Article Trading Through a Political Storm

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Europe may be in calmer waters after the currency bloc’s leaders hashed out a EUR 1 trillion plan to save the currency bloc and pull Greece out of the way of default, but the last few weeks have taught us valuable lessons that we would be wise not to forget. Trading is always risky and there are always events that can happen that you can never plan for.
Trading currencies is even riskier. Since a currency ‘s value depends on a huge multitude of factors including politics, economics and even social issues, you can prepare as best you can, but the chances are at one time or another you will get caught out.
For example, a developed western nation had not defaulted for nearly 70 years, yet here we are talking about how close Greece was to going bankrupt, defaulting on its debts and dragging the entire Eurozone down with it. If you told this story to an alien with no knowledge of Europe or the debt crisis then they would probably be flabbergasted that the 32nd largest economy in the...
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US Treasuries

The Federal Reserve is basically a check kiting operation. Since at least 1971, the Fed writes a check to the Treasury in exchange for a bond. The Treasury deposits the check and spends it (inflation). The Fed then sells that 100k bond for 140k making an instant 40%. More going on there because the Fed also creates a short-side of the market (open-market operations).

But the point is... "Consideration" is a legal principle that says that contracts must have value conveyed to be valid. So, due to lack of consideration (legal principle) bonds are null and void. Now. Once those fraudulent bonds are sold into the open market, they do have value. The bond market has been in an uptrend because institutions borrow and build interest rate spread derivatives like mortgages and collect the spread. So lots of bonds and they don't really care what the price is because the margin is so low.

So. What if a lawyer at the US Treasury decided to null and void Treasuries due to lack of consideration? The market will likely unwind naturally and fairly slowly. National debt would go to $0. The Treasury does have a fiduciary responsibility to savers (T-bonds held in personal accounts), however that is a relatively small liability. Since the income tax of 1913 was originally to make the bond payments, that can be repealed.

The dollar would likely improve due to inflation being stamped out. Would menu prices change? No, of course not. Long term, the US Treasury should tie the value of the dollar to real good exports. That would encourage manufacturing and simultaneously reduce the cost of imports.


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very great article , its true things we should care about , thanks kathleen .

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