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FOSS - Lehman CDS at 9bps in '06, 🇨🇦 now at 33 Profile picture
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Aug 17 • 4 tweets • 2 min read
The US debt spiral, a thread...

US Tax revenue $4T
minus: Entitlements $2.8T
minus: Defense $0.8T
leaves: $0.4T

Annual interest exp is $400B (at historic low coupons)

Interest coverage ratio is 1X (solid CCC ratio for corps)

/2
The debt spiral accelerates as new debt is issued at HIGHER coupon.

Ex: $30T in outstanding debt x 3.2% coupon is $1T in annual expense...(an increase of $600B/yr)

This is BEFORE any new deficits and a reduction in revs due to lower capital gains

/3
So the debt spiral grows organically even in the absence of new spending.

How does the treasury fund the debt spiral?

QE infinity. Pure #math.

Unless: IMF financial repression model >> YCC plus hot inflation to grow GDP faster than coupon

Either way, ALL PATHS LEAD TO #BTC
Here is the quandary in graphical form from the Congressional Budget Office.

FIAT debasement is assured. #btc.

Deficit as a percentage of GDP for USA. Image

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More from @FossGregfoss

FOSS - Lehman CDS at 9bps in '06, 🇨🇦 now at 33 Profile picture
Jul 19
Why #btc could rip…a thread from a shitty trader who has 35 yrs of mistakes.

In any hedging business the “easiest” way to “pretend” you have shorts that offset longs is by shorting an underlying INDEX to offset a long position in a single name.

The crypto hedge space /2
… is no different. Think of all those players who are likely short #btc or own some delta hedge short position.

These positions include: shitcoins vs #btc, equity in miners vs #btc, equity in crypto exchanges vs #btc, equities in Nasdaq vs #btc, mining lenders vs #btc…/3
This is called being “hedged and wedged”.

Add to this historic highs in open interest on #btc futures AS WELL as potential positions with counterparties who are in bankruptcy and there is a good possibility that the “INDEX” hedge snaps back hard, relative to the other silos…/4
Read 6 tweets
FOSS - Lehman CDS at 9bps in '06, 🇨🇦 now at 33 Profile picture
Apr 22
Every reason you would buy the UST30YR right now is twice the reason you should buy #btc. A thread…
The Fed will invoke QE infinity and YCC shielding bonds…

Yes but currency debasement is thus accelerated…therefore #btc over the UST30YR
We are heading to a recession and #bonds always perform in recessions…

Yes but the next recession could be the one that gives up the ghost and QE causes credit contagion and collapse…therefore #btc over UST30YR
Read 5 tweets
FOSS - Lehman CDS at 9bps in '06, 🇨🇦 now at 33 Profile picture
Mar 22
BINGO square -- the middle star -- (deserves a thread),

#BTC is a long vol asset. It is insurance.

But Foss, the market (still) treats it as risk off...

My response... /2
Markets take time to adjust their thinking, but once it happens there is no turning back. For example:

"In 1959, 30 years after the great Crash, an event took place that made absolutely no sense in light of history. Up to the late 1950s, investors had received a

/3
...higher income from owning stocks than from owning bonds. Every time the yields got close, the dividend yield on common stocks moved back up over the bond yield. That seemed precisely as it should be. After all, stocks are riskier than bonds.... /4
Read 5 tweets
FOSS - Lehman CDS at 9bps in '06, 🇨🇦 now at 33 Profile picture
Nov 12, 2021
What #btc means to me (in 150 words)

I have been a professional risk trader for over thirty years. Sitting in a risk chair is real life. It is not some cushy academic chair where theories are espoused. It is managing the savings and pensions of clients, friends and family… /2
— in real time, good markets and bad — and your livelihood and sanity are pressured daily.

In a risk chair you are always looking for cheap insurance. An edge that will protect you and clients in the event of a risk event.  I believe bitcoin to be the best insurance product… /3
I have ever studied. It is essentially credit insurance on a basket of Fiat currencies.  It is a hedge to the inevitable unraveling of Fiat systems globally.

Bitcoin provides protection against central bank shenanigans.  It allows for a more comfortable risk chair…. /4
Read 4 tweets

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