US Treasuries Will Sink Into A Black Hole
Investors around the world are blissfully ignorant of what will hit them in coming months and years. Virtually no one understands the risks in the world and less than ½% of investors have protected themselves against the destruction of their financial assets.
It is of course wonderful to live in Shangri-La and be totally seduced by governments magnificent injection of credit and printed money which creates eternal happiness and wealth. Many of us live in fantasyland where it is irrelevant if you work or not. If there is not enough money, your government will issue food stamps, rent subsidies or help you to buy the latest car on credit. And if the government runs out of money, it can always print some more. There is no limit to how many quadrillions the printing presses or the computers can manufacture. This is the wonderful Keynesian virtuous circle of
No one ever looks at the facts. It would be a real mistake to be confused by the darned facts!
The fact that Japan is a basket case doesn’t matter. The government is buying all the debt that is currently issued and will soon own over 50% of all the debt they have ever issued. That is the most perfect example of perpetual motion. Print more than half the government spending every year and more if needed. It is really unnecessary to collect any taxes. It is just an administrative irrelevance. Much better to print all the money that the country spends. That way the people can
stop working and just enjoy life. With 260% government debt to GDP, it is guaranteed that no one has the intention to ever repay that debt. The fact that the working population will decline by 40% in the next 40 years guarantees that the debt will grow exponentially until the Yen and the Japanese economy disappears into the Pacific. On their way down they will obviously sell over $ 1 trillion of US treasuries just to do their share of global debt implosion. But why should we worry about the fact that the world’s fourth largest economy will go back to prehistoric times. Or should we?
But the Chinese economic wonder will certainly save the world? Well, the Chinese are extremely clever at copying all the things that we do in the West, good or bad. They are making all the products that the West invented at a fraction of the price and flooding the West with goods which we are buying on credit. The dilemma is that China also thought that Shangri-La had arrived and that this would go on forever. So in this century they bought all the commodities that the world produced to create a massive Emerging Market bubble.