‘Terrorist’ Economy: Washington is Prepared to Create a New Financial Disaster for the Whole World

• ‘Terrorist’ Economy: Washington is Prepared to Create a New Financial Disaster for the Whole World
  by https://www.rt.com/
  The US Treasury market, essential to the functioning of the global financial system, doesn’t seem to be working
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  There is a mantra that has essentially become axiomatic: the US Treasury market is the deepest and most liquid in the world. And a corollary to that is: US Treasury bonds are ‘risk free.’ These once-taken-for-granted pillars of eternal truth are looking awfully shaky. The tectonic plates of the US-led global financial system have been rustling ever more frequently in recent years but the quivers are now coming more frequently. At the heart of this increasingly brittle and dysfunctional system is the US Treasury market.
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  Everyone has noticed the sharp rise in yields in recent months. In early October, the US 10y hit a yield of nearly 5%, the highest level in 16 years. This is, of course, entirely understandable: rate hikes by the Federal Reserve have pushed bond yields higher. But what we have been seeing is more than a manifestation of the vicissitudes of finicky markets.
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  As foreign buyers of US Treasuries dry up and the US government continues to run astronomical deficits at a time of high interest rates, the Treasury market is coming under increasing strain and showing ever more signs of dysfunction. The implications of this are hard to overstate.
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  Where have all the foreigners gone?
  There was a time when Treasuries were essentially the US’ biggest export and served as the mechanism for the sort of macro-level vendor financing scheme under which the US imported goods and energy from the rest of the world in exchange for dollars – and these dollars were dutifully recycled back into Treasuries to finance the US deficit.
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