“Federal debt figures don’t include any of the additional $5.48 trillion in debts held by various government agencies. Nor do they include any of Fannie Mae’s or Freddie Mac’s obligations, two private companies that were taken over by the federal government during 2008 and whose total obligations stand at a little more than $5 trillion. When you add these other, genuine, federal obligations that exist right now, today, you come up with a total debt figure that’s much more than $20 trillion.” Porter Stansberry, Editor
The admitted treasury debt is over $16 trillion, an amount that will likely never be paid. Once market interest rates on bonds rise, as they are apparently beginning to do, paying just the interest on the debt will be a struggle. Now we are focused on debt of federal government agencies. There’s another $5+ trillion of debt that needs to be paid or monetized by the FED to create more money for the banks.
Historically, in order to ‘wash away’ debt, the government, through the FED, has engaged in inflationary monetary policies. That is, they produce more money thus devaluing each dollar. The debt can therefore be paid off in cheaper money as prices rise. That’s why over the last 40 years, owning a home with a mortgage with a fix loan rate was such a good deal. As personal earnings rose, the mortgage payment became a lesser percentage of total income.
Today, however, the government debt is through the stratosphere. Money creation to ‘balance the books’ of our insolvent banks is gargantuan. There is a potential of moving us to hyperinflation. Venezuela just devalued their currency by almost 32%. When their banks open tomorrow, those with savings in the banks are 1/3 poorer than they were before the weekend. FDR did this to the American people in 1933. The textbooks just don’t tell the story. Nor did textbooks explain the loss to the confederacy in 1865 when their currency became valueless at the end of the American Civil War.
Our federal government needs more cash and they are eyeing 401(k) accounts that hold nearly $20 trillion dollars. “The government is going to want to ’protect you’ by potentially offering Bonds for America in place of the holdings in those 401(k) accounts. Right now, the FED is buying about 90% of bonds issued by the U.S. Treasury as investors are refusing to buy. Once interest rates on bonds moves higher, the value of those existing bonds will plunge. Buyers Beware.
