US-Iran peace agreement discussion, part 4

[RedTagAlan]

Thread 4 for those following and commenting on the above subject.

Sorry @Newbutoldfather but I think this is naive.
Didn't you see Trump's recent speech about protecting the US bond market at all costs?! He even added that the US army was the ultimate weapon here.
The US definitely did not intervene in the Yen market to help the Japanese. Since when do the US do things to help others? They did it to you help support the US bond market and stock market. They even sold Euros to do so rather than $.

@rainingsnoring ,

‘They are struggling to control the bond market at the longer ends so appear to be borrowing at the short end to pay off the longer term bonds. At the short end, the Fed can reduce the interest rates, lowering the carrying cost of the US debt. At least that's the theory but now, some moron started a war in Iran because Netanyahu told him it would be an easy victory like Venezuela, and the Fed is talking tough because inflation has already risen as a result. I think we still get lower rates before too long and then QE to the moon.’

It is complicated and what you post is partially true.

Fed funds (which the Fed controls directly) are the main input into treasury bill yields (the credit spread being the other one). Long term bonds are generally modelled on a combination of short term rates (they anchor the short term discount rates), long term inflation expectations and a credit spread. Generally, as a country can print money, default risk is pretty low, but it feeds into long term inflation expectations.

There is the a feedback loop from long term yields back to the fed, who use it as an input into their long term inflation models which they use to set Fed Funds.

The U.S is in a real bind here. Warsh just made a (very good) first speech as chairman of the Fed. I can post a link if people want. He made it very clear that he would take inflation control seriously and will set funds at a level that will anchor long term inflation expectations, which to me means considerable tightening (raising interest rates).

A solution would be a wealth tax on the super rich. As was pointed out to me, that would merely be the super rich giving the treasury money rather than lending it money via buying treasuries as investments. Not sure I see it happening though .

@rainingsnoring ,

‘Didn't you see Trump's recent speech about protecting the US bond market at all costs?! He even added that the US army was the ultimate weapon here.’

I think that you are giving Trump way too much credit here!

Trump has no idea how the bond market works. Most traders thought that U.S military comment was a ‘senior moment’ rather than a threat-to put it politely.

Funny how people take Trump's pronouncements at face value when he says something that backs up their own views. Other times they are adamant that he is not a serious person.

Which of course he isn't.

Reuters: Blockade succeeds where sanctions failed as Iran oil exports stall

For the first time on record, Iran has gone about seven weeks without shipping meaningful crude exports through the Strait of Hormuz, as a U.S. naval blockade succeeds where years of sanctions failed by cutting off one of Tehran's main sources of foreign-currency earnings.

Unlike previous sanctions campaigns, when Iranian crude continued reaching buyers despite restrictions, the current blockade has stopped fresh crude cargoes reaching China, Tehran's only major remaining oil customer, increasing pressure on government finances and foreign-currency reserves.

Since the U.S. reinstated its blockade on Iran on July 14 as part of their six-month conflict, no Iranian crude cargoes have successfully transited the Strait of Hormuz to China, according to Kpler, Vortexa and TankerTrackers.com.

As a result, Iran can only sell crude to China from floating storage in Asia, which it cannot replenish as crude accumulates aboard tankers inside the strait.

"Even at the height of maximum-pressure sanctions in 2019-20, some Iranian crude cleared Hormuz every single month; at no point did outbound flows fall to near-zero for a sustained stretch as they have since mid-July," Vortexa analyst Claire Jungman said.

Iran loaded about 220,000 to 255,000 barrels per day of crude oil and condensate in August, according to Vortexa and Kpler estimates, down from roughly 740,000 bpd in July and about 2 million bpd in March.

The collapse in exports is draining one of Iran's main sources of foreign-currency income and could force Tehran to finance spending by printing money, risking even higher inflation, Kpler analyst Homayoun Falakshahi said.

The International Monetary Fund estimates Iran's inflation rate at nearly 70% this year, the world's third-highest after Venezuela and Sudan.

www.reuters.com/business/energy/blockade-succeeds-where-sanctions-failed-iran-oil-exports-stall-2026-09-01/

This was in MSNow. I looked it up. Not too bias:

““We are telling people, either you are with us or against us,” the treasury secretary said, echoing a post-9/11 line from the Bush-Cheney administration.
In the abstract, the White House seems to be under the impression that the United States, as the preeminent global superpower, can simply bark orders, issue a few threats and isolate Iran. In reality, however, Team Trump’s efforts have elicited little more than yawns.
Bloomberg reported, “By the week’s end, countries with ties to Tehran had so far shrugged off the threat and analysts were left underwhelmed by the U.S. actions.”
That was soon followed by a New York Times report noting that Iran had joined a handful of other countries, including China, Russia and India, for a meeting of the 10-nation political and security group known as the Shanghai Cooperation Organization, which Beijing dominates.
The message to the White House wasn’t exactly subtle: Trump and his team demanded other countries further isolate Iran, at which point much of the world turned to the Republican administration and said, simply, “No.””

Excerpt From
“‘Economic D-Day’ policy flops, as Trump and Bessent suffer another embarrassment”
Steve Benen
MS NOW
https://apple.news/AgyVfdujoRJWesi_CIzLLKA
This material may be protected by copyright.

Full TS in link

https://bsky.app/profile/atrupar.com/post/3muhx3kkick2d
Trump: "If the failed Nation of Iran retaliates for this very justified attack, they will be hit again at a much harder & higher level, but it will not be the biggest attack of them all, that is waiting in the wings &, when it is over, there will be very little left of the Islamic Republic of Iran!"

Latest wave of US strikes against Iran targeted 'mine laying capabilities': CENTCOM

The latest wave of US strikes against Iran has concluded with American forces targeting “mine laying capabilities” and other military assets, according to US Central Command.

“US forces struck Islamic Revolutionary Guard Corps (IRGC) targets including air defense sites, radar systems, maritime assets and facilities, mine laying capabilities, and communications sites”, CENTCOM wrote on X.

4 people including a child killed at a wedding party. What a memorable day. War truly is an evil bastard.

I mean, Donny said it, so it must be true:

Trump told Fox News on Tuesday that the US gave Gulf allies a heads-up before its latest strikes and criticized Iran’s leadership. “I think an agreement with them isn’t worth the paper it’s written on,” the president said, later adding, “They don’t stop: They’re crazy and they’re stupid.”

He posted this yesterday too.

Donald J. Trump
@realDonaldTrump · September 1, 2026, 9:13 PM

I’m not trying to force Iran to the bargaining table, as ABC Fake News reported. I couldn’t care less if they sign a worthless, to them, agreement. I like our position now much better, with almost total control of the Hormuz Strait, and their economy totally collapsing. They are just playing out the inevitable. When are the Iranian people going to rise up and fight? President DJT

I removed the links from the above. Source

Donald J. Trump: "I’m not trying to force Iran to the bargaining table, as ABC Fake News repor... - Trump's Truth (trumpstruth.org)

So it's back to the Iranian people to fight then. He makes no mention of what they are supposed to fight against. I mean technically they are fighting. They are fighting Trump.

And this goes back to what I have said before. People really do need to have a cause. And when one thinks about it, most, possibly all, uprisings tend to be left wing led. I honestly can't think of any popular uprisings where people demand capitalists take charge. Maybe Cuba ? And the fall if the USSR maybe ? Democratic reform for sure in those cases. But they are not on the street demanding all their natural wealth be given to some fella thousands of miles away.

I think right wing revolutions tend to be coups.

‘Bout right.

@RedTagAlan ,

‘So it's back to the Iranian people to fight then. He makes no mention of what they are supposed to fight against. I mean technically they are fighting. They are fighting Trump.

And this goes back to what I have said before. People really do need to have a cause. And when one thinks about it, most, possibly all, uprisings tend to be left wing led. I honestly can't think of any popular uprisings where people demand capitalists take charge. Maybe Cuba ? And the fall if the USSR maybe ? Democratic reform for sure in those cases. But they are not on the street demanding all their natural wealth be given to some fella thousands of miles away.’

i would be incredibly surprised if the population of Iran enjoy being under an extreme theocracy. This especially applies to women. I mean it isn’t Afghanistan but it is far from great.

Whether revolutions are ‘right wing’ or ‘left wing’ is debatable. Virtually all despotic societies give great wealth to the rulers, so almost by definition, if the population want their fair share, it could be called left wing.

Would the Iranians want a more enlightened leadership? I have no doubt they would. But, to rise up, you need weapons. Which either means you get the existing army on your side (what kind of happened when Yeltsin stood on a tank) or you are able to form an organised armed militia.

I kind of imagine that, as long as the Mullahs can keep the army paid, they will stay on side, and no one is able to form an armed militia.

So, a revolution, at least in the near future, is a pretty tough ask.

Hmm. I agree with quite a lot of what you have written. I do think that the section you quoted is accurate though. The war has certainly made everything much worse.

I completely agree that Warsh is in 'a bind' but I don't agree with your conclusions. I think Warsh is talking the talk but I think the chance of him raising the base rate is very low. He is very well aware that the US debt is far too high to be able to carry higher rates. We'll see but I expect the opposite to you and an awful economic situation, made much worse by Trump and Bibi's war.
I don't think a tax on the super rich would be a solution at all.

I'm not giving him any credit. I only asked if you had heard his speech because I think the views you expressed were a bit naive.
Trump will have at least a basic understanding of the bond market. He also has Bessant to explain things and many other advisors too.
One interesting thing about Trump is that he does occasional let things slip accidentally. Here, I think he is stating how the administration will, undoubtedly, protect the bond market at all costs. I have no idea whether they would actually use military force or not but what came across is that he understood the vital importance of protecting the US bond market.

Are you talking to me? I was chatting to @Newbutoldfather about something called the bond market.

On lunatic religious clerics, yup, here we are:

“While I wouldn’t be shocked if we are living in the end times, what I’m trying to focus on is doing as much of God’s work as possible right now, and if that leads to the end times, OK, and if that leads to, you know, us building a better world that thrives and survives for a very long time after I’m gone, that’s great, too.”

“I think that there are... things about the world that make me feel like not shocked if the Antichrist was walking among us, but again, I try not to focus too much on it.”

Any idea who said that in the last few days ? Here is a hint -

“One of the things that I think that Catholics are very focused on, that I think is very good for me, is this idea that... we don’t know when God is coming, but we’re commanded to try to, as much as possible, try to make the world the kind of world that God wants it to be,”

Yup. That was JD Vance said that. Vice President of the United States. In an interview with a Ccristian Podcaster.

Not a great source due to web restrictions. He did say it

JD Vance Says If His Work With Trump 'Leads to the End Times' That Is 'OK' | Common Dreams

@rainingsnoring ,

Of course I read your posts with respect, as you are clearly intelligent and knowledgeable about many things.

But fixed income securities and derivatives are something that I did as a job for a couple of decades (at a pretty high level)!

I will deal with a couple of the points that you have made above:

‘I completely agree that Warsh is in 'a bind' but I don't agree with your conclusions. I think Warsh is talking the talk but I think the chance of him raising the base rate is very low.’

Firstly, if you haven’t already, you should listen to Warsh’s speech. I am happy to post a link if you can’t find it. Secondly, the Fed fund futures market, which is where professionals trade/bet on Fed rate moves, has gone from pricing virtually zero chance of a hike next meeting to pricing it at 68%. If you genuinely believe he won’t do it, the market will give you 2:1 odds on your bet!

‘He is very well aware that the US debt is far too high to be able to carry higher rates. We'll see but I expect the opposite to you and an awful economic situation, made much worse by Trump and Bibi's war.’

The problem is that, although 25% of securities the U.S pays interest on are sub 1 yr (which, as you correctly said, is too much already), 75% isn’t! And some of it is 30 years plus. As I explained above, this is priced off forward inflation expectations. So if the Fed weren’t to raise, it would actually become more expensive to pay net debt, as the market would collapse the long end based on the fact it wouldn’t trust the Fed to do its job of controlling inflation.

Currently long term inflation is priced at 2.2-2.56% depending on which security you look at and how you model it. The Fed’s target is 2%, so that is already bad and an indication the U.S needs higher rates.

‘Here, I think he is stating how the administration will, undoubtedly, protect the bond market at all costs. I have no idea whether they would actually use military force or not but what came across is that he understood the vital importance of protecting the US bond market.’

He had been told that there is something called the bond market and, if things go awry with it, it’s bad news. I honestly doubt his understanding goes any deeper! I am very curious to know how the U.S military could affect bond yields. I am honestly lolling at it! What are they going to do, get soldiers on dealing deals and physically restrain traders as they put orders into their screens?!

‘I don't think a tax on the super rich would be a solution at all.’

This was suggested to me by someone who lectures in economics and seems to make sense. Why would it not be a solution. Bonds are debt and money pays down debt. Ultimately a lot of cash is already held in bonds, so it would just change from the super rich lending money to the state to them giving it to the state. Tax rates for the super rich have been obscenely low for a very long time and that is part of the reason for the debt problem. 1-2% on anyone with a a net worth of $50 million + would raise hundreds of billions of dollars.

Why don’t you think it would work?

Bessent is now blaming Ukraine for the higher gas/energy prices rather than his boss.

The US military says it is aware of the reports but that it never targets civilians, and was striking Iranian targets in response to "recent attempted" Iranian attacks

https://www.bbc.co.uk/news/live/cm86xq9261xdt?post=asset%3A5cb30c83-67e3-4f4f-9158-1dbe185d78ef#post

Not specifically to you no, it was more a general observation.

Iran’s currency hits record low

Iran’s currency, the rial, hit a record low on Wednesday.

Traders in the Tehran market exchanged 2.20 million rials for one US dollar. That was nearly 10% higher than last week’s record, set on August 25, when one dollar was sold at 2.02 million rials.

The currency had already been under pressure before the U.S. and Israel attacked Iran on February 28 as Iran battled double-digit inflation and negative growth.

The rial has repeatedly hit new lows since the conflict started more than six months ago. The troubled currency has lost about half of its value in a year of tightening US sanctions and American and Israeli attacks.

https://www.theguardian.com/world/live/2026/sep/02/iran-us-middle-east-war-strikes-tehran-washington-wedding-trump-kuwait-jordan-latest-news-updates

CNBC: China’s Xi keeps Iranian president at arm’s length weeks ahead of Trump summit

China’s President Xi Jinping gave his Iranian counterpart Masoud Pezeshkian a brief, low-profile audience at a regional security summit, signaling Beijing’s calibrated approach toward Tehran just weeks ahead of Xi’s planned trip to Washington.

The two leaders met for several minutes on the sidelines of the Shanghai Cooperation Organization summit in Kyrgyzstan on Tuesday, according to Iranian state media.

The semi-official Mehr News Agency said that the Xi-Pezeshkian meeting focused on “bilateral ties in line with strengthening relations between Tehran and Beijing,” without offering further detail.

That contrasted with Beijing’s approach of keeping the meeting out of public view.

Chinese state media, including the Communist Party’s flagship newspaper, People’s Daily, gave extensive coverage to Xi’s encounters with other visiting leaders on Tuesday, but made no mention of the meeting with Pezeshkian. Modi, by contrast, published photos of his meeting with the Iranian leader.

“Xi is keeping Iran at arm’s length publicly while still maintaining contact privately,” said Han Shen Lin, managing director for Greater China at the Asia Group, a Washington-based strategic-advisory firm.

The SCO leaders in a joint statement condemned the military strikes on Iran, while backing member states’ right to civilian nuclear development under the Nuclear Non-Proliferation Treaty. The statement stopped short of committing members to any concrete military or economic support.

China has been the largest buyer of Iran’s sanctioned oil exports, but those flows through the Strait of Hormuz have fallen sharply since the war began, as Beijing slashed imports, tapping into its massive reserves.

www.cnbc.com/2026/09/02/china-trump-iran-summit-nuclear-trade-tariffs-sanctions-.html

Re Trumps TRUTH about Iranians rising up. He was asked about that at a press conference thing on the US travel industry. I have no idea who asked, but here is the exchange. Trump in bold.

QUESTION 00:21:02-00:21:16 (14 SEC)
Mr. President? Thank you, President Trump. You posted today on Truth Social when are the Iranian people going to rise up and fight? If that's what you want, will you send the CIA in to arm Iranians?

DONALD TRUMP 00:21:16-00:21:38 (22 SEC)

Well, I wouldn't want to say that to you, Peter. I'd love to tell you that, but it wouldn't be appropriate to say. But I mean, I understand their plight; they're being shot. Right now, you know, these gentlemen sit here in the lap of luxury and they see things, but over there it's not so luxurious. As of three months ago, they had 52,000 protesters were killed.

Can you imagine this fellow? And now I hear the number is probably 20,000 to 25,000 more. They had close to 65,000 protesters killed. So, when I asked that question, I asked it sort of knowing the answer. The only answer is that they're being shot. The regime is getting weaker and weaker by the day, and at some point, they're not going to be able to shoot so easily because I think the people aren't going to take it. But I did pose that question because, you know, it would be time.

But unlike most -- most people can't kill their people like that. Most people try and reason, they talk and then there might be an overthrow. In Iran they kill the people; when they get out to protest, they kill them. They shoot them right between the eyes. They have two forms, machine guns and snipers, and they use them sometimes with machine guns and sometimes the snipers.

They like the snipers better because all they do is have a crowd of 200,000 people, and a person goes down here right between the eyes, and they'll have three snipers doing it and it's a horrible thing to watch. So, that's why it's not happening. And who can blame them? Who can blame them? But the regime is getting weaker by the day.

That, it seems, is the wisdom of Donald Trump.

Source :

Remarks: Donald Trump Meets with American Travel Industry Executives - September 2, 2026 — Trump Archive (trump-archive.com)

Liar in chief. Perhaps he is talking about his federal agents, who a lot of the world watched murder Minneapolis residents Alex Pretti and Renee Nicole Good as well as many others in his so called civilised country.

I hope he stays alive long enough to watch it all crumble around him!