The Fallacy of TINA

The week ended on May 11, 2024. Interesting news items to look at this week are:

The Fallacy of TINA: One of the tried and tested method of corralling capital into US is for US to destabilize other regions. This orchestration is through the notion of TINA (There Is No Alternative with USD being the only Global Reserve Currency). The Hedge Funds attack in Thailand in 1997 had a domino effect in Asia with US reaping a bountiful harvest in valuable stakes at dirt cheap prices in top S. Korean conglomerates. The entrapment of PIIGS nations in 1997 put a dampener on the rise of the Euro. Then there was Arab Spring in 2011 which clipped the aspirations of the Shiite Crescent in the Middle East. Did this same playbook earned the expected rewards for US in the current conflicts and tensions in Ukraine, Gaza and the South China Seas? In this week’s Blog, we shall follow the money and make a factual conclusion through a look at international capital flows.

(i)  Investments into and Out of US: The US Treasury Department publishes monthly balances of portfolio securities (at current market prices) held by Foreigners in the US and US holdings in foreign countries. Statistics available up to end February 2024 indicates that US owed $28.1 trillion (Bonds and Stocks) to other countries against assets of $14.9 trillion abroad. (Fig. 1).

Between Jan 2020 to Feb 2024, the ebbs and flow of funds into and out of US showed similar patterns but on a trend line basis has plateaued.  In the intervening period, there were extreme volatility generated by the Ukraine and Gaza wars, tensions in the South China Seas and an utmost aggressive interest rate increase by the Federal Reserve from a 15 year long ZIRP by 550 basis points within one year. On the surface, US appeared to have come out slightly ahead since Oct 2023. There were two factors, the first being the Gaza War, then a verbal suasion that the Fed would pivot in December 2024 which gave a lift to both bond and stock prices.

To look at whether US had actually gained from all the disturbances created, one needs to look at the cost to the US in paying the highest interest rates within the major economies and the cost to create the destabilization through wars in every spectrum.

(Fig. 2) shows both a rise in net Foreign Funding in US (Investments in US minus US Investments abroad) and total US Federal Indebtedness. Again on a trend-line basis, the slop of increase in total US Federal Indebtedness is much steeper than Net Foreign Funding, meaning the US destabilization antics actually costs more than it gains.

(ii) A Region by Region Look at Money Flows:

(a) Europe and Offshore Hedge Funds Centers: To have a realistic assessment of true European Funds flow into US, we first have to isolate the money centers where SWAPS, Derivative Trades under US smokes screena and mirrors could magnify the actual funds flow by multiples. (Fig. 3)

distinguishes money flows into US firstly through BLICS (Belgium, Luxembourg, Ireland, Cayman and Switzerland), UK, Ukraine and Other Offshore Hedge Funds Money Centers. These countries all have small and non-existent trade surpluses. They represents simply parking bays for obscured and creative cross border money accounting. Then we look at the rest of Europe comprising Germany, France, Italy, Spain, Netherlands, Sweden, Finland, Russia and the all other European economies. The blue line representing principal European economies showed little capital flight into US but the House of Mirrors showed a typical volatile trend associated with a per-designed painted chart. To graphically demonstrate the incestuous relationship between US and the BLICS UK, Ukraine and Offshore Hedge Funds Centres, I prepared (Fig. 4)

which highlighted around 80% of investments in US from BLICS et el. Actually originated from the US and basically are just smoke screens and mirrors.

(b) Asia:  When we strip away the smoke screens and mirrors in Europe and the Offshore Hedge Funds Centers, Asia (including the oil exporting countries in the Middle East) represents the richest area for US to strip mine. (Fig. 5)

shows how Asia had invested in US over the relevant period. Both China and Japan is contracting their investments in the US leaving ASEAN and the Middle East still on the fence and not pushing as hard to isolate themselves from the US sinking Titanic. There is however very little room left for the US to maneuver both in terms of time and capacity.

I must apologize for the very technical and mathematical nature of this week’s Blog. Yet despite the few words, thousands of data points were analyzed and I prayed it is not too late for everyone to take note that the endgame is upon us. When the deception failed, the elites will take us to war and repudiate all claims against them. Word from the Street is between July and September 2024 is when fireworks begin. Take good care my friends.

Colossians 3:15  And let the peace of God rule in your hearts, to which also you were called in one body; and be thankful. 16  Let the word of Christ dwell in you richly in all wisdom.