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USA debt dances to tune of market

July 10, 2015

Our President Obama struts around proud of our low interest rates on US bonds for our debt. Alan Greenspan observed that average interest rates going back to the 16th century have been around 5% for long term bonds. This is based on market forces that has savers willing to let money be used for 30 years with a payment of 6% for the use of their money. People do not care about the Federal Reserve goals and targets. I will never buy a long term bond of 30 years for an interest rate that barely beats the cost increases of inflation.

The sad reality is that we are about to get punched and slapped by a revolt from savers. Our budget is based on the fantasy that our payments on bonds issued by USA will continue to be around 3%. That is why our secretary of the Treasury was kicked out of Citigroup when investors grew tired of his incompetence. Our 19 trillion dollars of debt will become a terrifying problem quickly when interest rates increase to 5%.

Our president continues to strut like he is doing a great job, as the floor is about to collapse from under the weight of our spending money we do not have. This is a man who could not balance the budget on his campaign for president. This is a man who is telling companies how to run health insurance. This is a man telling companies how to pay more and give more benefits. This is a man who is cutting our army while China and Russia are expanding. He is reducing army benefits, and has a exodus of the millennial generation that is the future of our country. His contribution to the Greece bankruptcy of their socialist government is to be a cheer leader for Europe to bail out an incompetent government.

Yes, the market will force rates to increase and this will make the budget of our overspending US government actually be forced to cut out money to welfare, food stamps, free phones, and socialist meddling. The market just like mother nature, do not fit into fairy tale endings. The fairy tales are over, and reality is knocking on our door. Bond holders of low interest rate bonds will be forced to hold them to maturity collecting interest payments below market rates of return. New bonds will be around 5%, as the US Treasury reluctantly has to meet market demanded interest above our budget forecast.

Shrewd financial mind of our president is a joke that is not funny.

Shrewd financial mind of our president is a joke that is not funny.

One Comment leave one →
  1. July 10, 2015 11:43 am

    Reblogged this on Brittius.

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