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IPFS News Link • Government Debt & Financing

Alarmed That The Biggest Bond Fund In The World Has Dumped All Of Their U.S. Treasury Bonds?

But the truth is that the Ponzi Scheme of the U.S. Treasury issuing bonds and the Federal Reserve buying them up cannot last forever as Gross noted in his March newsletter.... "Basically, the recent game plan is as simple as the Ohio State Buckeyes’ “three yards and a cloud of dust” in the 1960s. When applied to the Treasury market it translates to this: The Treasury issues bonds and the Fed buys them. What could be simpler, and who’s to worry? This Sammy Scheme as I’ve described it in recent Outlooks is as foolproof as Ponzi and Madoff until… until… well, until it isn’t." Gross also noted in his newsletter that the Federal Reserve is currently buying up about 70 percent of all new U.S. government debt. So what is going to happen when that stops? Nobody knows for certain, but it sure is going to be interesting to watch. The market for U.S. Treasuries has not been working "normally" for quite some time now, and there is some legitimate doubt as to whether it will ever fully get back to "normal" again. Meanwhile, the sovereign debt crisis in Europe continues to get even worse. The yield on 10-year Portuguese bonds is now above 7 percent, the yield on 10-year Irish bonds is now above 9 percent and the yield on 10-year Greek bonds is now above 12 percent. Most people expect European leaders to soon come to an agreement to add billions more to existing bailout funds, but there is no guarantee that is actually going to happen. In fact, the Germans are making waves by insisting that the financially troubled nations in the EU must be willing to agree to limits on their future budget deficits. A recent article on CNBC described the situation this way.... Before the Germans will agree to pump in extra cash from their taxpayers, backed by the French, they want each leader to agree to legislation at home that will limit the size of their future national deficits. The Greeks are already refusing point blank. Things may boil to the surface at an extraordinary summit on Friday. So what if an agreement can't be reached? Could the dominoes in Europe start to fall? Very few people actually want to see a wave of sovereign defaults in Europe, but the current situation cannot go on forever. At some point the Germans are going to get sick and tired of bailing out other members of the EU. The global addiction to debt is about to start having some very serious consequences. For decades, most of the governments of the industrialized world have been running up debt as if it would never come back to haunt them. Now the world is absolutely covered in red ink and everyone is looking for a way to solve the problem. But there is not going to be a debt jubilee to come along and save everyone. This debt bubble is either going to keep expanding or it is going to burst.

1 Comments in Response to

Comment by Daniel Penisten
Entered on: "Treasury Bonds" the same as "U.S. Savings Bonds"? The ones that folks used to buy from the Post Office?

In the "Nineteen Forties" my Wife used to buy "U.S. War Bonds" in her elementary school in Jacksonville, Florida. She says that the kids would pay a quarter, or more, a week for a stamp to glue into a "book" to earn the bond. The plan was for these bonds to pay for future education or whatever. This program was helping the war effort (II) effort and to help the kids get money for college. Pretty neat, as one way,  for getting the populace involved in meanigful exchange with Our Government.

I was thinking, wondering, if U.S. Savings Bonds are still being offered? And further, if it wouldn't be better for We The People to buy U.S. Savings Bonds, rather than feeding the new world order through the Federal Reserve Bank? The proceeds from the "U.S. Savings Bonds" would go directly into Our Treasury instead of the bankster's coffers.

I know. Duh. Probably a stupid idea. But, I still wonder if the Treasury Bonds are the same as the U.S. Savings Bonds?