Only Suckers Buy US Treasury Bonds or Bonds Denominated In US$ Toilet Paper
The Biggest Monetary Con-Job Of All Time
By Matthias Chang – Future Fast Forward
Can all the suckers who are into fixed income investments, specifically into US Treasuries and Bonds etc. do a simple research which would take not more than five minutes.
Go to Wikipedia, Investopedia or Google and search for – “What are Fixed Income” and “What are US Treasury Bonds” if you are not aware of such things (then you are the privilege few to live in Wonderland where everything is all nice and sugar candy) before you continue reading this article. Just take five minutes of your time NOW!
Now that you have taken the trouble to do this simple exercise, let’s get down to the basics.
BELOW ARE THE STANDARD EXPLANATIONS AND CONVENTIONAL WISDOMS ON THE ISSUES AT HAND
From Investopedia
What is ‘Fixed Income’
Fixed income is a type of investing or budgeting style for which real return rates or periodic income is received at regular intervals and at reasonably predictable levels. Fixed-income investors are typically retired individuals who rely on their investments to provide a regular, stable income stream. This demographic tends to invest heavily in fixed-income investments because of the reliable returns they offer.
Breaking Down ‘Fixed Income’
Fixed-income investors who live on set amounts of periodically paid income face the risk of inflation eroding their spending power. The most common type of fixed-income security is a bond. Bonds are issued by federal governments, local municipalities and major corporations.
From Wikipedia
Terminology used in connection with these investments:
- The issuer is the entity (company or government) who borrows the money by issuing the bond, and is due to pay interest and repay capital in due course.
- The principal of a bond – also known as maturity value, face value, par value – is the amount that the issuer borrows which must be repaid to the lender.
- The coupon (of a bond) is the annual interest that the issuer must pay, expressed as a percentage of the principal.
- The maturity is the end of the bond, the date that the issuer must return the principal.
- The issue is another term for the bond itself.
- The indenture, in some cases, is the contract that states all of the terms of the bond.
Pricing Factors
Fixed income investments such as bonds and loans are generally priced as a credit spread above a low-risk reference rate, such as LIBOR or U.S. or German Government Bonds of the same duration. For example, if a 30-year mortgage denominated in US dollars has a gross redemption yield of 5% per annum and 30 year US Treasury Bonds have a gross redemption yield of 3% per annum (referred to as the risk free yield), the credit spread is 2% per annum (sometimes quoted as 200 basis points). The credit spread reflects the risk of default. Risk free interest rates are determined by market forces and vary over time, based on a variety of factors, such as current short-term interest rates, e.g. base rates set by central banks such as the US Federal Reserve, the Bank of England in the UK, and the Euro Zone ECB. If the coupon on the bond is lower than the yield, then its price will be below the par value, and vice versa.
From Investopedia
Junk Bonds
Junk bonds are risky investments, but they have speculative appeal because they offer much higher yields than bonds with higher credit ratings. Investors demand that junk bonds pay higher yields as compensation for the risk of investing in them.
From Wikipedia
Sovereign Debt Crisis
On 27 April 2010, the Greek debt rating was decreased to “junk” status by Standard & Poor’s amidst fears of default by the Greek Government They also cut Portugal‘s credit ratings by two notches to A, over concerns about its state debt and public finances on 28 April. On 5 July 2011, Portugal’s rating was decreased to “junk” status by Moody’s (by four notches from Baa1 to Ba2) saying there was a growing risk the country would need a second bail-out before it was ready to borrow money from financial markets again, and private lenders might have to contribute. On 13 July 2012, Moody’s cut Italy’s credit rating two notches, to Baa2 (leaving it just above junk). Moody’s warned the country it could be cut further.
I AM SURE YOU HAVE READ SIMILAR PASSAGES FROM YOUR RESEARCH.
What is interesting is that the above-mentioned countries are treated as pariah, scumbags and a huge risk. But, the US is in a worse state – the biggest creditor and issues toilet paper money BUT NO MENTION AT ALL IN WIKIPEDIA!
Why?
Let us see whether you share the same conclusions as I have in this article.
The US$ Trillion Question must be: “Is the US a creditworthy issuer of bonds?” Alternatively, “Are the US Treasury Bonds, Bills etc. junk fixed income investments?”
The US is the biggest debtor in the entire world. The US has been living beyond its means since the early 1970s, borrowing huge amounts of money to finance the excesses of her empire. President Obama has incurred more debts in eight miserable years than the combined debts accumulated by all the previous Presidents, reaching the present levels of US$21 trillion and counting. This debt can never be repaid.
The US has been defaulting on all its debts, but this critical fact, this horrendous reality is camouflaged by the financial magic of the unlimited power and authority of the FED to print money (digitally or otherwise).
Why any country, its central bank and or an investor would want to invest in US Treasury Bonds, Bills etc. or investments denominated in US Dollars when they are participating in a giant global financial con-game?
The so-called experts (those who have the three glorified alphabets “PhD” after their names) and the global presstitudes are the “paid and bought for” scumbags who daily churn out rubbish to induce and brainwash you to “invest” in this global con-game!
Every month (almost), the US Treasury conducts an auction for its bonds, bills etc. Please pause and ponder, “Why such frequencies to borrow?” No one stops to think and question this desperate need to borrow so often and in such huge amounts!
The answer is so ridiculously simple.
The Biggest Debtor in the world needs to borrow (get new loans) to pay off previous loans which have matured[1] Please read the footnote below three times!
The loans and borrowings are not being paid by surplus income (i.e. savings) because the US exorbitant and wasteful expenditures exceeds its revenue. When this happens to you and me, to the common people, you are deemed to be in default and no banks would be willing to lend you further monies unless and until you can provide further and adequate collaterals, and even then, the banks might not lend any further if all the security as a whole is insufficient to cover all the indebtedness!
The US can play this con-game only because it is a nuclear power bully that invades any country that refuses to play this con-game.
As stated earlier, there is just no way that the US can repay its loans. Never, ever!
So the FED, the global banks, the global mass media and crony central banks all over the world (and their controlled lackey Governors) created the world’s greatest financial pantomime to hoodwink the gullible:
“The US Cannot Default Because the US Toilet Paper Is Superior Than Gold”
Then, there is created the illusion that the US is creditworthy and can easily pay its debts. And the biggest joke – the US Treasury Bonds are the safest and most liquid investment in the world. What a sale pitch! Of course that’s what the US elites would say. Would any salesman pitching their wares for a living not glorify their products?
Aiyo, please wake up and not get glued in Hollywood reality TV shows!!!
However, Russia, China and the growing number of countries have belatedly realised that this is a con-game. But, because they have bought so much of the toilet paper bonds (after being brainwashed by Goldman Sachs when they were appointed as advisers post liberalisation of their economies) they cannot in the near term extricate from this financial quagmire other than reducing their exposure gradually. In the result, there is a growing shortfall in investors willing to buy US bonds, bills etc. at the monthly auctions or such other prescribed intervals. Someone has to take up the shortfalls to keep the music playing!
So now, we have the ridiculous situation whereby the FED steps in to purchases the said bonds etc. to make good the shortfall of investors buying the bonds etc.
Why this is a criminal scam.
Firstly, the FED prints monies (digitally or otherwise) out of thin air. It is a simple as clicking the mouse of a computer and $trillions are credited in the accounts of the FED and the global Too Big To Fail Banks.
Let me illustrate by an analogy.
You are a shopkeeper selling all kinds of household goods. Most of your customers pay in cash for their purchases. However, you do provide a system of buying on credit – your customer can pay for the goods in 30, 60 or 90 days with interest chargeable during the credit period. How would you react, if one day you discovered that one of your best customers, Mr Hyde was printing monies from his garage to pay you?
Everyone has to work their butts off to earn a surplus to purchase the goods and or to repay the credit extended by you. But, this one customer is laughing and mocking you and all your other customers – “bleeding idiots, having to work so hard when all I need is to turn on the printing machine!”
This is exactly what the US Treasury and the FED are doing.
Who can’t repay his loan if he is allowed to print the currency without limit?
There is no inherent value to the piece of paper or the digit in the computer generated statement as it is not backed by gold or anything thing else. However, you are stupid enough to accept without more the face value of the NOTE as if it has THAT SPECIFIC VALUE when it is but a NUMBER PRINTED ON THAT TOILET PAPER MONEY – e.g.US$100, US$50 etc.
The final insult to the countries and people all over the world in this very simplified explanation is:
Countries without exception export goods and services to the US and are paid in US Dollars. The FED prints the money (digitally or otherwise) and lends it to the US Treasury who in turn pays for the imports.
The US also borrows money to finance its wars all over the world. Those countries who have huge surplus from their exports (i.e. a lot of US toilet paper money – digitally or otherwise) stupidly lend this surplus.
Now, the US has no money to repay this debt, as they are always having a deficit in trade. So the US gets the FED to print monies (digitally or otherwise) to repay the matured loans.
NOW, PLEASE YOU TELL ME THAT THIS IS NOT A SCAM, THAT THESE COUNTRIES DOING ALL THE ABOVE ARE NOT STUPID IDIOTS?
NOW, PLEASE TELL ME, GIVEN THE STUPIDITY OF THESE COUNTRIES, WOULD IT NOT SERVE THE US INTERESTS TO BRAINWASH ALL AND SUNDRY TO BELIEVE THAT THEIR TOILET PAPER MONEY IS NOT WORTHLESS, THAT THE US IS CREDIT WORTHY AND PEOPLE SHOULD CONTINUE TO HOLD THE US TOILET PAPER MONEY AS THE GLOBAL RESERVE CURRENCY?
NOW, PLEASE TELL ME, WOULD NOT THE US, ENSURE BY VARIOUS MEANS AND METHODS TO GIVE THE ILLUSION THAT THE US DOLLAR IS WORTH MORE THAN THE “UNIT VALUE” PRINTED ON THE PAPER (I.E. $100 ETC.) AND MANIPULATE THE MARKETS TO PUSH DOWN THE PRICE AND VALUE OF All COMPETING CURRENCIES AND ASSETS?
ALL THESE MANIPULATIONS HAVE BEEN EXPRESSLY ADMITTED BY THE FED AND THE GLOBAL TOO BIG TO FAIL BANKS!
JUST GOOGLE “FRAUD AND MANIPULATION BY GLOBAL BANKS OF MARKETS AND INTEREST RATES” to get the confirmation.
So, what the hell are we still debating this issue?
To all those people who disagree and rant against my views and advice, and want to bury their heads in the sand, they are welcome to continue their state of denial.
For those of you who have just woken from the deep sleep, I wish you well and that you will take such necessary steps as to protect yourself and your family.
[1] The process for auctioning bills, notes, and bonds begins with a public announcement by the Treasury. A typical announcement might read that on such and such a date, “The Treasury will auction $11,000 million of 91-day bills to refund $9,000 million of maturing securities and to raise about $2,000 million new cash.” In other words, the Treasury Department is going to sell treasuries with a maturity date of 91 days to pay off other securities that have reached their maturity date and to raise extra cash at the same time.
