How much additional soverign debt does the world have to issue this year, just to make up the massive, growing budget deficits?
"You have to think about the world and its totality. There is a finite amount of capital, so just to plug fiscal deficits the world has to issue $4.5 trillion worth of new debt—that assumes the existing debt stock rolls," Kyle Bass, managing partner of Hayman Capital, told CNBC's The Strategy Sessionon Tuesday, adding, "but where does this $4.5 trillion worth of new debt come from?"
"U.S. banks' securities portfolios have increased 26 percent year over year, all they are doing is buying Treasury Bonds. The Fed doesn't want that to happen—they want the yield curve to flatten and the banks to go lend," Bass said.
With the Q2 GDP (Gross Domestic Product) set to be finalized on August 27, Bass believes it will likely be revised to 1 percent or lower (the advanced estimate is currently 2.4 percent).