Mark Stoneweapon

The End of Discipline If in war, truth is the first casualty, discipline is the second. That is only takeaway I have after glancing at the Treasury's latest borrowing estimates for TBAC. The CBO's outlook always "projects" the total deficit to contract next year only to - at the first sign of a growth scare - update with increased borrowing estimates, which I find amusing. Months ago I said in War and the Term Premium that the ultimate risk faced by the financial establishment is a no landing scenario and a stronger dollar. If you ask what's the one thing dollar foreign exchange cares about, the answer will be overnight interest rate differentials, and this is for a number of reasons — global cash lenders seek higher yields in overnight Treasury reverse repo and international real money investors prefer to hold higher yielding Treasury bills while the curve is inverted. A lot of people who I speak with will describe the world economy as heavily financialized, and that is of course true. But a better way to understand today's regime is one that it is heavily dollarized. This is just the reality — when a funding crisis emerges, somewhere along the path to solution is a supply of dollars. In the late 1990s, this was IMF dollar loans; in 2019 it was standing repo; in 2008 it was dollar swap lines. And so, aside from Brent Johnson's 'milkshake', there exist alternate mechanics that explain dollar FX strength, and one is the supply of Treasuries. This is why it's important to think about the world as dollarized because, unlike in the U.K. or elsewhere in Europe where the threat of deficits see a sovereign bond and a currency selloff, foreign banks don't post their collateral in pounds or in euros. They need eurodollars. But I see a vicious cycle here. Because if the U.S. has infinite fiscal space, and Treasury supply loosens financial conditions, then reducing said deficit is but a matter of tolerating an economic contraction. With no tolerance for economic contraction on the margin, the deficits will persist. Inflation will rise. Persistent deficits will slowly widen the term premium and incur negative carry... unless rates remain higher-for-longer. Higher-for-longer means the demand for eurodollars from overseas can only strengthen. A feedback loop emerges where the endgame is not U.S. financial conditions becoming too tight as the dollar strengthens (the pain we all expect and recall from 2022), but too loose as the dollar strengthens. This is a dynamic that has existed for about a year now in the post-fiscal discipline world. Technically, since the Treasury went on a bill-issuing spree to finance the TGA rebuild using reverse repos because it set the precedent, one which the Biden Administration embarked on soon after, that a policy of persistent fiscal expansion was acceptable. The Biden Treasury has crossed a fiscal Rubicon because there can no longer be tolerance for economic contraction. There is no choice. If Treasury supply to the private sector is net stimulative and loosens financial conditions, then it follows that removing the supply of Treasuries from the private sector with LSAPs (Large Scale Asset Purchases by the Fed) is net contractionary and tightens financial conditions. If this is a counterintuitive way of thinking about QE, that's because the QE we know of was inspired by a Fed put under risk assets. But, as I've said before, the coming QE won't depress interest rates and cheapen financial leverage to prop up assets — it will be, under the guise of YCC, to pump the brakes on a runaway dollar amid raging deficits. If we are right about the structural path of deficits keeping inflation and interest rates higher-for-longer, and that this would resultingly strengthen the dollar against other DM currencies, we will first see pain abroad before asset bubbles at home. There are only two tools that can manage this problem. Which is why the Federal Reserve's next surprise will not be rate cuts with QT, but rate hikes with QE. Excerpted from The End of Discipline Zoltan Pozsar May 8, 2024

The feedback loop of deficits and dollar strength

My participation as a trouble maker on social media platforms behind the evolution of deep state technocratic social engineering is to light little fires here and there with a trail of dry tinder, driving a wedge into those servitude's, disturbing the echo, balancing scales, raising curiosity, raising doubt, making not knowing uncomfortable so the intellectuals will dig deeper and broaden the periphery of context as they research and write, and then to cross pollinate this aggregation of new ideas on these giant platforms to stay ahead of the algorithms as the fascist’s program them to contain people in their silos. The billionaires that own these platforms, integrated into the statecraft of the intelligence apparatus, are developing and experimenting how to control the content of vast information which includes various revenue sharing initiatives though the control of advertising and selling health products for example. It was quite interesting when these technocrats got so overwhelmed from all the resistance on the internet during Covid, they panicked from government pressure and deleted hundreds of thousands of accounts or officially labeled counter narratives to be false information, “No that’s false, vaccines are safe!” Compartmentalizing dissenters into their silos and likeminded groups into their echo chambers is engineering consent while they employ agents online to regulate narratives integrated with AI, which is really supposed to be a covert operation, not the obvious authoritarianism we saw during Covid. Since then they have upgraded and tweaked their software to suppress impact, but info operations remain in the research and development stage. There are too many aspects to be certain of controlling the outcome in this new frontier. The race is on....the digital dictatorship of the technocracy Vs the anarchy of free thought, the revolution of cross pollinating authenticity that cuts through the propaganda machine and the building tide of its empirical result. "The perfect dictatorship would have the appearance of a democracy, but would basically be a prison without walls in which the prisoners would not even dream of escaping. It would essentially be a system of slavery where, through consumption and entertainment, the slaves would love their servitudes." —Aldous Huxley

The Pentagon has a timeline wasting resources on Israel and Ukraine before expanding military bases in Asia, where the bulk of growth is occurring. They will use Trump to make the transition. Annual defense spending will go from $2T to $3T no matter what the expense to its population.

“Looks like Assange will be stepping back into the fray eventually. His wife, Stella, spoke to reporters this morning when Julian arrived in Australia, and said that Julian will need some time to recover before talking to the public. Yet he remains “principled and unafraid”, implying that he doesn’t plan on shying away from the mission. Stella also said they will be fighting for a pardon at some point in the near future, but right now, the focus is just getting Julian acclimated to freedom, and spending time with his family.” —Bioclandestine This statement is crafted is by your Intelligence Community, the same plant that was sucking Elons cock for the first year of his channel. If Assange so much as steps an inch out of line from what he is permitted to say or do, he will be locked up again. The US/UK IC is above the judicial branch. It was Trump’s admin that removed him from Ecuador into the UK, and he didn’t pardon Assange. The MIC is playing us to think there is hope in the fraudulent machine they dominate in the west.