money down banks' throats but pay them inflated interest:

The Federal Reserve had 11 consecutive quarterly operating losses as of August 2025, starting in the fourth quarter of 2022.

Except for a minor aberration in 1919, these are the first losses in FedRes history.

I've given up on trying to guess the financial future. I do think I finally figured out one thing: Why long-term interest rates remain reasonable despite probable devaluation. It's because the huge money stock has to go somewhere! Gold, Bitcoin, Stocks, and some of it goes into bonds. If bonds are inflated in value, it's because Gold, Cryptos and Stocks are all inflated too.

The last two webpages I clicked on really pissed me off.

(1) A Professor Emeritus^* babbled boringly about the pending devaluations, but I used the Fast Forward facility to find his "punch-line." He mentioned that the Legendary Sage of Omaha is mostly holding cash, and then advised listeners to do SOMETHING (anything?) with their cash. He IGNORED that, after praising Buffett, he advised listeners to do the opposite of Buffett. (It's a paradox that when there's a risk of inflation, CASH may be the best option! Stay liquid so you can re-direct the funds quickly when fear strikes.)

* - I used to think "Emeritus" was a distinction of honor. But maybe it sometimes means "This guy has no personal life so we let him hang out in the faculty lounge."

(2) Nothing new, but I hadn't checked the markets for a few days and clicked when I saw a headline that implied the Great Crash had begun! The NASDAQ-100 plummeted a breath-taking TWO percent on Monday, collapsing all the way down to the (record-setting) levels not seen for almost two weeks. (It did bounce back and is now only 1½% away from its all-time high.) Gold took a nose-dive as well. It hasn't been this cheap since ... October.
Scary bold-face. Hate to imagination the consternation if QQQ falls THREE percent.

 

[Swammerdami]

According to the ADP, in the first two months of Trump's administration, the economy added about 115,000 jobs a month. Since the tariffs, over the last seven months it has added 180,000 jobs... total or about 26,000 a month.

Alí Bustamante, an economics professor at the University of New Orleans, said
“Just two years ago, we basically had an economy where we had to add about 250,000 jobs a month to achieve break-even employment.”

Reduced immigration is the main reason for the sudden drop in employment figures, IIUC.