The US government will sell T-bills this week in exactly the amount that it withdrew to pay interest on the Federal debt on November 15. Coincidence? I think not. But while it makes a point, the real issue is in the ability of an extended financial system to withstand the drumbeat of Treasury supply. Non-subscribers, click here for access.
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That system is at an all-time record in size and in relation to stock prices, moving relentlessly in the same upward direction as the Treasury issues more and more debt. The fragility seems to be able to grow endlessly. The game can go on until it can’t. Our job here is to be on the lookout for any signs that it is reaching that point. It’s getting closer but we haven’t yet reached that inflection point. This report shows you what to look for in the charts of the crucial banking and liquidity indicators. Non-subscribers, click here for access.
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