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10 Signs That Confidence In U.S. Treasuries Is Dying And That Financial Armageddon May Be Approaching

Selling government debt is a gigantic confidence game.  For decades, investors all over the globe have gobbled up massive amounts of U.S. debt at incredibly low interest rates because they believed that it was a certainly that they would be paid back and be able to make a little bit of profit on top of it.  Unfortunately, things have changed.  Confidence is U.S. Treasuries is dying, and if confidence in U.S. government debt completely collapses at some point we could literally be looking at financial Armageddon.  Why is that so?  Well, when the world totally loses faith in U.S. Treasuries, interest rates on U.S. Treasuries will have to keep going up until enough investors are found to buy them.  But much higher interest rates will mean much higher interest on the national debt and thus much higher federal budget deficits.  That will erode confidence in U.S. Treasuries even further.  In the end, a vicious cycle of eroding confidence and higher interest rates could ultimately lead to hyperinflation as the U.S. government and the Federal Reserve flood the system with endless amounts of paper money to try to keep the system solvent.

Faith in U.S. Treasury bonds is absolutely critical if the world financial system is going to continue to operate in a stable manner.  In the post-World War 2 era, U.S. Treasuries have been largely viewed as the absolutely safest investment out there.  So if there comes a point when the market for U.S. Treasuries completely collapses, it is going to cause unprecedented financial chaos.  The worldwide derivatives market, which is already highly unstable, would almost certainly implode.  Credit markets all over the globe would seize up.  Global trade would quickly grind to a standstill.

This isn’t going to happen overnight (hopefully).  Rather, the loss of confidence in U.S. Treasuries is something that is likely to take months or even years to play out.  But once that confidence is gone, it is not something that will be able to be rebuilt easily.

Think of it this way – once you drive a car off a cliff, is it easy to reconstruct it?

Of course not.

Well, that is where we are headed with U.S. Treasuries.

The Federal Reserve is flooding the system with new dollars, Barack Obama and the U.S. Congress seem poised to pass a new tax deal which does not include corresponding spending cuts which will cause U.S. government budget deficits to become even more bloated, and there is a tremendous lack of faith both in U.S. political leaders and in the Federal Reserve at this point.

The rest of the world is losing faith that the U.S. government is going to be able to handle all of the debt that it has accumulated.  We may be approaching a “tipping point” soon.

The following are 10 signs that confidence in U.S. Treasuries is dying….

#1 The financial community is extremely concerned that the tax deal that Barack Obama is pushing is going to dramatically increase U.S. government budget deficits over the next two years.  On Monday, Moody’s warned that if Barack Obama’s tax deal with the Republicans becomes law, it will increase the likelihood that Moody’s could soon be forced to slash the rating of U.S. government debt.

#2 Already there are signs that some bond investors are looking for the exits.  Last week, U.S. Treasuries suffered their largest  two day sell-off since the collapse of Lehman Brothers back in September 2008.

#3 The yield on 10-year Treasury bonds set a six-month high on Monday before pulling back a bit.  Most analysts believe that Treasury yields are going to push significantly higher in coming weeks.

#4 This trend of rising yields has been going on for a while.  In fact, yields on 10-year Treasury bonds have been steadily rising since October 7th.

#5 Even before the recent tax deal was announced there were already troubling signs regarding the growth of U.S. government debt.  The U.S. government budget deficit rose to $150.4 billion in November, which was the largest November budget deficit ever recorded.

#6 It is not just the new tax deal that has investors around the globe spooked.  The truth is that the rest of the globe reacted very negatively to the new round of quantitative easing that the Federal Reserve announced back in November.  The Federal Reserve is flooding the system with liquidity and the rest of the world is not amused.

#7 The American people have less faith in the Federal Reserve and in the financial system than at any other point in recent memory.  For example, a new Bloomberg National Poll has found that a majority of Americans now want the Federal Reserve to either be held more accountable or to be abolished entirely.

#8 Investors all over the globe are starting to wake up and realize that America’s debt problem is unsolvable.  David Bloom, the currency chief at HSBC, raised eyebrows when he recently stated that “if yields are rising because people think America’s fiscal situation is unsustainable, then its Armaggedon.”

#9 There is also a growing feeling among investors that the Federal Reserve simply does not care about the danger of inflation, and this is making bondholders very nervous.  Stephen Lewis of Monument Securities recently put it this way….

“There is a feeling that the Fed doesn’t care about inflation – in fact, wants more of it – and that is certainly not in the interest of bondholders.

#10 Over the next 12 months, the U.S. government is going to be rolling over trillions of dollars in debt along with all of the new borrowing that it is going to be doing. In fact, the U.S. government is somehow going to have to find a way to finance debt that is equivalent to 27.8 percent of GDP in 2011.

For years our politicians have told us that “deficits don’t matter”, but the truth is that they do matter.  The national debt of the United States is now the biggest debt in the history of the world by far, and yet most Americans do not seem to grasp the absolute financial horror that we are facing as a nation.

In the end, debt is always painful.  It can be a lot of fun to run out and buy a beautiful new house, a couple of brand new cars and to run your credit cards up to the max, but eventually it catches up with you.  Well, the same thing is now happening to us on a national level.

We are getting to the point where eventually we are not even going to be able to service the debt that we have already piled up.  Once that happens we can either declare national bankruptcy or we can try to hyperinflate our way out of trouble.

Meanwhile, the once great U.S. economic machine is dying as well.  The only reason we have been able to survive with all of this debt as long as we have is because of how powerful our economy has been.

But over the past couple of decades, the big global corporations that now dominate our economy have shipped thousands of factories and millions of jobs overseas.

The mighty economic machine which is supposed to provide funds to pay off all of this debt is being dismantled right in front of our eyes.

There was no way in the world that U.S. government debt was going to be sustainable even if our economy remained vibrant and healthy.  The sad truth is that U.S. government debt is approximately 13 times larger than it was just 30 years ago.

But now that the “real economy” is dying a savage death there is simply no hope that this thing is ever going to turn around.  The only thing left to do is to take bets on when the implosion is going to happen.

All of this “great tax cut debate” nonsense going on in Washington D.C. right now is just a bunch of incompetent politicians running around rearranging the deck chairs on the Titanic.  Perhaps these tax cuts will provide enough of a short-term economic boost to get many of them re-elected in 2012.  Meanwhile, our long-term economic problems continue to get a lot worse.

It has become quite obvious that Barack Obama is completely clueless about the economy, and what is even sadder is that the “highly educated” Chairman of the Federal Reserve, Ben Bernanke, seems almost equally as clueless.

Unfortunately, Americans have become so dumbed-down that they don’t even realize that their leaders are incompetent.  In fact, as sad as it is to say, most Americans you will meet on the street probably cannot even tell you what U.S. Treasuries are.

Let us hope and pray that investors around the globe continue to have at least some confidence in U.S. Treasuries for at least a little while longer.  When “financial Armageddon” finally does happen, it isn’t going to be pleasant for any of us.

So enjoy these happy economic times while you still have them, because at some point things are going to get a whole lot worse.

  • http://brunolem.wordpress.com Brunolem

    “In fact, as sad as it is to say, most Americans you will meet on the street probably cannot even tell you what U.S. Treasuries are.”

    Sure, they do! They will say it has something to do with the next episode of “Pirates of the Carribean”, some treasury hunting in the US…

    Two things are actually “saving” the dollar and the US Treasuries:

    1. The dollar competitors: the euro, the yen and the pound, are in a worse shape

    2. The so-called professional investors do not believe in a future monetary system involving gold and other precious metals, thus they prefer to hold Treasuries producing interest, rather than metals producing nothing. Good riddance!

    Click on my name to visit my blog.

  • Gary2

    Tax the rich-spread the wealth-Armageddon averted!

  • http://thecivillibertarian.blogspot.com/ Frankenstein Government

    Bring it!

    I said bring on the bankruptcy and criminal charges long ago. And the cowards said, oh no we can’t do that! We have to have bailouts.

    I hope and pray for financial armageddon to arrive. Maybe this herd of sheep they call a country will finally wake up about the time their masters are stripping them of everything they “think” they own. I grow weary of this stream of BS from the banker thieves and their government facilitators. Bring it.

  • Michael2

    I lost confidence in Wall Street, Bankers and the Federal Reserve in the 80’s because of the Farmers Credit “Crisis” in which millions of acres of prime U.S. agricultural land ultimately ended up in industrial agriculture corporate hands. I was still naive back then though and held out for “hope and change” from our government. What convinced me to be afraid and resigned to fate however was the book, Inside Job–The Looting of America’s Savings and Loans by Stephen Pizzo, Mary Fricker and Paul Muolo. After I read this book I realized how rigged the economic game really was and gave up on hope and change and justice during the late 80’s. I quit voting too, not that I had ever voted much previously because it now seemed to me an exercise of futility. I also prepared myself mentally and physically for another 30’s style depression and or worse given our history as a species. The momentous financial scandals that occurred since the 80’s Savings & Loan scandal, like the dot.com bubble, Enron, WorldCom, etc. and the boom/bust and recession/depression prone U.S. economy only served to further convince me that I was right in my judgments. In fact I started thinking that the only that the only difference between Ancient Rome and the US is that the Togas had been tailored into the Western style business suit. Despite the gloom and doom though I still hold out a small measure of hope because for now we at least know a document like the constitution and other documents of liberty and economic schools of thought exist.

  • Owen

    In my opinion, our leadership is not incompetent, they are deoing exactly what they have planned to do: Destroy America in order to bring about a new world order. They are doing exactly what they need to do to extract all the wealth they can before Russia and China finshes America off with a nuclear/bio-chemical attack. They are doing this right under our noses because the majority of American people still trust them. Ask yourself — when is the last time you voted for a Republican or Democrat for President or for Congress? If you are stil electing them, you are still part of the problem.

  • VegasBob

    I think the bond markets have sent an unmistakable message to Bernokio at the Federal Reserve:

    “Stop the money printing or investors will stop buying and interest rates will rise dramatically.”

  • http://SurviveTheGreatInflation.com Michael Murphy CFA

    SurviveTheGreatInflation.com shows that this more than just a credit deleveraging. Both demographics and technology are depressing economic activity, and Bernanke sees neither. So he will keep using credit tools to fight deflationary forces that will never respond to credit tools, until the dollar is toast. He has no reason to stop before the Great Inflation hits.

  • mondobeyondo

    [In C3PO voice, of “Star Wars” fame]

    “We’re doomed, I tell you! Doomed! Is there no hope?”

    And R2D2, I mean Ben Bernanke, responds with squeaks and whistles, and fanatically pulls levers in a vain attempt to beat a dead horse back to life.

  • tgus

    wowsers

  • mondobeyondo

    The first paragraph of this article pretty much explains why the prime lending rate has been kept close to zero for the last several months.

    But sometime, somehow, some way, interest rates will have to go up. A time will come when nobody will buy our bonds at 0%. What would they get in return? Nothing! (no pun intended)

    A nearly $14 trillion debt at 0% interest is bad enough. Imagine it at 2% or 5%.

    In the early 80’s, Greenspan raised the interest rate to 20%. But we didn’t have a $13 trillion debt in those days. That really hurt back then. With the debt we have today, it would be a death sentence – which is why Bernanke will never even consider it.

    Would an interest rate hike help in any way at this point?

    No. We’re beyond help.

  • mondobeyondo

    I meant to say Paul Volcker, not Alan Greenspan, in my previous post. Volcker was the guy in charge of the Fed in the early 80’s.
    Not that it really matters that much…

  • http://www.planorperish.com/ Gutter Economist

    #11 It appears that the long term trend of bond prices and interest rates has reversed:

    http://www.planorperish.com/?p=2494

  • flubadub

    Thanks again for shedding some light on the impending catastrophe. Another sign that people are losing faith in treasuries: the near doubling of silver prices over the course of 2010.

    http://www.ebullionguide.com/price-chart-silver-last-1-year.aspx

    Precious metals along with commodities in general are increasingly being seen as safer investments than U.S. bonds.

  • RunVampRun

    There is hope:
    Emergency Essentials has freeze dried chicken ( 25-year shelf life) on sale for less than $17 (for a #10 can) all this month!
    Academy Sports has the Ruger (SR9) .9m for less than $400 this week and a Ruger (LCP) .380 for less than $330!
    The Mint seems to have replenished some of their silver and is selling the American Eagle Silver Dollar (ships on the 13 of next month) for less than $46!
    Adaptive seeds are putting together a new online catalog for their artisan quality, non-synthetic seeds!
    Please prepare yourself…the coming collapse is going to be a long and arduous event!

  • Suetonious

    Our leaders are not incompetent. They are not stupid. They are not screwing up. However, WE are.

    How? Because we are colossally clueless as to what they are doing.

    Not too long ago (less than 7 years ago), I had a conversation with a close relative who was very high up the food chain at Freddie Mac. Being an engineer, I asked her a buncha elementary questions about what Freddie Mac does. She explained the whole mortgage bond packaging thing in fairly good detail. I asked what would happen if all the bonds went mega-worthless if the housing market ever went sour. She told me that would be impossible for two reasons: A) Housing values would always increase and B) the bonds were backed by the full faith and credit of the US government. These answers absolutely stunned me. The first answer blew me away for obvious reasons, as it struck me like Dutch Tulip bubble folly, even if very long-lived. The second answer just floored me because she said it like the US government was some sorta immutable force that could take on Nature itself. However, the conversation was very revealing for the brainwashing that happens even amongst people that are highly intelligent. Apparently, GI=GO at any level of intelligence.

    Anyway, it is our collective fault for switching off our brains and refusing to say “Waiiiiit a friggin’ minute….” when Bernanke and the piddling little minions in the White House and Congress tell us lies that just cannot be true, because we don’t..LIKE the truth. It is our fault too that we think it is because they are stupid. That’s a cop-out on an even more unpleasant truth. And that is that Bernanke and crew are very aware of what they’re doing, and they mean exactly what they do.

    The collapse has been pre-ordained to bring out the conditions necessary to establish a global currency. After they collapse the dollar, Bernanke and his fellow minions will come out and say, “Look at what the system allowed us to do! We collapsed the global economy with currency debasement. Stop us from being idiots again! Establish a global currency and shut down our printing presses! Call now – and you not only can get Bancor’s for your dollars – but a world government to go with it! But don’t delay! This is a limited-time offer, after which, your dollars will no longer be accepted anywhere and for anything.”

  • David Robertson

    If indeed the US dollar is going to fail then it was designed to fail and will fail when the ruling elites choose to allow it to fail.

    There are actions the Fed can take to avoid this fate and they are doing just that. They can keep the ball rolling along just as long as they want to. The major banks work with the Fed to keep the game going and if anyone gets out of line they kill them off, just like they did with Lehman and many others. They then assimilate them.

    Their game plan, so far as it is ascertainable, is to create political infrastructures around the world that are designed to be undemocratic and hierarchical with all the power flowing upwards to the top, there to be held in as few hands as possible. They have done this in Europe with the signing of the Lisbon Treaty which is pretty much a copy of the 1933 Enabling Act that gave the Nazis to dictatorial power. There the power is with the EU Commission who are controlled by the corporate cartels.

    A similar structure has been built in America under the cover of a phoney Constitution that was put in place in 1871 but gained real traction under FDR in the 1930’s. The real power in America is in the hands of the office of the President and the administrative branch of government which follows orders from the corporate cartels. All the other major nations are similarly organised.

    Over the same period the international ruling elites have been acquiring control over all land and property as well as natural resources, energy, water, food and dominate every sector of the economy through their corporate cartels. Michael2 above makes this point very clearly.

    Overarching all of this is the web of international treaties emanating from the UN which is designated as the eventual world government. It is beyond me how anyone can imagine that the international corporate elites are going to give up all of this control when they have been working for it for hundreds of years.

    They can and will be defeated but not by any earthly power, nor by physical strength but by My Spirit says the LORD God who is your Redeemer.

  • messengerr

    Buy gold, then buy silver, then buy even more gold, then maybe you should start thinking about “REALLY” buying gold & silver, then buy more and more and more and more and more every spare penny then buy some more!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Now what part of that don’t you understand?

  • Craig

    Good article however Obama and Bernanke are not clueless and incompetent. They are very sharp, manipulative people following the precise new world order plans of the Bilderbergs. Those who consider this “conspiracy theory” are clueless and incompetent. Average People on the street need to know more about the Bilderbergs adgenda than US treasuries.

  • William

    If Americans actually knew what the Rothschild banking dynasty is, what the Federal Reserve is, what the major Wall St financial institutions do, and the relationships these entities have with each other and the US Treasury Dept, there would be a revolution in America that would make the one that founded this nation look calm. But, Americans do not care that their future has been thrown away. No, they want to text message and dance with the stars and American Idol and believe the garbage that the US government spins out each day.

  • http://ariel.org stilo

    A one world gov’t might not destroy America, as it has already exported our culture around the globe. The transition might be seamless, everything working together toward that end. You can’t blame individuals for this, it’s the Invisible Hand (and the handwriting is on the wall). This is the 4th empire– Imperialism, which includes the Roman Empire and will include a one world gov’t stage, 10 division stage and the AntiChrist stage. This is all covered in Daniel and Revelation:

    http://www.arielu.org/amdld.htm

    We don’t yet have one world, as in the days of the Tower of Babel, but someday the financial center of the world will be Babylon (now Iraq).

  • Chartguy

    This is funny…… another person just writing as if its a foregone conclusion that the world will lose faith in Treasuries.

    “#2 Already there are signs that some bond investors are looking for the exits. Last week, U.S. Treasuries suffered their largest two day sell-off since the collapse of Lehman Brothers back in September 2008.” – WOW – A WHOLE TWO DAYS!

    “#3 The yield on 10-year Treasury bonds set a six-month high on Monday before pulling back a bit. Most analysts believe that Treasury yields are going to push significantly higher in coming weeks.” WOW – A WHOLE SIX MONTH HIGH! WRITER FORGETS TO MENTION BONDS ARE STILL UP ON THE YEAR (RATES ARE LOWER COMPARED TO YEAR END LAST YEAR), AND THOSE ANALYSTS WHO ARE USUALLY WRONG THOUGHT RATES BE BE UP THIS YEAR.

    #4 This trend of rising yields has been going on for a while. In fact, yields on 10-year Treasury bonds have been steadily rising since October 7th. HAHA – YEAH LONG TIME THERE. FORGET THAT THEY ARE LOWER THE PAST #) YEARS. THIS AUTHOR MUST ASSUME THAT UNLESS RATES GO DOWN EVERY DAY AND IN A STRAIGHT LINE, THE MUST BE REVERSING. HOW MANY TIME IN THE PAST DECADE HAS THIS AUTHOR CALLED THE BOTTOM IN RATES ONLY TO BE WRONG?

    I could go on, but I don’t need to. For a guy who gave an analysis against this type of fear mongerer, see these articles:

    http://seekingalpha.com/article/222054-why-hyper-inflation-is-a-low-probability-event

    http://seekingalpha.com/article/220467-u-s-dollar-and-long-bonds-gotta-own-them

    http://seekingalpha.com/article/217555-here-s-why-i-m-bullish-on-the-long-bond

    http://seekingalpha.com/instablog/475264-tim-ayles/87960-paring-back-exposure-to-the-long-bond-for-a-trade-only

    http://seekingalpha.com/article/241219-was-bernanke-lying-about-printing-money

    This guy helped me get it.

    Even the responses in the blog from readers are so typical:

    “In my opinion, our leadership is not incompetent, they are deoing exactly what they have planned to do: Destroy America in order to bring about a new world order.”

    yeah – I’ve never heard that one before. Thanks for the original thought.

  • zack

    The implications for this loss of faith in our debt is staggering, considering that government debt is what backs our currency. Oh yes, thanks to the Fed, the currency is also now backed by worthless mortgage derivatives. When no one shows up to the Treasury auctions, interest rates will spike, and all of the bailed out banks will go bankrupt again.

    We help Americans find jobs and prosperity in Asia. Visit http://www.pathtoasia.com/jobs/ for details.

  • Scott’s Sense

    The most concise summary of my thoughts.

    Meanwhile american thoughts are …”Itz cuzza dem Iraneuns and Muslins, ….attack!!!”

  • D

    There is hope in Jesus. Get on your knees and pray like never before. It will collapse and we cannot imagine what is coming, but if you prepare now on how to live in a cashless society you will be ahead of the rest. Hard to imagine, but it can be done. We will be reduced to a bartering country. All societies that get away from God collapse and we will not be any different and will be brought to our knees the hard way. Conversion begins with self, then family, then friends, then society. Our leaders can’t and won’t be able to help us.

  • http://leibowitzsociety.blogspot.com Leibowitz Society

    There really isn’t much time left to prepare for the inevitable destruction of the American economy (and subsequent destruction of the American civilization). There’s not a lot to do at this point, but realize that the storm is coming.

    At the Leibowitz Society (http://leibowitzsociety.blogspot.com), we are working to save our essential accumulated knowledge and preserve it for future generations when the time comes up pick up the pieces and start anew. While you are making your own personal preparations, please consider taking a little time to include generational preparations like these as well.

  • Jack Duncan

    Let’s legalize all the drugs. The drug lords have as much cash as China has in our bonds.
    Tax the hell out of it and save the Treasury.
    Worst case scenario, we all go out with a smile on our faces!

  • http://ariel.org stilo

    I’ve never read Adam Smith, but his Invisible Hand idea I want to extend a bit further, into something that he might agree with, as he lived in a time when people still agreed with such things. This Invisible Hand has distinguishable economies in the outworking of its purpose, economies in which man is tested in respect to obedience to something specifically revealed about the “will” of the Invisible Hand. So is Bernanke obeying the revealed will of the Hand? No and yes.

    Some might say there is no an Invisible Hand and they will be doomed to the confusion of never understanding. The “handwriting on the wall” proverb, being directly from the Book of Daniel, spelled doom for the last Babylonian Co-regent. If we ever see a hand, writing on the wall we can assume we’ve missed something, somewhere along the line. And this hand wrote out in Babylonian: “your kingdom is doomed”. Medo-Persia was coming, in fact would be there that night.

    So what has been specifically revealed to men about the will of Mr. Hand in this economy? and how should men act so as to obey the Invisible Hand? (you would not believe me if I told you, which is of itself a sign of the Hand writing on the wall).

    The Invisible Hand is bringing in a new
    Medo-Persia was coming, in fact would be there that night.

    So what has been specifically revealed to men about the will of Mr. Hand in this economy? and how should men act so as to obey the Invisible Hand? (you would not believe me if I told you, because it has been so much maligned). These are rhetorical questions.

  • Aleg Whitfield

    The entire world system needs t diligently and carefully re-structure and re-construct from ground zero state.

    The US needs to wage war on its debt rather than war against lives abroad. To much money wasted on Military wars outside the US. They need to actually refresh and revamp with an open mind, soul and spirit!

    Otherwise, going over the rocky cliff would be no fun at all for anyone, so let stay braced in any case for a free fall…regards

  • geterix

    actually, in reference to the fed indirectly,
    the whole global scenario is rather dismal,
    for myself , living in cities like NY or London , Paris, Dubai, etc is abhorent! so then what?
    as we can’t all live on a farm in the middle of nature, or return to the trees, the leaving of which was likely our greatest mistake ever,ahem!
    where to now? , weath differentials are a driving force in the cultural economy,even if we all became “wealthy” overnight?, we’d still live in cities and vastly overtax the sustainaility of our global ecologies,even sooner, a massive reduction in population, coupled with sustainable life styles, might
    project us out a few more centuries, or until
    we do a nose dive into a black hole, but for a variety of reasons this scenario is most unlikely, again , where to from here, its a danse, to be learned and enjoyed day to day,
    have

  • GoldBug

    “Nobody” is in charge, and “Nobody” just wants to keep things going on and on until it does not keep going.

  • http://www.danielrevelationbiblestudies.com Robert Stout

    Fellow Patriots, the time has come to prepare for the worst economic disaster in history!!! Thanks to the staff and writers of the Economic Collapse we have been informed of the oncoming financial disaster that is coming like a high speed train into a city or town near you!!! Don’t be caught when big things are happening, go to http://www.survivalblog.com and glean all yo can for you and family while there is still time!!! Remember, the old grandfather clock of time is clicking
    off precious minutes go get ready, get ready!!!

  • Joseph

    It is no surprise that the Fed does not care about inflation. When are the servants of the Fed a/k/a the American population going to realize the Fed is a PRIVATE corporation. They control the money, so control the government and all the citizens. They know their number is up so uncontrolled printing only benefits them as they receive a percentage off the top of every bill they print. On a bad scam if you can maintain it.
    It would be great to finally expose their shenanigans, who ‘they’ are, and what they are investing in with their ill-gotten gains.

  • INNERTRADER

    All one has to do is look at history. Socialism has never worked longer than it took to go through the “value” created by the free market system. Socialism’s very nature is to feed off of the productive and once the productive leave and/or stop producing, game over! One would have to be a complete idiot to not know a little about the history of socialism. Our ONLY answer is the FairTax and it may even be too late for that! Detroit was once the iconic city of the USA and the FEDs under Johnson spent 400 Million on Detroit back in the 60s to make it the shinning example…. well take a look at it now, it’s all over the net. That is where this country is headed and it may be too late to change the direction no matter what.

  • breed

    yes, but the federal government is not revenue constrained, it is the world monopoly producer of the reserve currency, and holds no debts denominated in foreign currency, therefore it is not able to default on debt. however, it is a currency that requires confidence in the whole game, and once that drys up, the game ends. usa is not revenue constrained like the typical family or a state… it can’t possibly default on debt, therefore moody’s rating is kindof weird.

  • Philip M.

    > 10 Signs That Confidence In U.S. Treasuries Is Dying
    > And That Financial Armageddon May Be Approaching

    The confidence in the US Dollar will stay with us, albeit it’s true this recovery will take much longer than any previous one.

    Political gridlock will force Democrats to get going again.
    But there is one upside of all this:

    On The Upside: We Will Not Become A Second Europe:
    http://www.hedgethebets.com/latest/2010/11/markets-expect-political-gridlock-and-why-it-could-actually-be-a-good-thing/

    VAT tax rates in Europe were initially introduced at a seemingly harmless rate of slightly above 10 percent. Give the government a finger and it will take the whole hand and ask for the leg.

    From this point of view the Tea Party movement makes a lot of sense, because no matter how much you give the government it always succeeds in wasting your taxes!

  • http://imissmyfreedom.blogspot.com chris

    The sad truth is that most Americans don’t care what US Treasuries are much less the dire condition of our economy and even if you tried to explain the horror to them, they simply don’t want to know. They would rather just be blissfully ignorant… they actually prefer it that way.

    I don’t know how many times I’ve tried to casually inform friends and family of the coming chaos only to be shut down with rebuttals like “I just don’t want to hear about all that”… “I can’t deal with that”… “I don’t want to know about that because it just depresses me”… and so forth and so-on.

    Until that attitude changes, we can only prepare ourselves for what is coming. God help us.

  • FreedomScribe

    Bush and his father are criminals…Clinton is now IN with them…Obama bin Lyin’ is so incompetent he has botched up his “front man’ job for the Evil Soros gang/NWO. USA was aptly referred to as The United Staes of Entertainment. We produce almost nothing thanks to commie liberal socialist environmental wacko jerk offs who have spent the last 30 years making sure we can’t gather our own natural resources.

  • Dave

    “This isn’t going to happen overnight (hopefully)”

    Yes it will. Treasury investors won’t stand around forever watching their assets shrink to nothing. When a critical mass of doubt is reached, they will stampede for the exits. In less than twelve hours, the financial crisis will be over, the dollar will be worthless, and every store will be emptied to the bare walls.

    No one can predict when this will happen, not even the day before, because knowing the outcome in advance would change the outcome. It’s an economic version of the Halting Problem. Just be prepared.

  • David John W

    Get your money out of the dollar as soon as possible. I’m an Iowan that lives in Brazil. It’s great here. While we aren’t using our money to buy farmland and grow cotton and other commodities our businesses move large amounts of money from our checking accounts into short term investment accounts and earn 10.5% plus the Brazilian currency continues to gain on the dollar which enhances our dollar return. Plus we can take the money out of the accounts at any time! follow me on twitter at davidjohnw

  • Lennie Pike

    Suetonious and David Robertson :

    Exactly.

  • hal

    End the Federal Reserve and thereby end the INFLATION TAX. The Federal Reserve is Congress’s credit card. Take it away!

  • Robert J Molineaux Sr.

    The US will not be able to pay the interest on its debt once rates return to “normal” levels. The dollar will cease to be the reserve currency. What alternatives are there? The Swiss and Swedish currencies are stable, but they are very small economies to support reserve status. The equally dismal status of the UK pound and the euro are the only things that have delayed the removal of the dollar. Japan has an enormous fiscal debt that disqualifies it. China, while growing strongly, is also unstable and subject to inept government intervention. IMO, only the IMF has a real possibility of stabilizing the situation, but most states are not willing to surrender economic sovereignty to it. A substantial period of disorder is unavoidable.

  • http://shankystechblog.blogspot.com/ shanky

    We’re so screwed. Can you say Argentina? I agree with Porter Stansberry that we’ve gone too far this time and there is really nothing we can do to fix it at this point.

  • mondobeyondo

    I assure you, most Americans are well aware of The Situation.

    You know, that guy on the “Jersey Shore” TV show. The guy who works out at the gym, does laundry, has a perpetual tan, perfect muscles, and so forth.

    They hope The Situation will improve. Maybe his muscles will get bigger.

    They are totally unaware of the real situation that matters, though. They turn the channel, and watch Bristol Palin dancing with the stars.

    I see no way out of the Mess we are in.

  • David

    If the better world has yet to come out of this crisis, then let it be! let the the whole damn financial system collapse worldwide. But the fact of the matter is that the collapse is inevitable, and no one can stop this from happening! Prepare for the worst time of this century to come; total chaos could reign all over the places, riots at every corner of any major city and before you know it Dukes and Gangs may take over of every city in the world. Welcome to the new civilization folks. And only Gods knows what would come after that; maybe just the end of civilization as we know it. Whatever may happen, it would suit me.

  • Michael R.

    “This isn’t going to happen overnight (hopefully). Rather, the loss of confidence in U.S. Treasuries is something that is likely to take months or even years to play out.”

    Habakkuk 2

    7“Will not your creditors rise up suddenly,
    And those who collect from you awaken?
    Indeed, you will become plunder for them.

  • http://www.crewtonramoneshouseofmath.com Crewton Ramone

    The math is actually quite simple.

    Financial Armageddon May Be Approaching?

    The Pope may also be Catholic. Water may be wet. One legged ducks may swim in circles.

    Financial Armageddon IS Approaching. People confuse inevitable with eminent. Change is the constant, we’ve had a system of debt that has been about 500 or 600 years in the making. The last 100 or so have given the USA supremacy and that is about to change.

    Fiat experiments never end well, and when the game comes to end cash is king. The old definition of cash as in “cold hard cash.” Paper is not cold or hard, metal is. Our masters even control the words we use making debate and understanding that much more difficult. But people are beginning to understand the problems with fiat and debt and around the world where silver is the same word for money in over 50 languages people are returning to real money as they watch the system fail.

    With the power of the internet people are also realizing this change is 100% premeditated. No accident. The agenda of the elite is not in line with the agenda of the common man, and a free nation like the USA has always been in the way. But now we also have other nations on the world stage that had been brushed aside for hundreds of years: China and India. Their agendas are also very different from the western elite and are making things even more interesting.

    Articles like this are becoming more common as people wake up to the fact that all is not well and the bankers are not as benign as they once thought. I think we can come through this and be better for it. More people need to wake up and get involved, we can create a better system or we can be enslaved by debt.

    I have no idea how this is going to play out but one thing certain there will be pain for America…and the world as we go though the change. The Chinese curse is in full effect:

    “…may you be born in interesting times…”

  • mondobeyondo

    Bernanke, Obama, et. al. are not stupid.

    You do not go to Ivy League schools to graduate dumber than a 5th grader.

    I watch enough TV to know that those kids on “Are You Smarter than a 5th Grader” know a little bit about the adult world.

    It IS intentional. The Fed does not have the American public’s interest at heart (duh!)

    Many people don’t realize it, but real evil exists in the world. Comforted by mainstream broadcasts about “them folks” in Bangladesh, Argentina, Thailand, etc – we’ve been insulated from the harsh truth. “Yay!” the sheeple bleat. “We don’t have food riots and devastating floods here in the U.S.! Poor dumb third world filth!”

    Oh, but we will.

    Read Leviticus 26, and allow it to ring in your ears. Ancient Israel = USA 2010. No difference. We’ve disobeyed God’s rules. And soon we will pay a heavy price for it.

    America is not the world, and the world is not America. Even though Americans who don’t know what a passport is, or can’t even pronounce the word, think it’s so.

  • http://WBDM Joe in JT

    The reason inflation went off the charts in Germany’s Weimer Republic is because Britian demanded war reperations as a condition of surrender during WW1. So when the Brits told Germany we will take more and more of your money the Germans said “fine”, then proceeded to print paper until it was worthless. I don’t think it’s fair to compare that experience to what might happen here in America. Just my two cents worth of opinion.

  • Gary2

    People need to stop voting for rich people to represent us in congress/senate. Their interests are not those of the bottom 90% of us. Is it any wonder we are discussing giving the rich another tax break while there are record numbers of people in poverty? Look at the idiot voters in Wisconsin who voted a millionaire ron johnson to the senate to replace a non millionaire Russ Feingold. What a bunch of fools. Most of the low information fools that live in Wisconsin only care about football.

    Disgusting right wing scum.

  • http://WBDM Joe in JT

    Did anyone notice that Bernanke on that 60 Minutes interview was scared as a rabbit being chased by a coyote? His lip quivered uncontrollably like a guilty murderer being interviewed by 3 homocide detectives at the police station. The point is this. What the heck is he trying to hide from us? It’s something big, I can feel it. And it doesn’t help when our government looks just as afraid as Bernanke when WikiLeaks puts out nothing but hard facts of our wars and politics from around the globe.

  • mondobeyondo

    These people in high offices and positions know EXACTLY what they are doing. They are not stupid.

    They are deliberately steering this Ship of State directly into the iceberg. They already have their lifeboats ready, prepared to live the high life on the French Riviera or wherever they plan to ride out the upcoming crisis.

    You and me? We’re what they call “collateral damage”. Too bad, so sad. When the SHTF, Washington won’t lift a finger (middle, index or otherwise) to help you. They basically exist to help themselves, and their friends.

    Grab a life vest while you still can. The water’s cold, and the waves will only get higher…

  • mondobeyondo

    Pork at my local supermarket is going up.
    I paid nearly $7.00 for three pork chops yesterday.

    Pork in Washington keeps going up, and up, and up, up, up.

    Pork chops don’t exist in Washington. Your Congressmen and Senators don’t know what “cutting unnecessary expenses” means. Keep voting them in, and they’ll keep demanding more, more, more.

    Soon, they’ll go after the whole pig.
    And then they’ll cook your goose.
    Yeah, the one that lays the golden eggs.

    As for the rest of us 309 million people (plus or minus) – we’re in trouble. We’re in trouble deep.

  • Jason K

    Did anyone realize that one simply can’t live on borrowing or credit card spending ? How come a big nation can escape the same fate of either bankruptcy or hyperinflation then ? It’s just the basic laws of economics on Earth that no one is exception. Just tell the mega dinosaurs when the basic laws of survival in sovereign , no one is exceptional , no matter how big you are. There is NO TOO BIG TO FALL !

  • honestann

    The Titantic is almost vertical, and very soon will start sliding downward into the abyss.

  • http://none Ashok

    Well, it is true that the world watches with mixed views, some with amusement, some with despair while a few others might be expecting the safety of thier national debts to be paid to US !

    But Blank despare and frustration is not the only way if one encounters a road block. it is impossible to smash your way out and only saner option for America, in my view to drop the EGO AND FACE IT WITH CONFIDENCE AND TRUST. MOST AMERICANS ARE WONDERFUL GIFTED PEOPLE AND IT IS TIME TO LISTEN TO YOUR INNER VOICE AND HEED THE GUIDANCE LONG SINCE MADE AVAILABLE BY US FOUNDING FATHERS AND listen to any and all well-meaning cousels from the brilliant brains in many other countries. Time for American Leadership for a sober reflection and NOT RESORT TO ANY INSANE AND RASH REACTIONS for there would be many within US system itself eager to push America to a disastrous path !AND NO ANY insane rash reactions BUT A sober reflection. UNIVERSE IS TESTING THE GRIT DETERMINATION AND RESOLVE OF THIS GREAT NATION.

    ASHOK SHARMA

  • john

    Ashok Sharma. The implications of the fiscal madness of the United States doesn’t just affect the American People. It is global. So you can sit around idle waiting for your inner peace, while I see my people slaughtering eachother for food in the streets. Peace cannot exist without war and vice versa.

  • rebootd
  • mike

    Looks like Washington has a problem.

  • http://mrbonetonemusic@yahoo.com james

    the financial armageddon has begeon its just proped up with tooth-picks and a house of cards it will fall by the 2012 election will be civial chaos.!!!! end game america too many crooked bankers, j.p. morgan, chase, bank of america citi bank. wall street and the federal reserve.! all propagated by bush the war criminal and 911 conspirter.!!! terrorest, and his accomplice cheney, bush seinor and rockefeller.!!! it was all a staged pearl harbor for control of the global banks, america ate it like breakfast cceral, we are the suckers.!!!!

  • TimeTraveler

    As China and Russia have now cemented their trading policies with each other into their own currencies, and not the dollar, the bell has now tolled on this economy. China trades with the yuan in Asia, and it is only a matter of time before the bond market collapses as Bernanke keeps his finger on the printing press, and the rest of the big players out there realize the dollar is worth nothing.

    The flashpoint could come as Spain and Portugal are lining up right behind Ireland as the next two countries go to the head of the IMF bread line for assistance. But this time nothing will help the EU as Germany is ready to pull the plug on them, and the Federal Reserve has no way of dealing with the magnetude of their debt. The EU will collapse sending shock waves thru out the system and the ripple effect will most likely implode the $600 trillion derivatives sitting on the books of the central banking system. Instantaneous implosion of the whole economic system!

    The other story is the Comex and the LBMA as they have shorted the market, and as they are being investigated, they will not have the resources to back up their contracts, as again the billionaires of the world try to take them down and demand their physical gold and silver.

    Gold and silver are going to do a moonshot as hyperinflation destroys the US. It will happen overnight as the sheeple of the US awaken to some very dark times ahead.

  • http://TheEconomicCollapse Dan Shuh

    Obama and Bernanke are not “clueless at all”.
    Everything they are doing is by design to destroy America as we know it. The Globalist Agenda is to make an “equitable distribution of wealth” around the world. Why do you think millions of manufacturing jobs have left this country and gone to third world nations like India and China. The plan is to inflate away our national debt. Thomas Jefferson said it best about a private bank such as the Federal Reserve. “I believe that banking institutions are more dangerous to our liberties than standing armies.If the American people ever let private banks to control the issue of their currency,first by inflation,then by deflation,the banks and corporations that grow up around (the banks) will deprive the people of all property until their children wake up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people,to whom it properly belongs.”
    Just ask the hundreds of thousands of people that have lost their homes if they would agree with that statement.

  • jane

    The whole thing is a Ponzi scheme. Bernacke and the others would be put in jail for financial manipulation or fraud if they didn’t work for yjr gov’t

  • John galt

    The fed can create endless money secretly. Imagine having your own printing press while nobody else does. You and yours can become insanely rich, buy up whole industries, and control economies without anyone knowing. Honest, god fearing society believe you to be rich due to ivy league job connections, skill, intelligence, old money. The big boys hide truth by obfuscation. Ever read L Ron Hubbards book “Dianetics?” Lots of technobabble and huge words that create the carrot effect. This “knowledge” simply misdirects and exhausts the curious. Banking is no different, nor many other industries like medicine. The Fed props ups the world, its money feeds foreign banking and countries. Point is money isn’t needed. Imagine again you own the only printing press. If responsible and not power hungry, money could discretely be strategically delivered both domestically and abroad for the benefit of all. We are constantly reminded of conservation of energy and the fact that nothings free. What if Energy was free like the motor in Atlas shrugged? Tesla had the technology 100 years ago to create free, non polluting power. But the media is always fear mongering about how natural resources are running out and we are bad, immoral, greedy, etc, for turning lights on. Have you noticed technology has stagnated, the resistance to electric cars, solar energy? The upper atmosphere runs above 300,000 volts, power is plentiful. JP Morgan destroyed Tesla’s free energy because it couldn’t be metered and thus he wouldn’t financially benefit. Entrenched power would lose control if the hidden tech were made available. Just like Medicine will never cure cancer, diabetes, or autoimmune but only “treat” the symptoms. Self reliance destroys power. Its all about Power and maniacal arrogant ego. Its an illusion, just like Enron’s artificially created power shortage in California. Remember in the 90s being told Americans are lazy compared to Europe only to find out Europe mandates minimum of 6 weeks vacation, and then, 30 hour weeks? Life is relative. Money can only buy so much but power is an aphrodisiac. Simply, they like to manipulate.

  • http://yourownonlinebusiness.net/start-online-business/small-business/management/accounting/ Frank Chiesa

    It is about time that Congress did something right and stopped the pending tax increases. But I’m not so sure about the 13 month unemployment extension. Come on … 3 years of unemployment payments.

  • http://www.pathtoasia.com Rhea

    The economic issues facing the nation will not be solved by more partisan gridlock. 85-90% of every federal budget goes to 4 items (Military, SS, Medicare, interest). Neither Democrats nor Republicans nor the FEDs have been able to reduce the debt or the deficit. Electing a bunch of extremists who talk about death panels and socialist takeovers will make partisan bickering and gridlock worse, not better.
    We help Americans find jobs and prosperity in Asia. Visit http://www.pathtoasia.com/jobs/ for details.

  • Denise Wright

    breed, you are naive like so many Americans. Countries CAN go bankrupt. Look at Argentina, the Weimar Republic of Germany.

    Printing more money makes it worth less.Print too much and it becomes worthless.

    Sell your Treasuries NOW. Sell your muni bonds too. Log on to Everbank about foreign currency CDs.Or Merk Funds.Or Franklin Templeton if you don’t mind paying load fees.

  • Johnny

    Emergency Broadcast Alert: Government offices, schools, banks and mail delivery are closed for the indefinite future. Social Security and Medicare payments are suspended for the indefinite future.

    All senior citizens and disabled who are unable to find shelter with family or neighbors must report to your nearest FEMA center. If you are unable to get transportation due to public transit workstoppages or fuel shortages, you should notify FEMA to request transportation.

    All residents are ordered to remain indoors until further notice. Curfew hours will be in force from dawn until dusk. All unauthorized movement during non-curfew hours will be severely punished.

  • Blammo

    They’ll fix it just like they did the last time.
    Prepare for WW3.You didn’t notice but you voted for it.
    Pura Basura.

  • hal

    If we don’t pay taxes to cover government spending, then the Federal Reserve has to “print” or create money to cover the debt.
    Politician s don’t like to increase taxes; they won’t be elected; they relie on the Fed to pick up the tab and we pay, the poor and the middle class, the INFLATION TAX. The weathy are able to make out because they own assets that increase in value. The INFLATION TAX is evil; it destroys the progessivity of our system of taxation. End the Federal Reserve and then our government will have to live within it’s means. Between 1881 and 1912 the purchase power of the dollar remain the same. After the extablishment of the Fed in 1913 the purchasing power of a dollar in 1913 declined to $.04 in 2009. We must END THE FED.

  • http://none tony

    Obama clearly does not have even a basic understanding of the American banking industry. He is completely incompetent, which makes him maleable by the powers who got him elected; he is nothing but a puppet whose strings are pulled by others.
    Bernanke is simply throwing a hail mary pass with his quantitative easing program. He knows all too well the end could be near but has nothing left to work with except to keep buying the bad loans held by the major banks and making more money available to them. In reality, the major banks are already insolvent but the common man truly has no clue had serious the mess is that we are in. If the banks had to carry their bad loans at their real value rather than face value, their reserves would be totally inadequate. Bernanke is helping them with the low rates so they can make easy money in the “carry trade”.
    Frankly, there is no good ending to this mess because the clowns who got us there are the same clowns that havent the courage to fix it, namely, slimy, crooked, self serving politicians. When the collapse of our financial house of cards come, it will indeed be ugly and will last for years. The mathematics of the problem are simply undeniable for those of you who can add and subtract. tony

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