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Introduction

The interplay between global asset prices and liquidity is a critical area of focus for investors and policymakers alike. Understanding the dynamics that drive these financial variables provides insight into the broader economic climate. The above video by Luke Gromen examines whether global asset prices can decline amidst increasing global liquidity, the impact of oil sales on currency valuations, and the implications of shifts in monetary and fiscal policy.

Global Liquidity and Asset Prices

One of the fundamental questions raised regards the possibility of global asset prices decreasing while global liquidity is on the rise. Historical trends suggest that as liquidity increases, asset prices tend to rise due to the availability of more capital to invest. This increased demand for assets typically inflates prices. However, the sensitivity of different assets to liquidity changes can vary. For instance, Bitcoin has been cited as a particularly sensitive indicator of liquidity changes, often reacting positively to increases in liquidity.

Currency Dynamics and Oil Transactions

The currency market dynamics are influenced by numerous factors, including how commodities like oil are transacted. When Saudi Arabia sells oil to China in renminbi (RMB) instead of US dollars, it ostensibly reduces the demand for dollars from the Saudis. However, given the entrenched nature of the dollar in global finance, particularly through the offshore dollar-denominated debt markets, even a marginal shift can lead to a strengthening of the dollar. This is because a reduction in the supply of dollars to meet the persistent demand can drive up the value of the dollar. Conversely, a surplus of RMB, with comparatively less demand, could lead to a weaker RMB.

[

The Red Sea Conundrum: Navigational Challenges and Coalition Efforts

Recent developments in the Red Sea region have caused significant changes in maritime routes, with over 100 vessels opting to bypass the Red Sea.

TFTC – Truth for the CommonerStaff

](https://tftc.io/red-sea-traffic/)

Implications for Gold and Treasury Demand

The shift away from pricing oil exclusively in dollars has ramifications for gold and US Treasuries. As central banks diversify their reserves away from US Treasuries and towards gold, the demand for the latter increases. This trend has been observed over the past decade. In the long term, the move away from dollar-centric oil transactions could diminish the demand for US Treasuries, which, in turn, could be negative for the dollar.

Inflation, Deflation, and Interest Rates

The prospect of a return to a deflationary environment versus the potential for long rates to surpass 5% is a critical issue. Given the current fiscal landscape in the United States, it is argued that neither deflation nor excessively high long-term interest rates are sustainable. The fiscal situation may necessitate a period of secular inflation with persistent negative real interest rates. This would have a significant impact on long-term bond portfolios, which could face losses either nominally or in real terms adjusted for inflation.

Legal Constraints and Treasury Management

Questions regarding legal limitations on the proportion of short-term to long-term debt that the US Treasury can issue have been raised. While there may be legal frameworks in place, historical precedence suggests that such regulations can be amended if deemed necessary by policymakers, implying that these constraints may be more procedural than absolute.

Peak Cheap Oil Debate

Finally, the discussion on whether the era of "peak cheap oil" has ended and if we have entered a time of abundance requires careful consideration. While some argue that technological advancements and new supply sources are mitigating scarcity concerns, others maintain that the economics of oil extraction still point to a world where cheap, easily accessible oil is becoming scarcer. This has implications for energy pricing in various currencies and the relative cost of oil in dollar terms versus gold.

Conclusion

In summary, the relationship between global liquidity and asset prices is complex and multifaceted. Currency valuations, particularly the US dollar's status in global markets, play a significant role in these dynamics. The interplay between fiscal and monetary policy, commodity pricing, and legal frameworks all contribute to the evolving economic landscape. Understanding these interconnected elements is essential for navigating the global financial system.

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As the festive season's glow dims, Americans confront a sobering fiscal reality: the United States' national debt has surged past an unprecedented $34 trillion, according to a recent announcement from the Department of Treasury. This eye-watering figure was confirmed on December 29, merely 105 days after the national debt crossed the $33 trillion mark in September, marking a breakneck pace of debt accumulation that outstrips projections.

As predicted, federal debt breached $34 trillion on 12/29/23 as Treasury borrows over $90 billion in a single day - even a talented technocrat like Yellen can't hold back this tide: pic.twitter.com/HqFckOUlJ8

— E.J. Antoni, Ph.D. (@RealEJAntoni) January 2, 2024

The gravity of the situation is underscored by the downgrading of America's credit rating by Fitch last August and by Moody's in November, reflecting growing concerns about the nation's fiscal health. Despite these warnings, political factions in Congress, often referred to as the "uniparty," continue to approve spending that exponentially inflates the debt, ostensibly for programs related to diversity, climate change, and military engagements abroad—commitments made in the name of future generations.

The implications of this ballooning debt are dire. During the 2008 financial crisis, the national debt was a third of its current size, with the government incurring over $1 billion daily in interest. Today, that figure has tripled to $3 billion per day. The Peterson Foundation estimates an expenditure of nearly $11 trillion on interest alone in the next decade, excluding potential new debt from additional spending initiatives.

The situation is compounded by unfunded liabilities, particularly in entitlement programs such as Social Security, Medicare, and government pensions, which add at least another $100 trillion to the fiscal burden. This translates to over $1 million per American household, a staggering fivefold increase on the median U.S. household net worth.

Historically, nations have extricated themselves from such debt spirals through massive austerity, as seen in Argentina; hard default, which would involve reneging on debts to creditors like Wall Street; or resorting to inflation. The latter, given its political palatability and Wall Street's influence, appears to be the likeliest path the U.S. might take.

[

Bitcoin’s 15 Years In Perspective | Marty Bent

Today is a better day than most to put the current problems people are facing into perspective. To do this, let’s take a look at what the monetary and debt landscape looking like around the time bitcoin was launched.

TFTC – Truth for the CommonerMarty Bent

](https://tftc.io/bitcoin-15-years/)

As the nation edges closer to a potential debt spiral and point of no return, the critical question remains: how will America navigate this fiscal quagmire?

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Pure projection. The US government is the biggest perpetrator of financial crimes on the planet. https://t.co/CvNxIKLEmW

— Marty Bent (@MartyBent) November 22, 2023

As I am sure most of you are aware of by now, earlier today the Treasury Department and the Department of Justice announced that they have reached a plea agreement with Binance and it's CEO CZ for breaking anti-money laundering laws brought forth by the CFTC. Purportedly helping Hamas finance their operations via their exchange. The plea deal entails that CZ pays a $50M dollar fine personally to the CFTC and Binance pays more than $4.3B in fines. The largest fine ever levied by the Justice Department on a single corporate entity.

When you take a step back and survey the field, this move makes sense and is a win-win for all parties involved. The market is eagerly awaiting the approval of the spot bitcoin ETFs that have filed and are sitting on the desk of the SEC. The SEC's comments to date have been clear that their biggest worry at the moment is "off-shore" exchanges manipulating the price of bitcoin. Binance is the largest exchange in the world and has successfully operated outside of the purview of the United States government until today. With this plea agreement, the off-shore price manipulation problem is solved, CZ is able to get away with a relative slap on the wrist, and the Treasury and the Department of Justice are able to LARP about how they're protecting consumers at the end of the day.

The result of all of this will be the spot bitcoin ETFs getting the green light, regulatory enforcement precedent that will be used to pressure companies in the space to make the experiences of their users much worse, and CZ getting a clean exit back stage where he will likely operate Binance from the shadows and reap the massive benefits that will come with the next bull market without spending the rest of his life locked in a cage.

This is a classic misdirection move that comes with the corrupt pay-to-play mechanisms that have become all too common in our fiat dominated world. The Treasury and the Department of Justice don't actually care about protecting consumers. What they care about is the perception that they are actually doing something beneficial by "taking care of Binance". Nothing makes this clearer than the fact that they have focused in on "terrorist financing" as the activity that they are preventing. If the Treasury Department and the Department of Justice truly cared about the end consumer they would have lambasted Binance for leading their users to financial slaughter by incentivizing them to burn their hard earned money on altcoin speculation. The focus on "terrorist financing" allows them to pretend that bitcoin and other cryptocurrencies are the medium of exchange of choice for terrorists, which will enable them to single out and scrutinize the industry even more moving forward.

This is a pure projection play because if the Treasury or the DoJ actually cared about preventing money laundering and terrorist financing they would investigate themselves. It is very convenient that they are able to pick on bitcoin and other cryptocurrencies when we live in a world in which Jeffrey Epstein's client list is withheld from the public, there is no accountability for the $100B+ in taxpayer money that has been siphoned off to Ukraine, politicians are currently running 2024 election campaigns with dollars overtly stolen from FTX users, and the Pentagon just failed yet another audit and can't account for $3.8 TRILLION of military equipment. $3.8 TRILLION is 5.34 times larger than the current bitcoin market cap. And that is only one part of the government. We haven't even mentioned the black box that is the "Inflation Reduction Act", or the COVID PPP loans, or the black box budgets of the CIA and other intelligence agencies. If these people actually cared about money laundering or protecting US consumers they would be aggressively investigating themselves.

An introspective investigation is obviously off the table. The only move these scummy decrepit dying institutions have left is projecting their own guilt on others and manifesting scapegoats that can lead people away from the scent of their rotting corrupt corpses. And that is exactly what we saw today with the Binance plea deal. The Treasury and DoJ get to make it seem like they are doing good work, CZ and Binance get to live another day, and the cronies at BlackRock get the cover they need to open up the floodgates to their ETFs.

Stay frosty out there, freaks.

Final thought...

It's crazy how lazy they're getting.

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Japan bonds (JGBs, corporates, etc) have come under tremendous pressure since the BOJ's mild tweak to yield curve control.

Group just clocked the worst 2-day slump in at least 23 years pic.twitter.com/lhkxN2BHJj

— David Ingles (@DavidInglesTV) July 31, 2023

As everyone and their mother seems to be mentally prepping for a soft landing, it seems that things are starting to go terribly awry in the world of sovereign debt. Late last week the Bank of Japan made a surprise policy change and didn't put a confident foot forward when changing the range within which they plan to employ yield curve control. Since the policy change JGBs have experienced their worst two-day slump in at least 23 years and the yen has weakened significantly against the dollar. Reaching 142.5 earlier today. In layman's terms, markets are signsling that the little confidence they had left in the Bank of Japan's ability to maintain the monetary system was just destroyed with this spastic move. This move follows their abrupt policy change around Christmas of last year, which spooked markets at the time.

In a world that runs on a hyper-connected and intertwined financial system where everything everywhere needs to be in place for everything to function properly, the Bank of Japan, the JGB market, and the yen are the canary in the coal mine that signal turbulance on the horizon. And if we pan over to the US, things aren't looking so hot on the sovereign debt side of things either.

Earlier today, Fitch downgraded the US governments sovereign debt rating to AA+ from AAA. Joining S&P which downgraded to AA+ in 2011. Leaving the US with no AAA rating to point at while declaring that it has iron clad credit. While we've learned to be wary of credit ratings coming from these ratings agencies due to their abject negligence and pandering during the lead up to the 2008 finacial crisis, it is safe to say that the US debt situation is becoming impossible to ignore. These agencies tend to be very generous with their ratings. If they're downgrading the US government, you know things have to be pretty bad. Likely much worse than a AA+ status. Just look at how much debt Treasury is looking to take out to finish out their pillaging of the American people in 2023.

The Treasury's new guidance today is that they want borrow

::checks notes::

$1.85 trillion during the second half of this year. pic.twitter.com/zIYTB38oDe

— Lyn Alden (@LynAldenContact) July 31, 2023

If my back-of-the-napkin math is in the right ballpark, we're about to increase the national debt by ~10% this year. Utter insanity. And don't look now, but oil prices have been creeping higher and look like they are about to break out. Especially when you consider the inventory draws we've seen recently.

WTI first consecutive closes over the 40-week MA since July 2022. pic.twitter.com/oGLXTy2lQL

— Larry Tentarelli, Blue Chip Daily (@LMT978) July 31, 2023

Your Uncle Marty thinks the inflation problem is still pervasive, but it will begin to become even more obvious as it will be forced to be recognized by CPI prints because of energy costs rising. Let's hope this superconducter stuff is legit.

I don't think there's anything more attractive on the planet than bitcoin hovering between $28,500 and $31,000. The tremors are beginning to rumble louder and louder, the central banks have lost control of their monetary systems and the governments have absolutely no ability to stop themselves from binging on debt, which makes for a pretty precarious situation. It's not shocking that they want you focused on aliens, climate change, and the latest round of Trump indictments. They have completely lost control of the money behind the scenes.

Final thought...

Headed to the Big Apple tomorrow. Come check out the mining mert up at PubKey tomorrow night if you're in town.

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