Three Horrifying Facts About the US Debt “Situation”

A 13th century depiction of the Black Horse of the Apocalypse

It’s a little rare that Inquiring minds are so interested in another blog, but’s Graham Summers has a great post on why the US debt situation is so dire. This is must reading:

#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.

And you think that because the stock market going up everything is fine?

#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!?!?

This just might be the worst part of our debt situation.

Under Bill Clinton, the Treasury Secretary began to shorten the term of our debt making Treasuries which were typically 30 year bonds into much shorter term notes. And, why you ask, did they do that? Very easy answer (that you actually probably already know the answer to)…shortening the term lowered the interest of the notes without changing spending.

All so that the Clinton Administration could claim that they ‘had a surplus’! No matter that they had only cut one department…the military. They didn’t worry that the bomb would go off years later. They get to go down in the history books as the only Presidential Administration in decades to have a surplus.

On to the last point:

#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.

How is something that has not yet occurred a fact? Because sometimes there are only two options and neither one is positive…and this is one of those times:

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.

Revelation 6:5,6

When He opened the third seal, I heard the third living creature say, “Come and see.” So I looked, and behold, a black horse, and he who sat on it had a pair of scales in his hand. And I heard a voice in the midst of the four living creatures saying, “A quart of wheat for a denarius, and three quarts of barley for a denarius: and do not harm the oil and the wine.”


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