Three Horrifying Facts About the US Debt “Situation”

Phoenix Capital Research's picture

Since too
often financial articles consist of some stooge blathering on and on with
opinions instead of facts, I thought today we’d simply focus on some FACTS
about our current financial system which few if any want to acknowledge.

 

#1: The US Fed is now the second largest
owner of US Treasuries.

 

That’s
right, this week we overtook Japan, leaving China as the only country with
greater ownership of US Debt. And we’re printing
money to buy it. Setting aside the fact that this is abject lunacy, this policy
is trashing our currency which has fallen 13% since June… as in four months
ago. Want an explanation for why stocks, commodities, and Gold are exploding
higher? Here it is.

 

 

#2:  “There are only about $550 billion of Treasuries outstanding
with a remaining maturity of greater than 10 years.”

 

This
horrifying fact comes courtesy of Morgan Stanley analyst David Greenlaw. And it
confirms what I’ve been saying since the end of 2009, that the US has entered a
debt spiral: a time in which fewer and fewer investors are willing to lend to
us for any long period of time… at the exact same time that we must roll over
trillions in old debt and issue an additional $100-150 billion in NEW debt per
month in order to finance our massive deficit.

 

And only
$550 billion of the debt we’ve got to roll over has a maturity greater than 10
years!?!?

 

So we’re talking about TRILLIONS of old
debt coming due in the next decade. The below chart depicting the debt coming
due between 2009 and 2039 comes courtesy of the US Treasury itself. In plain
terms, we’ve got some much debt that needs to be rolled over that you can’t
even fit it on one page and still read it.

 

 

#3: The US will Default on its Debt

 

… either
that or experience hyperinflation. There is simply no other option. We can
NEVER pay off our debts. To do so would require every US family to pay $31,000
a year for 75 years.

 

Bear in
mind, I’m completely ignoring the debt we took on with the nationalization of
Fannie and Freddie, AIG, and the slew of other garbage we nationalized or
shifted onto the Fed’s balance sheet. And yet we’re STILL talking about every
US family making $31,000 in debt payments per year for 75 years to pay off our
national debt.

 

Obviously
that ain’t going to happen.

 

So default
is in the cards. Either that or hyperinflation (which occurs when investors
flee a currency). Either of these will be massively US Dollar negative and
horrible for the quality of life in the US. But they’re our only options, so
get ready.

 

Good
Investing!

 

Graham
Summers

 

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