Tag: US Treasury

Countdown To Catastrophe

Posted on by George Yacik

If you believe Treasury Secretary Janet Yellen, the U.S. is headed to “an economic and financial catastrophe” if Congress doesn’t agree to increase the federal debt ceiling.

Even worse, she warned in an interview with ABC News, we are headed to a “constitutional crisis.”

You know something is purely political and not to be taken too seriously when a prominent official in Washington warns that something is a “constitutional crisis,” as if that is the absolute worst thing that can possibly happen, short of war or some other real calamity.

According to Yellen, doomsday will occur around June 1, at which time the government will purportedly be unable to pay its bills, unless the Republicans in the House knuckle under and agree to increase the debt limit.

For good measure, she wrote in a letter to Congress that “we have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States.”

All of which has never happened.

When the government “defaulted” back in 2011 I seem to remember that the biggest imposition was that the national parks were closed for a few days. Anyone who was owed money, such as federal employees who had their paychecks delayed, soon got all the money that was coming to them.

Yes, Standard & Poor’s lowered the U.S. government’s credit rating to AA-plus from triple A - where it still stands - but did anyone really care? (Moody’s, Fitch and DBRS all still rate the government’s credit rating at triple-A).

If you were wondering, other countries with AA-plus ratings from S&P include Austria, Finland, New Zealand, and Taiwan. Canada, Germany and the Netherlands, among others, sport AAA ratings. With all due respect to those countries, does anyone seriously believe that you run a greater a risk lending money to Uncle Sam than you do to those nations? Continue reading "Countdown To Catastrophe" →

US Treasury Touches "Crypto-waters"

Posted on by Aibek Burabayev

On 6th of April, the U.S. Department of the Treasury published the 2023 DeFi Illicit Finance Risk Assessment, the first illicit finance risk assessment conducted on decentralized finance (DeFi) in the world. The assessment considers risks associated with what are commonly called DeFi services.

The document is 42 pages long. This report looks at how criminals are using DeFi services to move and hide money illegally. DeFi services use technology called blockchain and smart contracts to allow people to make transactions without banks or other financial institutions.

However, many DeFi services are not following the rules meant to stop money laundering and financing terrorism. Some DeFi services are trying to avoid these rules by claiming to be fully decentralized, but this doesn't excuse them from following the rules.

The report recommends improving the rules and regulations for DeFi services to make sure they follow the laws and don't help criminals.

The cryptocurrency market may face regulatory scrutiny as authorities look to increase oversight on digital assets, so be informed and prepared for real bombshells in the not so distant future.

What do you think is the real target of the Treasury?

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I would love to see your comments on this news.

Let me update some crypto charts to snapshot what’s going there. The comparison chart of major cryptos vs. the market follows below. Continue reading "US Treasury Touches "Crypto-waters"" →

Treasury Default Hysteria Begins

Posted on by George Yacik

While fights over Supreme Court and Federal Reserve Board nominations come sporadically as vacancies arise, there is one political battle we can almost always count on from year to year, and that is the struggle over extending the federal debt ceiling.

If it’s not increased, we’re told, the U.S. government will default on its obligations, Social Security and other government program beneficiaries will be rendered destitute, Treasury bondholders will see the value of their holdings decimated as they go without their interest payments, our soldiers and other government employees won’t get paid, and the global financial system will grind to a halt.

Most serious-minded adults, however (I hope), have learned to ignore this annual game of chicken that the White House and Congress insist on playing every year, although the financial press and media commentators profess to take it seriously.

Whichever political party controls the White House or the houses of Congress, the drama generally follows the same predictable format, namely the Democrats always favor raising the debt ceiling to avoid the catastrophes described in the first paragraph, while the Republicans express opposition in the name of fiscal responsibility.

Yet no matter how long the drama plays out, the outcome is always the same: the Republicans eventually knuckle under, life goes on and everyone gets their money, until the next debt debacle. Lather, rinse, repeat.

This year, it seems, the play has begun early.

Five whole months before the government allegedly runs out of money without a debt limit increase, Treasury Secretary (and former Fed Chair) Janet Yellen has already sounded the alarm and instructed her troops to put in place “extraordinary measures” to allow the government to keep paying its bills before it hits the current $31.4 trillion debt limit in June.

Yellen wasted no time in using the dreaded D-word to emphasize the supposed seriousness of the situation.

“A failure on the part of the United States to meet any obligation, whether it’s to debtholders, to members of our military or to Social Security recipients, is effectively a default,” she said. Continue reading "Treasury Default Hysteria Begins" →