the coming bond market collapse - michael g. pento

[...]... of a bubble in the bond market are in place, just as they were for the real estate market in the middle of the last decade and the dot-com bubble during the late 1990s The housing and Nasdaq bubbles not only rhyme with tulip bulbs, but they both seem to rhyme perfectly with the current bubble in the bond market Notes 1 Douglas E French, Early Speculative Bubbles and the Increase in the Money Supply... $1 trillion deficits The public has plowed their savings into the U.S debt market as commercial bank holdings of Treasuries have reached an all-time high And bond prices have soared, pushing the yield on the 10-year note to all-time lows, which is far less than the 7 percent average yield on the 10-year going back to 1969 One last similarity between to the two bubbles is that the prevailing consensus... new home buyers to the market So, in effect, the two bubbles fueled each other the financial institutions’ desire to underwrite mortgages, package them, and sell them off, and the public’s desire to partake in the housing market both as an owner and a speculator—a win-win! Not so fast Things started to get a little sloppy, and in 2007, with the distress in the subprime mortgage market, mortgage companies... similarities between the subprime mortgage crisis and that of the coming collapse of the U.S bond market are uncanny In fact, Mark Twain may have had the U.S debt market and the previous debt-fueled real estate crisis in mind when he said that “history doesn’t repeat itself, but it does rhyme.” As we discussed, the housing and credit crisis first became evident to most in 2007 with the distress in the subprime... of the reserve requirement theoretically gives banks the leeway to increase their lending; in turn, increasing the requirement would have the opposite effect Next is their cartel on the discount rate The discount rate is the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank’s lending facility, also known as the. .. that heals the damage caused by asset, debt, and money supply bubbles The Fed-induced inflation witnessed in the 1920s was dissimilar to the inflation experienced in the 1970s The inflation existed in certain commodities, the stock market, and credit The price associated with a basket of consumer goods in the 1920s remained relatively stable In the 1920s, the Federal Reserve was a little like Thelma and... currency, and courtesy of the Dutch Central Bank they were able achieve that Now, I want to make one thing clear: the Dutch Central Bank wasn’t run by the counterfeiters that run the central banks of the world today To the contrary, the Dutch had a hard metal currency While other governments were debasing their currency, the Dutch model provided a sound monetary system The Bank of Netherlands partook in... in the next chapter But the most important take-away here is that, once again, the government and private banks caused a rapid and extensive increase in money supply growth, which led to the formation of another pernicious bubble This is a key factor in the creation of the current bubble in U.S debt Today’s Bubble in Bonds Rhymes with the Debt-Fueled Real Estate Crisis Over the past dozen years, the. .. Thelma and Louise They had their foot on the gas, the top down, wind in their hair; they were cruising down the highway at record speed, creating all kinds of chaos, but by all accounts it was a fun ride—that is, until they crashed into the Grand Canyon On October 29, 1929, the 1920s’ joy ride came to an end The inflation that was created by the Federal Reserve had ended months before, and the country suffered... most surprised by this are the perpetrators themselves! In March 1929, Herbert Hoover became president of the United Sates In the 1930s, it is likely that when mothers put their children to bed they told them a story of President Hoover, who did nothing when the stock market crashed and the economy fell into depression Well, this tale should be placed on the shelf between The Three Little Pigs and Little . Congress Cataloging-in-Publication Data Pento, Michael, 196 3- The coming bond market collapse : how to survive the demise of the U.S. debt market / Michael Pento. pages cm Includes bibliographical. index. ISBN 97 8-1 -1 1 8-4 570 8-5 (cloth) — ISBN 97 8-1 -1 1 8-4 571 7-7 (ePDF) ISBN 97 8-1 -1 1 8-4 571 6-0 (Mobi) — ISBN 97 8-1 -1 1 8-4 571 5-3 (ePub) 1. Bond market United States. 2. Bonds–United States. I. Title. HG4910.P426. my progress or your progress; they aren’t interested in the advancement of the individual. Progressives want the government to progress; they want the government to advance. They see progress