Brace For The $1 Trillion Aftershock From Debt Deal

brace for the one trillion dollar Aftershock from the debt deal now we've been talking about the debt ceiling debate for weeks and it looks like a deal was finally made well not so much a deal as a complete caving in from the Republican side but that's not the topic at hand but rather the Aftershock that comes from reaching the agreement and lifting the debt ceiling and I'm not talking about the long-term effects of an additional four trillion dollars of debt I'm talking about what Aftershock and repocalypse that could happen over the next 30 days as liquidity has sucked from the system in only 30 days so in this video we're going to break down what the new debt ceiling means for the U.S treasury and their bank accounts the TGA we're going to look at how much debt they will issue when refilling this TGA account where the money and liquidity gets sucked out from we're going to look at what happened in the previous times this happened and it's not good and then we'll look look at what effect this will have on the markets and economy so we don't get blindsided like the majority of people will but instead position ourselves to profit so let's go all right welcome back if you're new to the channel my name is Mark Moss I make these videos to change the way you think about money because yes almost everything the learner's wrong almost everything you hear is wrong and you have to learn how to kind of dive in and get through the opinions and the narrative to understand the facts on what's really going on and so I make these videos to help you navigate all of that and let's just jump in and take a look at what's really going on with the debt ceiling now I'm not going to dig into what the debt ceiling debate was about and what the concessions were there's plenty of news articles you can go read to do that what I want to show you is what's going to happen now because of that and not in some long far away you know what happens after four trillion dollars of spending in decades for our grandkids but what happens in the next couple of months so we're going to take a look at that now first of all just in regards to the debt ceiling I will say what ceiling so literally the debt ceiling agreement literally removes the ceiling it was about you know obviously reaching this agreement to raise the ceiling which is current currently at 31.4 trillion dollars of debt that number is so big you can't even comprehend it and basically they made a two-year deal to just suspend the ceiling let's just get rid of it and uh as a matter of fact let's push it out past the next presidential election cycle all the way till January of 2025 so Biden doesn't even have to deal with this again in his presidency or uh his next run if he's going to do that all right so we have a two-year deal to suspend that here's the one thing though because of the you know pandemic era where we increase the monetary Supply by about 40 percent and we increased the budget from about 4 trillion to 6 trillion so we increased the budget from four to six and that is now normalized that's just now baked in so it wasn't about cutting us back to where we were pre-pandemic it's about keeping that growing and again this isn't temporary this is their plan as I've been saying all over social media by the way if you're not following me at one Mark moss on Twitter we'll link to that stuff down below as well I put a lot of daily commentary out there but I said you know there's always been two certainties in life death and taxes and now there's a third and that's yes money Printing and we can take a look at you know this increase in the debt ceiling this is only going back to 2005. it's not that far but you can just see how fast this is of course right here 2020 it really took off uh really fast and you can see here by the way shout out to Joe consorti you should follow him on Twitter as well we'll link to him down as well he's helps me with the research for these videos it's a lot of data charts so shout out to him so I put this tweet out that he put out here that per the CBO Congressional budget office they're projecting that the debt to rise to a hundred and thirty two percent in 10 years not to go down but to actually go up and uh to 200 debt to GDP by 2053. so that means they're not planning on paying off now you'll see the debt did get high back here in the 40s and then they were able to bring it back down they were able to do that through something called Financial repression I've done videos on that if you want me to break that down again leave me a comment just say Financial repression we could do another video so they did bring the debt to GDP back down here through some games and tricks Financial repression I think that's the next game plan but here they're not even projecting to do that here they're projecting to continue sending it higher all right now let's go back to the topic at hand a tsunami of new t-bills so this is what's happening so the government well our entire monetary system is based off of debt so if they need money they have to take on debt in order to do that and so in order to do that the government or the treasury will have to issue treasury bills t-bills so that's debt and they'll receive the money back now we know that right now this treasury debt is is maturing between one month and one year that's that's what they like to issue short-term dated notes and this is basically like I said the go-to funding for the United States if they need money they don't have any Revenue I mean will they have Revenue in taxes but they also have to issue debt in order to do that and so now it looks like they're scheduled or expected to issue one trillion dollars in June let me say it again one trillion dollars in June that's how much you have to do and they're going to be paying about five and a quarter percent interest to do that because that's where the FED has raised the rates to now assuming that's uh everybody buys what's available now if there are no buyers they'll have to keep raising the rates until there are buyers so we can see how that goes and then half of that money being raised is just to pay the interest on the old debt that's what we call a Ponzi scheme the other half will go to put into its cash balance and this is the big piece this is the TGA the cash balance you can see actually I'm not going to pull up that chart right now we'll bring that chart back up a little bit later all right now the U.S government the treasury has to borrow more as a matter of fact about 500 billion as I said about half goes to pay the debt half goes to the US government's bank account so the US government has a bank account it's called the TGA and they're going to put that amount in one month or less in there now what's important to understand about this is where does this money come from and what does it um and where would that money have already gone or otherwise gone and so this is now not being spent into the markets so as the treasury the TGA account was draining they had about 1.8 trillion in that account and now it's down to like 20 billion so it's basically empty as they were spending that money it created massive liquidity in the economy in the markets which created things to be pretty good now they need to refill it which means it pulls the liquidity out so instead of providing liquidity it sucks it out this is a massive liquidity drain and that's the thing that we're going to break down right here okay now this is on Pace with a post covid market crash and a December 2021 market crash so we can see this right here so this is what I'm talking about this is the treasury's bank account the TGA account now we can see right here in 2020 when they filled it up now this was about like I said almost two trillion dollars right there since then they drained it all the way back down they filled it back up again right here and then they've been bleeding it down ever since now like I said this corresponds with I have a couple other charts I'm going to show you but if you remember the high in the NASDAQ the high in Bitcoin was remember November 2021 which is when this reached its bottom so as they spent this money up the markets went up as they started filling back up the NASDAQ coin they've been going down see how that works I'll show you a couple charts to kind of really illustrate that and basically what happens is the US is spending less because they're putting money back into their account the TJ is the US bank account or in this case the piggy bank and so the liquidity is not going into the economy so when this is falling when the TGA account is falling I just want you to understand this works that means liquidity is going into the economy so that's good people have money they spend it when they're filling when they're Rising the TG account then liquidity is leaving the economy so it's going into their bank account and then what happens is that starts to crowd out other markets so instead of money that could be going into other things going into other Investments Venture Capital private Equity stocks Etc instead of it going there it goes into the TG it kind of takes it away and what happens is that we see risk taking fall they'd rather give it to the treasury and make the five and a quarter percent then take risk from that so let's take a look at how this works so we have to ask ourselves a question when this is happening and the question is not who's going to buy all the treasuries the question is who's going to buy everything else so if the treasury issues a trillion dollars that people are going to buy well people are going to buy that but who's gonna buy everything else and that's where the problem is that's why the TGA refill is bad for risk assets so as a matter of fact we can look at this chart right here again Joe consorty helped me out with that we'll link to him down below you should definitely give him a follow but here what we can see is the TGA cash balance and risk assets and what we did is we inverted them so this uh this blue area right here is the TGA the treasury's bank account you can see it Rising here I already showed you a chart of that alone and that what we have on top of this is the S P 500 in blue these blue lines and the NASDAQ in the orange lines and we've inverted them so what you can see is as the TGA account was draining the NASDAQ and S P 500 went up as the TGA started refilling the NASDAQ and the s p went down remember in this chart we've inverted them but we inverted them so you can see how it's almost exactly the same so you don't have to be really good at this to understand if they start to drain this I'm sorry refill it again what do you think happens with the S P 500 or the NASDAQ I'll leave that for you to decide actually I'll come back and I'll answer that for you at the end of the video now this is another chart right here Bank Reserves and the S P 500 so as you can see here this um this uh red line or kind of pink line here is the S P 500 these are the stocks and so you can see the S P 500 has been going up and then what we have here is the Bank Reserves so as the Bank Reserves went up the markets went up but to refill the treasury they're gonna have to pull the money out of the bank reserves to go into the treasury so we're going to see this go back down and where do you think the pink line goes well if you guessed down you would be right okay now what we also have to understand is this means more bank failures so if we reduce the reserves that's bad for small Banks what caused the banks to collapse people were pulling money out and they didn't have the money to cover that if we pull more money out to go to the treasury the banks don't have the money to cover that same problem that we already had before and this means that the Lesser capitalized Banks are going to have a problem because they're more dependent on reserves also these small Banks a lot of them can't use these fed funding facilities have been set up a lot of you guys have seen that testimony uh where the senator from Oklahoma was asking Janet Yellen this specifically you know which banks what about the local small banks in my state and she says we'll just choose which ones so many of them can't use the FED facility that they have and so what we're seeing is the fed and the treasury working together are going to cause more small bank failures and this is a problem because without the small Banks we don't have small business funding if we don't have small business funding we don't have a small business if we don't have a small business the economy doesn't do too well you can see that this is a kind of a chart showing you the difference of the small Banks versus the large Bank Reserves and the large Bank Reserves have been going up while the small Banks reserves have been going down and we would expect that problem to only get worse now to refill the TGA the treasuries account the general account it's basically the same as what the feds doing with quantitative tightening they're both trying to tighten the monetary standards so when money's loose when money's sloshing around things do really well when you tighten it back up people tighten their belts as you might imagine and so what has been projected is to refill this TGA is equivalent to an additional 25 basis point height so we know the FED has been raising rates at the fastest rate in history a lot of people want to know will there be another hike or are they going to pause well it's looking like they're probably going to raise it one more time 25 but by filling the TJ that's like another 25 basis point on top of that the FED is not actively buying the U.S treasuries anymore so all of this is going to have to be absorbed by the market remember taking dollars that would otherwise be going into stocks or businesses and now it'll be going to the treasury now so the FED has been raising rates at the fastest rate in history trying to crush Demand right they're trying to bring asset prices down make you lose your job make you broke so you can't afford to buy as much stuff you don't buy as much stuff then they can bring inflation down that is their goal and now it looks like the treasury is getting on board that not necessarily because they're in lockstep but this is just the way it is now they're going the fed's tightening and the TGA is going to have to be refilled at the same time now how does that work at the same time how can the TGA suck this liquidity out while the feds are so sucking liquidity out well that's hey a double sucking of liquidity and what could go wrong well let's just take a look we can see here when the debt limits gets resolved so we're sort of there right now you're going to be very very deep and sudden drain on liquidity of course we've been already setting that up that's that's such a drop in liquidity liquidity really does negatively affect risk markets again NASDAQ uh Bitcoin cryptocurrencies things like that risk on assets we've already had a deep and sudden drain liquidity we've already had that because the fed's already been tightening it's already raised rates from uh you know 0.25 to 5.25 and we've already seen it stronger than anything since the great depressions we've already seen a sudden drain liquidity worse than anything we've seen since the Great Depression has already happened and it's been ongoing for the last seven months so we've already been dealing with this and it's about to Crescendo it's about to reach a climax is what they're saying it is possible that something breaks weeks after the debt deal is closed because remember in the next 30 days this is going to happen and we could end up in a full fed pivot so something could break so bad that it could force the FED into a full-blown pivot of course if you've been watching my channel then you you know that it looks like that will be coming later this year so we'll probably get through the summer it could be September October November somewhere in that time period so this is all starting to line up now if you're not watching my videos you should take a second and just hit that subscribe button real quick so you don't miss any more videos when I put it out there now this is not a prediction but a caution to have what you need what do you need you need cash you need dry ground powder ready including enough free cash to take advantage of these deals so we don't know if this is going to happen but if the TJ refill starts a fire which it most likely could certainly history shows it will understand the mechanics of how the system works tells us it will if that happens then the FED will have to step in to put out the Flames which is the pivot so everything that we've been documenting since last year I've been talking about how the FED raising rates would put the government broke which is what happened now they're borrowing more money now they've got to refill the TJ they increase the debt ceiling it's all lining up for something breaking and the eventual fed pivot now this is not a prediction but this is what looks like it's happening this is the most probable base case and so you want to be ready at least I know I am hopefully you are that's why I make these videos and again don't miss them subscribe to this channel if you're not already and of course let me know what you think leave me a comment down below thumbs up if you liked it if you didn't like the video you can give me a thumbs down that's okay but at least tell me why in the comments and that's what I got all right to your success I'm out foreign thank you

Channel: Mark Moss

Views: 149,509

Keywords: bitcoin news today, mark moss, market disruptors, crypto news today, sovereignty, stock market, dividend stocks, stock market news, passive income 2023, stock market update, bank loans, interest rates, investing for beginners crypto, commodity trading for beginners, how to make money online, recession 2023, stock market crash coming, how to trade options, debt ceiling 2023, govt debt explained, TGA Treasury, kevin mccarthy, us debt crisis, markets debt deal reaction

Id: M_KnC4oIqmU

Length: 17min 15sec (1035 seconds)

Published: Thu Jun 01 2023