Three
Horrifying Facts About the US Debt Situation By Phoenix Capital
Research | 10/07/2010 08:16 -0500
Since too often financial articles consist of some stooge
blathering on and on with opinions instead of facts, I thought
today we’d simply focus on some FACTS about our current
financial system which few if any want to acknowledge.
#1: The US Fed is now the second largest owner
of US Treasuries.
That’s right, this week we overtook Japan, leaving
China as the only country with greater ownership of US Debt.
And we’re printing money to buy it. Setting aside
the fact that this is abject lunacy, this policy is trashing
our currency which has fallen 13% since June… as in
four months ago. Want an explanation for why stocks, commodities,
and Gold are exploding higher? Here it is.
#2: “There are only about $550 billion of
Treasuries outstanding with a remaining maturity of greater
than 10 years.”
This horrifying fact comes courtesy of Morgan Stanley analyst
David Greenlaw. And it confirms what I’ve been saying
since the end of 2009, that the US has entered a debt spiral:
a time in which fewer and fewer investors are willing to
lend to us for any long period of time… at the exact
same time that we must roll over trillions in old debt and
issue an additional $100-150 billion in NEW debt per month
in order to finance our massive deficit.
And only $550 billion of the debt we’ve got to roll
over has a maturity greater than 10 years!?!?
So we’re talking about TRILLIONS of old debt coming
due in the next decade. The below chart depicting the debt
coming due between 2009 and 2039 comes courtesy of the US
Treasury itself. In plain terms, we’ve got some much
debt that needs to be rolled over that you can’t even
fit it on one page and still read it.
#3: The US will Default on its Debt
… either that or experience hyperinflation. There
is simply no other option. We can NEVER pay off our debts.
To do so would require every US family to pay $31,000 a
year for 75 years.
Bear in mind, I’m completely ignoring the debt we
took on with the nationalization of Fannie and Freddie,
AIG, and the slew of other garbage we nationalized or shifted
onto the Fed’s balance sheet. And yet we’re
STILL talking about every US family making $31,000 in debt
payments per year for 75 years to pay off our national debt.
Obviously that ain’t going to happen.
So default is in the cards. Either that or hyperinflation
(which occurs when investors flee a currency). Either of
these will be massively US Dollar negative and horrible
for the quality of life in the US. But they’re our
only options, so get ready.
Good Investing!
Graham Summers
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