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UNFTR Weekly Roundup |
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Max NotesWhat lies beneath: There’s a liquidity crisis brewing.
At some point it will bleed out and wreak havoc in the financial markets. It’s just a question of when and where. The upshot is that the banking sector will be fine this time because they’re playing with the house’s money and mechanisms were built in the wake of the Global Financial Crisis to handle this type of catastrophe. But at some point in the very near future, the Federal Reserve is going to have to print money; and everyone knows it. That’s where things get hairy.
As we kick off Q4 of 2025, we’re flying blind on government data, with the typical releases being halted due to the government shutdown and more questions than answers from the data dumps ending Q3. Inflation is persistent and rising based on manufacturing and services data. The labor market continues to soften. Layoffs are up and people are out of work for longer. So the last visuals we had on the economy were pretty rough, and now we’re flying through the storm with zero visibility.
We’ll be able to see treasury market activity in real-time, however, and that provides a few clues about the balancing act the Trump administration is attempting with mounting deficits eating away at cash reserves.
In fact, the Treasury just finished a record-setting short-term auction of more than $100 billion to pad its own checking account, the Treasury General Account (TGA). It had to do this because the Fed’s checking account is all but depleted at the moment, and we have trillions due before the end of the year that we don’t have. Bank reserves have also fallen in recent weeks to below $3 trillion as the Fed continues its policy of quantitative tightening (QT).
At the end of Q3 the Fed felt a little pressure as it had to backstop cash in the overnight settlement markets. This was not unexpected because large institutions move a ton off and on their balance sheets, so the Fed built a buffer to prepare for this. But it still had to inject $5 billion into the market and keep some money flowing for the next couple of days. That’s unusual.
If that all sounds a bit wonky, here’s how I look at it.
Money circulates between friends and family of the U.S. government. The Fed does business with family (banks) and the Treasury does business with friends all over the world (corporations, other governments, sovereign wealth funds, family offices, hedge funds, etc.) Like a good head of a family, the Fed lets family members sit on a bunch of money at very favorable rates. The Treasury loans money to everyone—friends and family alike—at slightly higher rates. At the moment, the government needs money for its own bills, so it’s looking to get back some of that family money and is lending out even more money to friends and family. The problem is, not everyone is so keen to part with their funds right now because they’re starting to think we’re a little over our skis, and that we might have a drinking problem.
As a result, in order to bring more money into the government, both the Fed and the Treasury are having to lend at the high end of their rate thresholds.
Then there’s this formula:
Nonsensical Tariff War + Huge Deficits + Government Shutdown + Insane Head of State + Destabilizing Foreign Policy + Concerns about Fed Independence + Everyone Realizing They Can Get by Without Us = A Devalued Dollar.
As you’ll see in the Chart of the Week, gold is at an all time high. So is silver, by the way. Our treasury auctions are getting bigger and the interest rates aren’t budging. Companies are beginning to revise earnings forecasts and the Challenger jobs report indicates that cut backs are about to turn to mass layoffs. A weak dollar means that everything we import is more expensive (on top of the ridiculous tariffs), so we’re heading into a stretch of even more inflation and worse employment figures.
The first break in the dam has already happened in the subprime auto loan market. Tricolor, one of the largest subprime auto lenders, just filed for bankruptcy. While this might seem contained, remember that’s what they said about the subprime housing market in 2007.
And that’s the concern right now. It’s not just about what we can see in the Treasury markets or the capital flight to non-dollar denominated assets like gold. It’s not even flying blind with no data during the shutdown. It’s the massively leveraged private credit market estimated at between $1.5 and $2 trillion in 2025, up from $1 trillion in 2020. This market is incredibly opaque and we only catch glimpses of it when lenders like Tricolor disclose their losses in bankruptcy or when more money is needed in the overnight settlement markets than anticipated.
What we can see doesn’t look good. It’s hard to imagine the things we can’t see somehow looking better. |
Other things I’m obsessing over…
-Max |
Killer Left Take of the Week |
KLTW goes to JT Chapman of Second Thought, “a channel devoted to education and analysis of current events from a socialist perspective.” Second Thought is an incredible channel and JT is a smart and patient host. He’s also an incredible creator. He’s like an even more subdued Johnny Harris with a socialist mind. Anyway, this week he digs into CIA black sites to set the stage for what deportees to El Salvador are likely facing, and in some cases verifiably experiencing.
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This Week on the UNFTR Podcast |
Bailing on Farmers to Bail Out ArgentinaTwo to Tango. |
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Treasury Secretary Scott Bessent recently pledged $20 billion of support to Argentina to prevent its currency from sliding further, and to backstop Javier Milei’s Trump-like economic agenda. Then, Argentina turned around and lowered its export tariffs and dumped its soybean crop on the market. They found a willing buyer in China, who has ceased purchasing U.S. agriculture due to the Trump tariff war. The whole affair boiled over when an AP photographer snapped a picture of a text thread on Bessent’s phone from Agriculture Secretary Brooke Collins, who said U.S. soybean farmers were livid because their market collapsed. It’s another example of the Trump administration putting ideology and pettiness ahead of his own constituents. But there’s a larger game afoot that no one is talking about that this situation perfectly illustrates: We’re playing checkers and China is playing chess.
Here’s a snippet from the pod: Max: This is the real threat to American economic hegemony. Not whether Javier Milei can balance Argentina’s budget or whether inflation comes down in Buenos Aires. The real question is whether the United States can maintain its privileged position as the issuer of the world’s dominant reserve currency, which allows us to run persistent trade deficits and finance our government spending at favorable interest rates. |
Chart of the Week |
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Source: GoldPrice.org
You know who’s probably pretty pissed off right now? Bob Menendez. If he was free and still had the 13 gold bars the Feds took off his hands, he’d be sitting on $1.63 million worth of gold. That’s because the price of gold hit a record high. Also, this is a really fucking bad sign because it means one of two things (or both). First, people are fleeing from other liquid or speculative assets because they think the global economy is about to take a shit. And second, it means investors are losing confidence in the U.S. Treasury bond. |
Headlines |
Unchecked and UnhingedStephen Miller is feeling his oats. His mass deportation plan is moving along. He routinely holds court with reporters outside of the White House. He gets off on cucking while Elon Musk f…Never mind. Accusing a federal judge of insurrection is the type of behavior that does come back to haunt people in power, though. I would like a front row seat for his comeuppance. It might take a long time, but it always happens. Unless you’re Henry Kissinger. Then you get to live for like a million years. You know what, never mind again.
From the article: “The White House deputy chief of staff accused US District Judge Karin Immergut, who was appointed by President Donald Trump during his first term, of ‘legal insurrection’ after she found that the president’s claims about violent protests at a US Immigration and Customs Enforcement facility in Portland were ‘untethered to facts,’ and that residents’ expressions of opposition to ICE do not meet the high legal standard for calling the National Guard.”
Common Dreams: White House Responds With ‘Authoritarian Propaganda’ as Judge Blocks National Guard in Portland
Shades of ReaganWhere the heck is ol’ Ollie North these days? For anyone interested in the origins of the CIA drug trade and formations of the cartels in Latin America, look up Gary Webb and his Dark Alliance Series. Also, American Made is a totally underrated Tom Cruise film. No idea how true to the story that one is, but it’s a solid flick. Back to the story at hand. If Trump does illegally invade Mexico to fight the cartels, our guys will be shot at with our own artillery. Like I said, revisit Gary Webb.
From the article: “If the U.S. military does confront the cartels in Mexico, it will find itself facing battle with its own weapons. An investigation by The Intercept traced the bullets that littered the ground in El Guayabo to at least two U.S. firearms manufacturers, one of which operates a massive factory owned by the U.S. military. The Intercept gathered 123 shell casings, some of whose numbered headstamps corresponded to the now-defunct St. Louis Ammunition Plant and Lake City Ammunition — a commercial ammunition factory in Independence, Missouri, operated by Winchester and owned by the U.S. Army.”
The Intercept: Trump Calls Cartel Members “Terrorists.” They’re Armed With Bullets From a U.S. Army Factory.
First They Came for…Aw, Fuck It.Troops are on the way to Oregon right now. They’re in Chicago. Inexperienced masked agents of chaos from ICE are carrying out raids on apartment buildings, car washes, Home Depot parking lots. It’s all happening.
From the article: “Just this week, the American people saw images of an ICE raid on a Chicago apartment building with a significant Venezuelan population. Citizens had their doors bashed in and were zip-tied for hours. Pulled from their apartments in the middle of the night, mothers were separated from children, and children were zip-tied to each other, some naked. This type of raid is precisely what the Supreme Court allowed just last month when it said that ICE could use race to detain suspected immigrants. Now with Friday’s decision, they’ve all but ensured that many of the 300,000 Venezuelans will have no legal protection should they get detained.”
Mother Jones: The Supreme Court Just Took Legal Status from 300,000 Venezuelans |
UNFTR’s Latest Article |
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A new NYT/Siena poll reveals a stunning shift in American opinion on Israel-Palestine. For the first time since 1998, more Americans side with Palestinians than Israelis, and 40% now believe Israel is intentionally killing civilians—nearly double the percentage from December 2023. Netanyahu knows he’s losing the public narrative, which is exactly why he’s desperately trying to control social media platforms like TikTok and hiring Trump’s former campaign manager to target Gen Z with pro-Israel propaganda.
Read: Losing the Narrative: U.S. Public Support for Israel Craters Amid Gaza Genocide |
Resources |
Pod LoveI don’t listen enough but every time I do I’m reminded of how good this pod is.
“Obstruction would never have been as effective as it has been without the help of the PR industry and the willful ignorance of the media. Today, Melissa Aronczyk, of Rutgers University, and Max Boykoff, of the University of Colorado, join us to walk through why getting a handle on the media’s role in climate obstruction is critical to solving the problem.”
Drilled: The Media As a Tool of Climate Obstruction
Book LoveOriginally published in 1947, this version was updated in 2007 and is more timely than ever. There is still so much we can learn from the indefatigable figure who transformed American politics and forced unions and politicians alike to shift their thinking and policies
“The Bending Cross offers us an old-fashioned—and, yes, incorrigibly romantic—ethos for activism; an antidote to jaded postmodernist cynicism, made compelling and coherent by the example of Debs’s own life. It is ironic that the Socialist leader was imprisoned for ‘disloyalty,’ since what most distinguished Debs was his moral steadfastness and unbreakable loyalty to the labor movement.”
The Bending Cross: A Biography of Eugene Victor Debs by Ray Ginger
Unf*cker Comment of the WeekFrom @Emc4421: “Also I’m sorry about the Mets. But they did it to themselves.”
I know. Sigh. |
Progressive Corner |
Progressive Organization of the Week: Knight First Amendment Institute.
This feels more important than ever.
“The Knight First Amendment Institute defends the freedoms of speech and the press in the digital age through strategic litigation, research, and public education. Our aim is to promote a system of free expression that is open and inclusive, that broadens and elevates public discourse, and that fosters creativity, accountability, and effective self-government.”
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