No interest in lending to the U.S.

 Last month, companies sold $75 billion of investment-grade corporate bonds in the U.S. – the busiest July ever. According to Thomson Reuters, total sales for 2012 are on track to hit $1 trillion.

With interest rates at record lows… many large companies are locking in obscenely small long-term borrowing costs. And yield-starved investors are happy to buy. Jim Probert, head of investment-grade banking at Bank of America, told the Wall Street Journal, "I've been doing this for 23 years, and I've never seen demand for new issues this large."

At a 3.2% average yield, investment-grade corporate bonds are paying nearly double the yield on comparable Treasurys. And due to corporate America's flush balance sheets, some investors view corporate bonds as safer than U.S. government debt…

"U.S. corporate bonds are becoming a flight-to-quality asset class," said Michael Seigel, global head of insurance asset management at Goldman Sachs. Funds holding investment-grade bonds took in $69 billion this year through July. Treasury funds only attracted $2.1 billion....

---excerpt from Stansbury & Associates


Note the last paragraph.

I am not recommending locking in 3% on an investment. The poop is bonds will sell for a few years. 

The important thing to note is our government has run for decades by borrowing money that you and your children will pay back. There is little interest, now, by sane people in lending money to the U.S. in exchange for on-going devaluation of their minute investment. In the real world, that outside of Keynesian economics, if a borrower really needs money, it raises the interest paid. 

This is not an option for the FED as a true interest rate would bring other jerry-rigged and interlocked problems to the surface, such as political and social unrest. This option inevitably becomes the final reality, but in the meantime, the surface calm is maintained while those in control prepare for the high interest. 

The talk about higher taxes or lower budget is meaningless in the face of our shortfall. It is like a homeowner facing bankruptcy and wondering if the answer to their problem is to use smaller light bulbs.

Who lends money to the Treasury at 1.5%?  When the market refuses to lend a debtor money, a Ponzi scheme comes to an end. If interest rates go up it is a warning and damages many current budgets and plans. SO, what to do?

The FED, a private consortium of banks, comes to the U.S. assistance and buys Treasury bills. 

Where do they get the money? They create it. The U.S. gave them that right. The junkie doesn't argue with the pusher.

This shell game may sound like a remote curiosity, but in accounting there are two sides to every transaction. When the government creates money, it causes it to devalue. When money devalues, the individual looses purchasing power, just as if a thief picked his pocket. Gasoline is up 20%, but not because the supply is down 20%, in the end. Rising prices reflect a lack of interest in the USD, which is coming to an end as the world's reserve currency.

The key to not being a sucker is to get off the carousel.