Economic and political challenges from a Christian worldview.

Bond market debacle coming 2010

Doug Tjaden | December 31, 2009 | 0 Comments

The U.S. has to fund 40% more bond sales than it did in 2009. Yet who is going to buy all of them? This article by Eric Sprott is a vital to understanding that we are continuing to be lied to by our government and the bankers. Look at the numbers regarding who bought government debt in 2009. The catch all category “Household Sector” increased its purchases by 3500% from what they did in 2008. Up from $15 billion in 2008 to $528 billion in 2009.

Do we really think the private sector scooped up half a trillion more in bonds during the “great recession” while at the same time propelling the stock market to new recovery highs? Not.

There is some funny accounting going on here, and the buyer of last resort – the Federal Reserve – is likely to be behind these purchases – through agencies that do their bidding and the ever increasing smoke and mirrors that the financial system has become.

This comes home to roost in 2010. The QE program is supposed to end in March. Not a chance. If QE were to end, who would buy the government bonds? There isn’t enough demand out there, and it is showing in the steady rise of interest rates over the last 30 days.

The currency crisis will manifest itself in the bond market. If it continues to fall (rates rise) then look out. Our economy cannot absorb higher rates, more debt and a failed US treasury auction (debt default). Yet all are on the table for next year.

Are you ready?

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