The Next Great Depression … well maybe. From what I understand US Treasury Bonds are still receiving the highest rating possible. And Countries like Japan, China, and Saudi Arabia are holding on to them. The bond market has been riding high since 1982 … and I’m not sure how much longer it will last.
This market “shrinkage” is like a bad hangover. Ever since Greenspan was in charge of the Fed we have partied like it was 1999. And any time there was a sign of hangover coming on, Greenspan pushed a pill on the American public. He didn’t want a hangover for America. At one point interest rates were as low as 1% (not for you and me but for banks). And that led Americans into debt spending. Credit was cheap .. too cheap. It led to the housing market casino and now the banks have all the bad loans Freddie and Fannie pumped out. This latest pill the Bernanke&Paulson team is making the American Taxpayer swallow will not fix the hangover. And this one is gonna be a biggie. Puking included!
Once the Fed and the NGM (Nice Government Men) realize this they will start pumping more and more money into the system. We may even see interest rates drop below the 1% mark in hopes of encouraging spending. It won’t help. You and I can’t afford it without our own bailout. Then we’ll see the NGM buying more bad debt from banks and business and more monies pumped into the system by becoming the biggest consumer. We’ll see spending on infrastructure .. roads, bridges to nowhere .. and when that fails .. start a really big war. War seems to bring everyone together. We unite as a nation. And the government spends. We sacrafice and scrimp and save and buy war bonds. And then they will have to figure out how to pay for all of it once things get working again. By raising our taxes.
If you think gold is expensive at $900 an ounce now .. wait until inflation kicks in because of the “flow of money”. I am thinking we will see gold at $1600 by year end with silver sitting around $25. If you can, buy gold and silver. Mostly silver if you can find it. Look for coins (dimes, quarters, 1/2 dollars and dollars) minted prior to 1965. Here’s what to look for – 1971-74&76 Eisenhower dollar is 40% silver, 1965-70 Kennedy 1/2 dollar is 40% silver, 64 Kennedy 1/2 dollar is 90% silver, 1948-63 Franklin 1/2 dollar is 90% silver, 1932-64 Washington quarter is 90% silver 1916-64 dimes (FDR and Mercury) are 90% silver and the 1942-45 nickle is 40% silver. I always check my change … you never know when you might get lucky.
There’s no way around it. We are headed down the hole .. head first into a deep recession. If not a depression. It just depends on you and me. How much are we willing to carry? Me? None! I’m ready for a new revolution! 🙂