Farewell Bernanke – Thanks For Inflating The Biggest Bond Bubble The World Has Ever Seen‏

Federal Reserve Chairman Ben Bernanke is on the way out the door, but the consequences of the bond bubble that he has helped to create will stay with us for a very, very long time. During Bernanke's tenure, interest rates on U.S. Treasuries have fallen to record lows.

This has enabled the U.S. government to pile up an extraordinary amount of debt. During his tenure we have also seen mortgage rates fall to record lows. All of this has helped to spur economic activity in the short-term, but what happens when interest rates start going back to normal? If the average rate of interest on U.S. government debt rises to just 6 percent, the U.S. government will suddenly be paying out a trillion dollars a year just in interest on the national debt. And remember, there have been times in the past when the average rate of interest on U.S. government debt has been much higher than that.

In addition, when the U.S. government starts having to pay more to borrow money so will everyone else. What will that do to home sales and car sales? And of course we all remember what happened to adjustable rate mortgages when interest rates started to rise just prior to the last recession. We have gotten ourselves into a position where the U.S. economy simply cannot afford for interest rates to go up. We have become addicted to the cheap money made available by a grossly distorted financial system, and we have Ben Bernanke to thank for that.

The Federal Reserve is at the very heart of the economic problems that we are facing in America, and this time is certainly no exception.

But is it a fundamentally sound path? Keeping interest rates pressed to the floor and wildly printing money may be producing some positive results in the short-term, but the crazy bubble that this is creating will burst at some point.

In fact, the director of financial stability for the Bank of England, Andy Haldane, recently admitted that the central bankers have "intentionally blown the biggest government bond bubble in history" and he warned about what might happen once it ends...

So what happens once this 'bubble' bursts and who has to pay? - we do.
Why someone can't come up with a long term plan that actually works is beyond me.
They never learn that all these short term 'economy boosts' do nothing but cause trouble later down the line and it's always us who have to suffer and pay for it

Source

Bonds are sharply lower overnight on speculation that the Fed will end QE (even tho it was not part of their official statement yesterday). It is a bad sign when stocks and bonds are both down together.

reply to post by sarahlm


It's funny you should mention this.
Recently, my company asked me to participate in a 401k plan. I told them I would as soon as the Fed stopped pumping billions every month into the market.
Only then would I or anyone else be able to see the true system and not the artificial one the government parades.

(they looked at me funny )

reply to post by sarahlm

Why someone can't come up with a long term plan that actually works is beyond me.

I don't believe they think or even care about long term any more. They know things are coming apart and are trying to make as much as possible in the time left.

reply to post by sarahlm


I'm sure they have come up with long term solutions. The problem with that though is you don't see immediate results. What good are these solutions to the politicians if you don't see results until the next guy is in office?

Originally posted by beezzer
reply to post by sarahlm

 

It's funny you should mention this.
Recently, my company asked me to participate in a 401k plan. I told them I would as soon as the Fed stopped pumping billions every month into the market.
Only then would I or anyone else be able to see the true system and not the artificial one the government parades.

(they looked at me funny

)

You probably had them wondering if you were the next Unibomber with your own shack and bomb factory or something. I get very odd reactions when I mention much that we all discuss here. The level of pure 'head in the sand' ignorance is over the top at times out there.

Bailout of the bonds - if you are holding them.
I would like to see JFK's E/O 11110 enforced - but that just me.
EO11110

reply to post by beezzer



Folks look at me funny too when I say stuff along those lines...

Originally posted by jibajaba
Bailout of the bonds - if you are holding them.
I would like to see JFK's E/O 11110 enforced - but that just me.
EO11110

Except these days, there's more certificates being issued than the bullion to back it up. That's part of the problem.

I dont follow the financial crisis as much as i should.

Can some one give me a simple breakdown of events?
What should i be expecting? and what time frame?

The US has been slapped with an overwhelming amount of crap in the past few weeks.

Another rat leaving the sinking ship. Anybody see what happened to the stock market yesterday when Helicopter Ben merely hinted at raising interest rates, stopping bond purchases, and suspending the capital injections into the enconomy? It took a nose dive.

Dow sinks 200 points after Fed hints at stimulus easing

The Dow Jones industrial average tumbled more than 200 points, or 1.4%, Wednesday afternoon after Bernanke took questions from the media about the Fed's exit strategy. The S&P 500 also dropped 1.4% and the Nasdaq sank 1.1%. Stocks had been in the red all day, but were barely below the breakeven line before the Fed chairman began speaking.

Once again, it looks like the Fed has created another Frankenstein's monster that is going to plunge us even further into economic oblivion. That is even if we pulled out of the last disaster? I guess we get to look forward to hyperinflation, government insolvency, derivative collapse, bond bubble bursting, and potential collapse of the US dollar. I would like thank Ben and his goons for a job well done, and doing everything in his power to make our lives that much more miserable than they already are. Have fun with Bankenstein (Greenspan) at the gentleman's club as you puff away on cigars and sip scotch while we weather another economic storm.

The DOW is in freefall as I type this, the countdown to the final 30 minutes before the closing bell, when the mist movement in tge market can happen in the last 15 minutes, either more in or more out, which remains to be seen.

After losing 200 points yesterday, the current additional loss today is standing, right now, at 361 , and it isn't just the DOW.

S&P is down 41.92

NAs is down 84.74

The markets are massively readjusting, it just remains to see if and when they hit the off switch. Will they? Or, will they let it correct? People knew the gov was artificially propping it up, and at this point, it is only the small timers and risk takers that are left. Big money, like Soros et al, bailed months ago. I don't think today is the end, but only the beginning.

The little guys, with their 401's are the ones who are going to pay the dearest, the ones who can't pull out on a whim, or those that don't know any better. The remaining players just made a mint of the American people.

Let's give the new millionaires and billionaires a round of applause, thanks to their friends in the US government. Those that missed out the first time got a second chance.

ETA as weapproach the 15 final minute countdown, the drop was increasing almost exponentially by the second, approaching 370 in mere seconds. I don't think people will come in. More are bailing. Waiting and seeing...

I wonder if the Fed has been hedging its bond purchases....if so, then they are making money as the bond market declines.

reply to post by Wrabbit2000


I learned the hard way and keep my mouth shut. What is interesting is that you make better decisions in the long term. Because when it drops, it's gonna drop like it never has before.

Of all the economic problems occurring in America, they have yet to tackle the core issues, like in Detroit. And then they decided to create monopoly to clean up the mess from 08 cuz they can't have Wall Street cave in when everyone else did.

i bet he walks away with a nice pension strange that a lot of heads of banks are going at the moment the head of the bank of england and the head of the bank of scotland walking away

Money laundering is a good business hey?
These guys need to be investigated like never before....Now that the fixing scandal is "official" as if we were unaware......

I wonder when people wlll start realizing that money is just paper and is not required to live.

I wonder when people will realize that if they worked for the greater good, helped each other, that money would not be required nor needed, to live a happy fulfilled life.

When the system collapses.... not if.... it's not like all the resources will drop off the face of the planet. There will not be a shortage of anything at all. Instead, no one will run anything because they won't be getting paid. Which will lead to a free for all, and death and greed will plague the planet causing a global famine. All in the name of money.

I wonder when people will see that this monetary system is just an illusion, it's not real. All the debt, it's not even real money to begin with. All the interest, is created out of thin air, it's fake, and it can never be paid back.

So when the usa has to pay 1 trillion dollars a year in interest.... its fake money, created out of nothing, there isn't enough money in existence to pay off the debt, it's impossible.

So it's time for the people to wake up and say, what debt? There is no debt, there is no interest, there is no money.

It's time for the people to start giving to the world, instead of trying to make their bank accounts bigger. Give what you have to offer, give what you can, if everyone gives, then we have a new system. A system of giving, a system where everyone is rewarded, because everyone works for the greater good. The only reason we have lazy greedy people now, is because the system has conditioned us to be that way. Humans aren't lazy by nature, but they sure as hell are lazy when they have to get up every morning to make a million dollars. They sure as hell are lazy when they live in an instant gratification society to go to walmart 2 blocks away to get whatever we need. That is not giving, that is taking, and there is a huge difference.

Humanity must go through a revolution of consciousness that goes from taking all we can get, to giving all we can give. If we do this, we will fall back into balance with nature, we will use our resources in a proper manner and not in the name of profit. There is more than enough to go around for the world. Every single human being can be fed, sheltered, clothed, and given the opportunity to live to their full potential.

It's time to move from living in the head, from judging everything, from suffering, from greed, to living from the heart, living in love, caring, kindness, compassion, selflessness. A way of life free from ego.

The monetary system, is not the only way to live on this planet.

reply to post by xxshadowfaxx


Wonderful post and exactly how I have felt for a few years now. But people laugh at me and say that kind of life is fantasy and impossible.

Whats fantasy and impossible, is believing that this system is going to last us into our retirement years.

Whats fantasy and impossible, is allowing this system to continue as it is, without it bringing about the destruction of humanity.

We are heading toward a cliff and that is only because we refuse to change the system.

We are living in a state of denial. We would rather take our worries away with alcohol, drugs, or sex, and pretend we don't see whats going on in the bigger picture.

We are watching the world crumble around us, corporations taking control, being fed gmos, and other chemicals in almost all aspects of our life, all in the name of profit.

At what point will we recognize that, it is we the people who have the power to stop this madness.

When will we see that we only have a very limited time before the stock market implodes on itself leaving the world in ruin, because we are dependant on it?

Why are we dependent on it? Why does it have to be the only way to live? Why does it have to make the world go round?

It's time we embraced change, because change is the only constant in life. The things that don't change, get left in the past. That is why we call them fossils, and ruins.

reply to post by Libertygal


It could be the "Big crash"!..There's been two Hindenbergs out the latest about fourty days ago which seems to be a trigger moment for them. Then when the Feds Chairman goes it seems to trigger falls. The whole edifice since the last crash was just built on BS! Lets get it over with.