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Created on: 1/19/2023 1:06:57 PM Last Update: 1/19/2023 5:08:04 PM Posted by: RTT
1 POST
Is FED balance sheet expansion on the table in 2023?
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 Will the FED cash bazooka be used to balance the US books in 2023?
Note: Members can keep up with the news on these subjects via our RTT Plus commentary service.
Chart 1 - US Deficit 2023 Forecast +$2 Trillion
The U.S. ran about a US$1.4 trillion deficit in 2022, this will swell to US$2.5 trillion in 2023 (dotted black line, left axis).
Here is some big numbers why:
- Interest on the debt is going up with higher rates adding about US$200 billion.
- In 2022 about US$600 billion in capital gains tax got paid and that won't happen in 2023.
- There was an 8.7% increase in social security etc. that adds about US$120 billion.
- Then you have student loan forgiveness and Ukraine aid so we can easily go to a US$2.5 trillion deficit.
- If a recession sets in, tax receipts will go down too. This would likely push the deficit near or over $3 trillion
More..
The orange line is the year over year value change purchase of US Treasuries (UST) by foreign and domestic institutions. The difference between the orange and black line are the unsold UST. These unsold USTs are purchased mostly buy the US Federal reserve (the blue line, now over $8 trillion) and placed on their balance sheet. Notice how before the 2008 GFC the USA had no trouble selling its debt (or USTs). A visible loss in confidence.
POINT: A 2023 US deficit over +$2 trillion will force the FED to once more buy US debt (USTs) or QE. More monetary debasement for the hard money markets (gold, silver, bitcoin) to absorb.
Click for popup. Clear your browser cache if image is not showing.
Chart 2 - Foreigners buying US Treasuries
A strong US dollar deters foreign investors from buying USTs. Manipulating the US dollar down makes the US debt (USTs) more attractive, a weaker US dollar also allows are larger quantity of USTs to be sold, resulting in less unsold USTs for the Federal Reserve to buy. A larger 2023 US deficit will place huge pressure on the US dollar.
Click for popup. Clear your browser cache if image is not showing.
Chart 3 - Debasement of money is a reduction of purchasing power.
Investors can protect their purchasing power by investing in hard money. Bitcoin (BTC) is a most volatile hard money asset, and will do well if the US Federal Reserve if forced to once again buy USTs (or QE) in 2023 (and 2024/25).
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NOTE: Posts here are the lite version, more depth on each subject can be found via our RTT Plus membership.
Changes in the world is the source of all market moves, to catch and ride the change we believe a combination
of Gann Angles,
Cycles,
Wyckoff and
Ney logic
is the best way to ride the change, after all these methods have been used successfully for 70+ years.
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Investing Quote...
.."Thus, I affirm, every class of phenomena, whether in nature or in the stock market, must be subject to the universal law of causation and harmony. Every effect must have an adequate cause."..
William D Gann
.."No amount of evidence will ever persuade an idiot"..
Mark Twain
..“Investing should be like watching paint dry or watching grass grow. If you want excitement…go to Las Vegas.”...
Paul Samuelson
.....“I measure what's going on, and I adapt to it. I try to get my ego out of the way. The market is smarter than I am so I bend.”..
Martin Zweig
.."A lie told often enough becomes the truth"..
Vladimir Lenin
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