Dark Matter & Current Account Imbalances
Menzie Chinn at Econbrowser comments on putting a fork in the Dark Matter theory and has an excellent find on how the large current account imbalances might unwind.
We observe: The Federal Budget Deficit widened to $49B from 47.3B a year ago and Interest payments on the national debt increased by 18.6% to $22.3B in October.
We query:
Do you think the Fed will raise again?? Do you think our foreign trade partners will allow our interest rates to increase further?? Is there sidelined dark matter coming to the rescue??
We opine:
To the first 2, no way, no how. To the 3rd, there is no sidelined dark matter, however...
Since the "gag" on M3 money supply went into effect, the Treasury is giving the Fed a run for its money, (no pun intended) in having an "unseen" hand in the money supply and velocity through its near secret repo program...
and despite today's disappointing foreigns inflows TIC data, our corporate overseas profits in Asia and elsewhere, recycled through foreign holding companies and individuals, will continue to be repatriated to buy US bonds and hold rates down.
Anything else will result in a global economic disaster of epic proportions.
We observe: The Federal Budget Deficit widened to $49B from 47.3B a year ago and Interest payments on the national debt increased by 18.6% to $22.3B in October.
We query:
Do you think the Fed will raise again?? Do you think our foreign trade partners will allow our interest rates to increase further?? Is there sidelined dark matter coming to the rescue??
We opine:
To the first 2, no way, no how. To the 3rd, there is no sidelined dark matter, however...
Since the "gag" on M3 money supply went into effect, the Treasury is giving the Fed a run for its money, (no pun intended) in having an "unseen" hand in the money supply and velocity through its near secret repo program...
and despite today's disappointing foreigns inflows TIC data, our corporate overseas profits in Asia and elsewhere, recycled through foreign holding companies and individuals, will continue to be repatriated to buy US bonds and hold rates down.
Anything else will result in a global economic disaster of epic proportions.
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