patrick.net

The OP article does not even define what International Reserves IR) means. I *think* it means (a) foreign-bank-owned reserves, that are (b) on deposit at the US FRB. As such, they should perhaps be be named foreign-owned-reserves (FOR).

Anyway, the 2nd underlying article is a bit better than the first link is.

http://www.plata.com.mx/mplata/articulos/articlesFilt.asp?fiidarticulo=299

May also have to do with this:

http://www.zerohedge.com/news/2016-11-16/saudis-china-dump-treasuries-foreign-central-banks-liquidate-record-375-billion-us-p

What does it all mean? It could be as simple as foreign countries selling US bonds to by their own bonds, to counteract the rising dollar. Or maybe it is something more radical. The article does not explain *why* decreasing FOR is such a bad thing, nor why it would cause asset deflation (which it very well may, but why?). Only that it is unusual.

"Hey, look at this graph" is not quite good enough for me.

I've got my economic theology surrounded with motion & heat sensors & I'm picking something up in the dark distance.
My night vision is not picking up anything in it's viewing range which is not long distance.
Be loving surprises!

Thanks, Justme. There are better articles showing real slowdowns in the economy.

Gary Anderson says

Ominous chart considering the history of asset reserves. Just another recessionary warning.

However I would like discussion because I amnot sure this alone is a precursor to recession. Please comment.

I'm willing to bet you never took econ 101 in college.

Strategist says

I'm willing to bet you never took econ 101 in college.

Oh yes I did.

Gary Anderson says

Strategist says

I'm willing to bet you never took econ 101 in college.

Oh yes I did.

You must have got an "F"

By the way, the Zero Hedge article says a couple of trillion. That is Chump Change compared to alll the bonds used as collateral in the 500+ trillion dollar derivatives markets. Of course the collateral does not cover 500+ trillion. But it is substantially more than 2 trillion.

Macro economics prior to the new normal of bond use as collateral does not apply. I specifically showed this here, Strategist: http://www.talkmarkets.com/content/bonds/keeping-interest-rates-low-is-a-function-of-demand-not-of-politics?post=105956&uid=4798 and here: http://www.talkmarkets.com/content/bonds/economic-theory-is-dead-new-normal-means-no-recovery?post=108622&uid=4798

Demand for bonds is massive, still. And yet this is at under 2.5 percent yield. This is not supposed to happen according to Keynes' classic monetary theory. But it is happening, Stategist. That is because of the bonds being used as collateral.