Record US Bond Sales for the Fiat Ponzi

Posted | 21/02/2018 / Views | 2181
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Last week we discussed the planned (not accidental) massive increases to the US’s deficits, some $1.2 trillion this year. So how does one pay for these deficits?  Issue new debt of course! So it should be no surprise that last night the US Treasury issued a record amount of Treasury bonds, $179b in one day and an expected weekly total of $258b, a new record.  Dumping this much debt onto the market can only have one consequence and that is higher yields.  2 year US Treasury (UST) bonds hit 2.26%, their highest since just prior to the GFC, 10 year UST’s hit 2.93%.  Higher yields mean higher interest payments on debt, more deficits, and the need for more debt to pay the interest on the existing debt.  

And how about some context for the $258b new debt in one week…From Casey Research “In January 2017, there was about $8.8 trillion in savings stashed away in depository institutions in the U.S. (some of it belongs to foreigners). Today, there is $9.09 trillion… or an increase of less than $300 billion over the year.”  You do the math.

Again we are reminded of the farce of calling Bitcoin a Ponzi Scheme when the US is arguably running the world’s biggest one.  Way back in 2014 we wrote the article US Debt Ponzi Scheme.  It is worth going back and having a read.  In 2015 we wrote of the issue of ‘debt saturation’ when the market can’t take any more on, and it too is worth (re) reading.

Many may not have thought we would be still talking about this in 2018.  However the discussion is now being had in an environment of even higher debt but also all-time-high leverage (debt) into nearly all-time-high financial market valuations and the clear emergence of the inflation genie, though arguably stagflation as the growth figures are still meagre.

Is it any wonder then that gold is outperforming those same financial markets and, along with Bitcoin, appearing to start its next bull market run.