Today some key insights and financial news, little noticed and mostly overlooked stories that affect our economy, paper money, and gold; bite-size news that we think our friends and clients should know.
China Cuts US Debt Holdings
“China reduced its holdings of U.S. debt in March by about $20.5 billion, bringing its overall ownership down to $1.12 trillion.
“The holdings are at their lowest level in two years and come amid escalating trade tensions.
“There’s worry that China might use its status as the world’s No. 1 U.S. debtholder as leverage in trade negotiations.”
- CNBC, 5/16/19
Social Security just ran a $9 trillion deficit, and nobody noticed!
“Social Security’s annual Trustees Report came out recently, and it showed Social Security ran a gigantic $9 trillion deficit between last year and this year. The system’s long-term unfunded liability is now $43 trillion, up from $34 trillion last year.
“Funny, nobody noticed.”
- Boston University Professor Laurence Kotlikoff, The Hill, 5/14/19
Fed Issues More Warnings on Danger of High-Risk Company Debt
“The Federal Reserve escalated its warnings about the perils of risky borrowing by businesses Monday, saying firms with the worst credit profiles are the ones taking on more and more debt….
“The U.S. central bank’s latest financial stability report said leveraged-lending issuance grew 20 percent last year, and that protections included in loan documents to shield lenders from defaults are eroding.”
- Bloomberg, 5/6/19
Dutch Central Bank Admits ‘The Rich Get Richer When We Print Money“
“Loose monetary conditions strongly increase the top one percent’s income and vice versa. In fact, following an expansionary monetary policy shock, the share of national income held by the richest 1 percent increases by approximately 1 to 6 percentage points.”
“… the increase in top 1 percent’s share is arguably the result of higher asset prices. The baseline results hold under a battery of robustness checks…. Furthermore, the regime-switching version of our model indicates that our conclusions are robust, regardless of the state of the economy.”
- ZeroHedge, 5/5/19
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