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Post  Administrator on 3/31/2010, 1:02 pm

.....then read the following good news laughing


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The Fed says it’s ending its purchases of more than $1 trillion in mortgage-backed securities today.

But, to hear the financial press tell it, you’d think that after today, the Federal Reserve will also stop creating money out of thin air.

Do NOT believe it —
NOTHING could be further from the truth!

Look: The reason the Fed has spent all this money to buy up bonds is very simple: Without the Fed’s money, the bond market would collapse.

The U.S. Treasury is selling its bonds at the rate of $1 trillion per year. Fannie Mae, Freddie Mac and other government agencies are selling bonds at a similar clip. But where are the buyers? Are they rushing in to buy these bonds? Heck no! They’re either slashing their purchases or actually selling. China, for one, has already dumped nearly ALL of its U.S. mortgage bonds.

The ONLY consistent big buyer in the U.S. bond market has been the Federal Reserve!

Meanwhile the U.S. Treasury is borrowing money like there’s no tomorrow. In just one week recently, it issued $236 billion in government debt in a single week — the most in the history of the world!

In February alone, the official U.S. federal deficit was a monstrous $221 billion, far greater than anything we have ever experienced in history.

In ALL of 1986, the single worst deficit year under President Reagan, Washington failed to run up as much debt as it did last month alone. And February’s deficit of $221 billion was more than TRIPLE the sum total of ALL deficits during the six years under Nixon.

It took 169 long years — from 1776 to 1945 — and seven major wars for Washington to rack up a cumulative deficit as large as the Obama administration created in just 28 short days in February.
If the Fed stopped creating money to buy bonds now, the bond market would implode ... interest rates would skyrocket ... the credit markets would freeze up and the entire U.S. economy would grind to a standstill!

And that’s not the worst of it ...

These deficits will only get larger

Congress says future deficits will be far greater than those estimated by the White House. But it is still grossly underestimating the problem.

In early February, the U.S. Office of Budget and Management (OMB) announced that we’ll see a $1.6 trillion deficit for 2010 ... another $1.3 trillion in red ink for 2011 ... and continuing massive deficits until 2020.

But in March, the Congressional Budget Office (CBO) disagreed, saying that U.S. deficits will be $1.2 TRILLION LARGER than the OMB estimates made just one month earlier.

Unfortunately, however, even these new, uglier numbers from the CBO may also be too low. They assume that there will be no recession at any time in this decade ... no weakness for U.S. government debt or spike in the government’s borrowing costs.

Bottom line: The total U.S. public debt load is set to explode — from about $9.3 trillion in 2010 to $18.6 trillion by 2020. And the cost of servicing all that debt is projected to more than quadruple from $188 billion to $840 billion!

So while the Fed’s strategy of printing money to buy mortgage backed securities may temporarily end today ...

The Fed’s determination to offset a bond market collapse has NOT ended —not by a long shot!

And that means you can expect the Fed to continue creating money out of thin air like there’s no tomorrow — until it is forced to stop.

Make no mistake: We are facing a debt crisis and future currency meltdown of biblical proportions. This is the crisis that will impact every major asset class — driving some sky-high in value and crushing others.

Once again, unprepared investors will be skinned alive. But those of us who see this hurricane headed our way and take the proper precautions can not only guard our wealth but also have the chance to multiply it several times over.
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Don't you feel better now? sunny
Administrator
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