US Treasury Bonds - The Biggest Bubble In History - About to Pop
The US Treasury Bond market is the longest unbroken bull market known to the financial world. For more than 30 years it has trended higher in nominal US dollar terms.
Of course, it has been helped greatly by price fixed and market fixed, Ben Bernanke, who has now bought up more Treasuries, by far, than any other identifiable group, but didn't pay for them out of production; he just did it with the pressing of a button, using a pretty fat finger!
At the current rate, with the Federal Reserve buying up every penny of newly issued government debt in 2013, and then some, it won't be too much longer before the Federal Reserve owns more than China, Japan, the oil exporters and Caribbean bank centers combined.
Considering it is a group of private central bankers that can print money to buy as much of anything they want it should really have people raising some eyebrows! But, aside from the fraud involved, let's take a look at how the issuance of debt is following the exact path of a bubble.
Stages of a Bubble
First, there is the money printing. This is the distinguishing feature of a bubble, its ultimate cause; and there is no more direct form of this model than the central bank printing money to buy the government's debt right out of the gate.
Jean-Paul Rodrigue is a Canadian most noted (in 2008) for his "bubble model", charting four "phases of a bubble". According to the model, while the "smart money" has purchased during the earlier "stealth phase", institutional investors begin to buy during "take off". Following media coverage, the general public begins to invest leading to steep rise in prices as "enthusiasm" and then "greed" kick in. "Delusion" precedes the peak.
Here is the progression, according to Rodrigue:
On a tip from good friend, Jeremy Martin, of the well-known Cambridge House conferences that we regularly attend, we decided to take a look at the entire US debt as plotted by the Heritage Foundation:
We then plotted Rodrigue's "bubble model" over top of the US debt data:
It's not perfect but it fits the model almost exactly. Where do you think Treasury bonds will head from here? TDV's Senior Analyst, Ed Bugos, is eyeing the Treasury Bonds for what could perhaps be the short of the century. He hasn't told subscribers to pile in yet, but I can tell from his twitchy finger over the "short" button on his online brokerage account that he is getting very close.
Subscribe to TDV Premium for more expert information on when and how to profit from the coming collapse and protect yourself from the collapse with investments in gold, silver and precious metals stocks and foreign real estate.
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Author: Jeff Berwick
Jeff Berwick
Chief Editor
The Dollar Vigilante
Anarcho-Capitalist. Libertarian. Freedom fighter against mankind's two biggest enemies, the State and the Central Banks. Jeff Berwick is the founder of The Dollar Vigilante, CEO of TDV Media & Services and host of the popular video podcast, Anarchast. Jeff is a prominent speaker at many of the world's freedom, investment and gold conferences as well as regularly in the media including CNBC, CNN and Fox Business.
Jeff's background in the financial markets dates back to his founding of Canada's largest financial website, Stockhouse.com, in 1994. In the late '90s the company expanded worldwide into 8 different countries and had 250 employees and a market capitalization of $240 million USD at the peak of the "tech bubble". To this day more than a million investors use Stockhouse.com for investment information every month.
Jeff was the CEO from 1994 until 2002 when he sold the company and still continued on as a director afterwards until 2007. Afterwards, Berwick went forth to live on and travel the world by sailboat but after one year of sailing his boat sank in a storm off the coast of El Salvador. After being saved clinging to his surfboard with nothing but a pair of surfing shorts left of all his material possessions he decided to "live nowhere" and travel the world as spontaneously as possible with one overarching goal: See and understand the world with his own eyes, not through the lens of the media.
He went on to visit nearly 100 countries over four years and did and saw things that no education could ever teach. He met and spoke with a plethora of amazing people, from self-made billionaires to some of the brightest minds in finance - as well as entrepreneurs from a broad range of backgrounds and locations from tech companies in southern China to resource developers in Mongolia, Thailand, Russia and Chile. He also read everything he could find on how the world really works... politically and financially. A pursuit he continues to this day.
He expatriated, long ago from his country of birth, Canada, and considers himself a citizen of the world. He has lived in numerous locales since including Los Angeles, Hong Kong, Bangkok and currently lives in Acapulco, Mexico and is building a home in Cafayate, Argentina. In essence, everything he writes about here for TDV he has done or is doing.
As well, during his travels, both real and virtual (through the internet), he met some amazing people who have a similar shared vision of what is currently going on in the world and enticed them to come aboard TDV and provide their own brand of analysis.
Copyright © 2010-2013 Jeff Berwick
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