Robert Munn <[email protected]> wrote:
> going to save them, because the whole system is going to collapse. One
> day China is going to stop buying our bonds. On that day, we're
> cooked. And it's going to happen a lot more quickly, and suddenly,
> than people realize.
>
>
Wow! Brother!! Obviously I couldn't agree with you more. Just one slight
point:
Guess who buys 70% of our bonds right now? YOU! (or your kids).
What the Federal Reserve does is say, "hey lookee that! I've got $1T". In
other words, they just make it up. Type some keys and blamo! $1 trillion
in their account ("quantitative easing" QE). Then the Fed uses their new
dough to go out and buy stuff. In this case US bonds.
This is why PIMCO's Bill Gross just sold his entire holding of US bonds; he
knows that in June when QE2 ends the government will have to raise yields of
new bonds to get someone to buy that 70% we need to keep our economy from
collapsing.
Of course, few will buy, so we'll see a QE3. More monster debt for your
kids. And that will drop existing bond prices which is why Bill sold.
What's it all mean? Stagflation. Rising interest rates, rising prices,
stuck economy. Just like the 70s!
And we have zero choice. Hopefully we the depression we were supposed to
have and held off with all the debt won't trigger anyway, but ...
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