Capital Is Flowing Out of the U.S. Faster Than Ever

The US Treasury Department reports that Japan and China — the biggest holders of America’s debt by far — has dumped $40.8 billion in US bonds.

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Interestingly, government bonds were not the only products being sold. Foreigners sold:

• $5.2 billion in Freddie Mac, Fannie Mae, and Ginnie Mae bonds.
• $5 billion in corporate bonds
• $116 million in bonds composed of packaged US mortgages.

And they also sold $26.8 billion in US stocks.

All counted, this withdrawal of foreign capital is greater than during the 2008 crisis. It is greater than any time in history.

The Fed’s QE3 program, which creates $85 billion per month to suppress interest rates, is rapidly losing its effectiveness.

It prompts the worrying question: How big is QE4 going to be?

— Read more at Money and Markets —