CRYPTO SOARS AS U.S. GOVERNMENT STARTS "BUYING" ITS OWN DEBT

The "shittification" of the US economy continues apace under Donald Trump, with US government debt now topping $40 trillion (or $116,700 per person).

This has led investors to move into what are called "debasement trades," namely things like gold and crypto, which are outside a government's ability to just print more and more money, or to create unsustainable deficits that inevitably lead to future governments just printing more and more money. The US dollar is also down about 0.8 per cent against a basket of currencies since Tuesday.

As reported by the FT: 

"The price of bitcoin jumped 6 per cent on Friday and is up about 23 per cent this week at about $77,375, the cryptocurrency’s highest level since May. Gold gained 2 per cent on Friday to value it at about $4,612 a troy ounce, up more than 13 per cent in August. The precious metal is on track for its biggest monthly gain since 1999."

The moves have been sparked by the Trump administration resorting to the kind of interventionist market-distorting moves more typical of Chinese and Japanese governments than market-aligned Western democracies:

"Friday’s moves come after Bessent on Wednesday said the Treasury would 'at least' double its purchases of long-term government debt from next month following a sharp sell-off in 10-year and 30-year Treasury bonds that has pushed US borrowing costs to multi-decade highs."

The US Treasury funds these buybacks (repurchases of its own outstanding securities) primarily from cash in the Treasury General Account (TGA / general fund), which is replenished through ongoing debt issuance—most often additional Treasury bills.

Yes, the US government is literally going further into debt to buy back its own debt!!! 

"Bessent’s interventions do nothing to deal with fundamental vulnerabilities," said Matt King, macro strategist and founder of Satori Insights. "No wonder the market is turning back to debasement trades."