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Bond Bubble = Debt Jubilee

Sprott Money's picture




 

 

...........Written by Jeff Nielson (click for original)

 

 

 

An interesting article has neatly encapsulated the global (but primarily Western) “bond bubble”:

 

The global bond bubble has ballooned to more than 76 trillion dollars, and interest rates have never been lower in modern history. In fact, 25 percent of all government bonds in Europe actually have a negative rate of return at this point. There is literally nowhere for the bond bubble to go except for the other direction, and when this bull market turns into a bear it will create chaos and financial devastation all over the planet.


There are, however, two problems with this article on the global bond bubble. First the article makes no attempt to identify who (or what) is pumping up this “bubble” to a level of literal perversity: “negative” interest rates, i.e. paying someone to borrow money from you. The second problem is that there is no attempt to specify what is meant by “chaos and financial devastation all over the planet”, when the outcome could not possibly be more obvious.

 

Dealing with these issues in order, there could never be a legitimate reason for any interest rate on any debt to go “negative”. As noted in a previous commentary, even so-called “0% interest rates” are a prima facie fraud, since it is literally providing someone (in this case, the Big Bank tentacles of the One Bank) with free money – and in near-infinite quantities.

 

So we begin with the fact that these negative interest rates are a fraud and a crime. Then, as with any crime, we look for a suspect with “means, motive, and opportunity”. We don’t have to look far. Going first to motive requires adding a little context.

 

First readers need to understand “the bond market”, which is a market for debt. In the economic insanity of our Wonderland Matrix, we have a plethora of pseudo-expert economists and traders in these markets who have brainwashed the world into treating debts as assets. True, holding the IOU’s of some entity does allow one to blood-suck like a financial parasite. However, as a supposed asset class, debts represent the ultimate in counterparty risk – the obvious/imminent risk that the debtor can’t pay, or won’t pay, turning the “asset” into nothing but a worthless piece of paper.

 

In the bond market, the “price” of these bonds is simply the inverse of the interest rate attached to that debt. Explaining this requires providing a simple hypothetical example. We start with two $100 bonds, each issued at 5% interest, but by two, separate entities: Debtor A and Debtor B.

 

Suppose that Debtor A’s debt is somewhat coveted, as it is widely believed that there is little risk of default. If traders in this market bid up the price of this bond because they want to hold it (and collect the interest), this translates to a decrease on the “yield” (i.e. the rate of interest). So if traders bid-up Debtor A’s bond by 20%, its price would go 20% higher, but the rate of interest would go 20% lower: from 5% to 4%.

 

Now suppose Debtor B is perceived to be a debtor with a high risk of default (e.g. the United States), and so the market bids-down this debt, meaning no one wants to hold this debt at the original rate of interest. The price goes down 20%, causing the rate of interest to rise 20%, from 5% to 6%.

 

As has been pointed out in the past, the deadbeat debtors owing most of this bond debt, meaning the corrupt and decaying economies of the West, are nearly all hopelessly insolvent. It’s only by fraudulently manipulating these interest rates (and bond prices) to literally perverse levels that these deadbeat governments are able to delay (but not prevent) sovereign debt-defaults, in domino-like fashion. In other words, Debt Jubilee. If Western interest rates were ever normalized, to somewhere between 3 – 5%, most of these Western nations would implode on the dramatically higher interest rates in a matter of months. Some (most notably the United States) would implode in a matter of weeks.

 

So the suspect with the obvious motive for fraudulently manipulating interest rates into negative territory is the entity or entities that hold of most of this debt, i.e. the One Bank. Most of these bond debts are no longer owed to ordinary citizens, or even public/private institutions. The holders of most of these $trillions in (Western) IOU’s are the Big Banks of the West.

 

Our motive is clear. The One Bank wants to prop-up these debtors (and continue to blood-suck our economies with massive interest payments) because if it fails to do so, the debts implode and its “assets” immediately go to zero. This brings us to means.

 

The manipulation of (primarily) Western interest rates is a subject which has been dealt with in numerous, previous commentaries. The “tool” used here are so-called “derivatives”: fraudulent (and previously illegal) bets on this debt market. What can gamblers bet on, in a debt market? That’s simple: the risk of debtors defaulting, or the rate of interest on the debts.

The “gamblers” holding the vast majority of the $1.5+ quadrillion in bets in this rigged casino are (surprise! surprise!) the Big Bank tentacles of the One Bank. When the gamblers bet on the risk of debtors defaulting, they give that the euphemism of “credit default swaps”. When the gamblers want to bet on interest rates, they give that the euphemism “interest rate swaps”.

 

These pieces have shown how credit default swaps can be used (and have been used) to manipulate interest rates, higher or lower. With the ability to manipulate interest rates to whatever number it desires, the One Bank was able to harvest $trillions in profits, from the Chumps who chose to bet against the Big Banks, in their (rigged) interest rate swaps.

zxcv83

While interest rate swaps are used for profit, credit-default swaps are used as a weapon or a shield, depending on whether the One Bank wants to manipulate a particular interest rate higher or lower. When it wants to punish a nation (such as the first time it drove Greece into debt-default), it uses this tool as a weapon. When it wants to shield debt from a rational rate of interest, it uses credit-default swaps to manipulate interest rates lower.

 

Obviously no rational entity would want to hold any debts which paid 0% interest, and it certainly wouldn’t want to hold any debts where it had to pay interest to the debtor (i.e. a negative interest rate). Thus fraud of this magnitude in the bond market requires one more ingredient: a massive supply of funny-money to fund these fraudulent transactions, meaning any/all bond purchases at a rate of 0% or lower.

 

This brings us to “opportunity”. Previous commentaries have pointed at the Federal Reserve as the “counterfeiter” who is (secretly) funding this massive fraud – at least the U.S. component. However, with its Big Bank tentacles having (literally) a near-infinite supply of its own funny-money (thanks to the fraud of “fractional-reserve lending” + “0% interest rates”), it could be the One Bank itself that is pumping up prices (and driving down interest rates) to utterly perverse and obviously fraudulent levels.

 

Having dealt with who/what is responsible for manipulating Western debts to 0% and lower, this brings us to the second deficiency of the commentary originally cited: the failure to specifically describe what will happen when this massive bond bubble implodes. Here the proverbial cat is out of the bag, as readers have already been told what will happen (and must happen) to these unsustainable bubbles of debt: Debt Jubilee.

 

Apart from the fact that Western debt-bubbles are individually woefully unsustainable, our “financial engineers” (the criminal psychopaths of the One Bank) have intertwined all these debt-bubbles, as an integral part of its “too big to fail” fraud. When one of these debt-bubbles goes “ka-boom”, they all go “ka-boom” – and that is simply Debt Jubilee.

 

At this point it is necessary to back-track slightly, back to the motive for the One Bank’s massive frauds and crimes in this debt market. We know why this financial vampire wants to protect its so-called “assets” today (through manipulating interest rates lower), but why would it have ever chosen to accumulate all of these IOU’s, in the first place – not only public debt, but private debts as well?

 

Regular readers can answer that question: Debt Slavery. By indebting (nearly) everyone and everything across the Western world – and to absurd extremes – this financial vampire’s plan is to blood-suck everyone/everything through its “interest payments” on all these public/private mountains of unsustainable debt.

 

Note that much of our private debt has also been intertwined, ensuring that when the sovereign debt bubble implodes that all of the private debt bubbles will also get caught up in these dominoes of default. This should guarantee that (inevitable) Debt Jubilee extends to all private debt, as well as public debt.

 

The question is “when?” When will the debt-bubbles of Western nations which are obviously/hopelessly insolvent go “poof”, as humanity invokes yet another Debt Jubilee? With the banksters holding all these debts, and pulling all the strings, in strictly “mechanical” terms this paper-fraud of unprecedented proportions could theoretically go on forever.

 

With a near-infinite supply of paper funny-money, and near omnipotence in manipulating debt markets, the One Bank could prop-up this market into more wildly fraudulent proportions, meaning even more deeply negative interest rates. This brings us back, yet again, to the fable of “the Emperor’s New Clothes”.

 

When will some government, or regulatory body, or even widely-esteemed individuals call-out this blatant, gigantic fraud, by which the One Bank maintains its Debt Slavery (and thus its choke-hold over our puppet governments)? Sadly, the ingredient necessary for such an event is “integrity”: a commodity in radically short supply, throughout the corrupt Western world.

 

 

...........Written by Jeff Nielson (click for original)

 

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Fri, 05/08/2015 - 21:43 | 6074845 Crisnach
Crisnach's picture

Pronosticos rendimiento bonos globales

http://www.aseperfi.com/inf/infBONOSPAISES.htm

Fri, 05/08/2015 - 19:22 | 6074510 Amy G. Dala
Amy G. Dala's picture

Debt Jubilee needs a theme song.  I'm thinking something by the Ramones.  Cretin?

Fri, 05/08/2015 - 13:13 | 6073346 Model T
Model T's picture

Bonds- "Instruments of guaranteed confistication"; the ten year pays 2%; what will a dollar be worth in ten years ? Duuh ! You're loaning money to the guy with all the guns and then expecting him to pay you back; why should he ? What are you gonna do about it ? Wake up, please.

Fri, 05/08/2015 - 12:46 | 6073260 Herd Redirectio...
Herd Redirection Committee's picture

Debt Jubilee, bitchez!

Fri, 05/08/2015 - 13:29 | 6073394 N3mo
N3mo's picture

Just be aware...a debt jubilee means your bank accounts go to zero, and your cash becomes toilet paper. The world trades debt markers as currency, so it will reset everything to origin.

The difference between a debt jubilee now (when we are using -x, -y as currency) and thousands of years back (when they were using +x, +y as currency).

Careful what you wish for.

Fri, 05/08/2015 - 14:38 | 6073604 Model T
Model T's picture

Gonna be funny when they try to reset Silver to zero. Ain't gonna work.

Fri, 05/08/2015 - 19:50 | 6073930 N3mo
N3mo's picture

Silver (that you hold, mind you!) is +x,+y. It cannot go to origin.

It's why, as I said above, Debt Jubilees USED to work. The debts were erased (+x,-y) but you kept your money, if you had any saved (+x,+y).

Comprehending where we are is simple. If you consider a standard Cartesian coordinate plane, the X axis delineates the type of marker (hard, physical, POSITIVE on the right, or + side and fiat, non-physical, NEGATIVE on the left, or - side). The Y axis delineates which side of the ledger the financial energy (charge) resides: +y indicates an asset, -y indicates a liability.

Anything but +x,+y is Sin (lack), and therefore disappears when Jubilee is declared.

It then becomes quite simple to see that in a debt jubilee, everything except +x, +y will be returned to origin. So yes, physical/tangible is all that is "real" in that case.

Paper silver/gold would fall into the (-x, +y) category. Intangible asset.

And yes, that means cash is a debt liability.

Fri, 05/08/2015 - 09:30 | 6072546 p00k1e
p00k1e's picture

Ideally, American citizens will be issued shares of the old debt and will be required to pay that back while a new dollar/debt system is created. 

Unless of course we agree on tossing the aged/ill/disabled into wood chippers. 

Fri, 05/08/2015 - 13:37 | 6073411 N3mo
N3mo's picture

Why would The Public pay a debt that they granted?

Let's get this straight: The Public created/granted/lent the money to Congress. By trick and deception, the system has brainwashed The Public into somehow thinking THEY owe the debt...to someone. Every time you "take" a loan, you just created N dollars and gave it to the "loan originator." They hold the negotiable instrument, and give you some markers to use in the meantime. They hypothecate the note (sometimes several time, see MBS/SLBS), and then look forward to you paying them yet AGAIN.

They get paid three or more times for risking/giving nothing, while you get the privilege of being in penury for using money you created.

The loan is an asset on their books. Ask yourself why, if they gave/risked anything, that would be the case?

WE the PUBLIC are the creditors. It's not hypothetical. Not a conspiracy theory.

A debt jubilee would allow the debtors to skip out on paying US back. The Public should call in the debt, all 15 trillion. Congress better start hocking it's shit.

Fri, 05/08/2015 - 15:23 | 6073774 PhoQ
PhoQ's picture

I'll give you $1000 for that national park over there with all the oil under it.

Fri, 05/08/2015 - 16:21 | 6073979 N3mo
N3mo's picture

We the Public already own it.

They can't sell us back stuff they stole in the first place (Trafficking stolen property).

I think they are going to have a problem.

Fri, 05/08/2015 - 08:53 | 6072396 LawsofPhysics
LawsofPhysics's picture

A true debt jubilee would be awesome for metals, commodities and any real asset, hence, it will not be allowed to happen.

Thu, 05/07/2015 - 23:10 | 6071634 lunaticfringe
lunaticfringe's picture

All debts are paid. Either by the borrower or by the lender. The vagina pics are a good idea also.

Fri, 05/08/2015 - 01:06 | 6071836 OldPhart
Fri, 05/08/2015 - 07:38 | 6072178 WOWurstupid
WOWurstupid's picture

The Son of perdition will become ruler of the Earth by doing a Debt Jubilee. He will screw the bankers and the world will love him. 

Fri, 05/08/2015 - 11:15 | 6072928 GuusjA
GuusjA's picture

De @RaadvanState van Nederland weet dat in de optiek van de 'Logica van de 1' iedere TopBestuurder van financiële instellingen 'ongeschiktheid en onbetrouwbaarheid' is, om te kunnen functioneren in het GELD=ZUURSTOF-paradigma. Minister Jeroen Dijsselbloem (Financiën) wilde daarom dat De Nederlandsche Bank (@DNB) en de financiële waakhond AFM een bevoegdheid kregen, om TopBestuurders snel te vervangen, maar trekt dat onderdeel uit het wetsvoorstel terug. De Raad van State vond zo'n aanwijzing door de toezichthouders aan banken, verzekeraars of pensioenfondsen te ingrijpend voor de betrokkene. Dijsselbloem schrapt nu dit onderdeel uit een wetsvoorstel over de financiële markten dat hij deze week heeft ingediend bij de Tweede Kamer. Het begint steeds duidelijker te worden dat het script van de 3e SpinozaGolf die rondslingert in het netwerk van @SuperWil niet correct is. 

 

http://www.telegraaf.nl/dft/geld/werk-inkomen/24020274/__Topbestuurders_...

 

Bundesfinanzminister Wolfgang Schäuble: "Das Bankgeheimnis in seiner alten Form hat ausgedient".

 

http://deutsche-wirtschafts-nachrichten.de/2015/05/08/europa-steuer-beho...

 

Het begint steeds duidelijker te worden dat netwerk Juncker verregaande, zeer drastische maatregelen treft om ineens het systeem 'Leven en Laten Leven' in te voeren. 

 

http://www.ftm.nl/exclusive/oorlogskas-voor-tuinders-die-rabo-willen-aan...

 

Het broeit in netwerk WitteGejT. De traditioneel innige band tussen politici en bankiers is onder grote druk komen te staan doordat beiden niet willen erkennen dat de 'wiskundige definitie van de absolute waarheid' het fundament kan zijn voor een nieuwe wereldorde. 

Fri, 05/08/2015 - 08:38 | 6072205 Seek_Truth
Seek_Truth's picture

The Son of Perdition (the business of religion) has been in existence since before Emperor Constantine- and continues its influence to this day.

The debt jubilee, and the destruction of the global financial system (Babylon the Great), will be accomplished by the 8th King. (Revelation 17:10-11) https://www.biblegateway.com/passage/?search=Revelation+17%3A10-11&versi...

WWIII is on the horizon. The 8th King and it's allies will win the war- then Babylon the Great will be destroyed.

Then, people across the globe will believe they finally have peace and security:

http://biblehub.com/1_thessalonians/5-3.htm

Fri, 05/08/2015 - 07:38 | 6072177 WOWurstupid
WOWurstupid's picture

The Son of perdition will become ruler of the Earth by doing a Debt Jubilee. He will screw the bankers and the world will love him. 

Fri, 05/08/2015 - 03:31 | 6071931 Ham-bone
Ham-bone's picture

My best attempt to show why, what, and how the US and global Ponzi is taking place...

http://econimica.blogspot.com/2015/05/veneer-of-us-growth-normalcy-has-worn.html

Thu, 05/07/2015 - 18:04 | 6070718 tosser2000
tosser2000's picture

this post would be better if there were a few vagina pics in it.

Fri, 05/08/2015 - 02:32 | 6071900 Pliskin
Pliskin's picture

Awww, you said 'Vagina' now if you'd of used the word 'cunt' I could of sent you a pic of Hillary.

Thu, 05/07/2015 - 18:03 | 6070703 Milestones
Milestones's picture

Read the mans' original article . This is a very important post.

Milestones

Thu, 05/07/2015 - 16:48 | 6070463 chubbar
chubbar's picture

I would be surprised to see a private debt jubilee. I think the bankers will either confiscate assets and firesale them to elites waiting in the wings with cash OR cram down workouts to keep the hamsters on the wheel. When it crashes the economy stops. I don't see how anyone will be able to pay off debt using future income streams since those will take a hit? I wouldn't want to bet on a peaceful resolution when the sheeple figure out the bankers fucked them out of the ability to pay off their loans without a jubilee.

Thu, 05/07/2015 - 17:11 | 6070533 Seer
Seer's picture

I figure the Fed will swallow the debt (and die).  The banksters HAVE to know that it's pretty much game-over.  The only card left is to distance themselves from the guillotines.  Debt Jubilee is the distraction that'll save their lives.  It's going to burn,  They, banksters, have  a desire to live, and a decree to wipe out debt means they live.  They'll already have had their nice golden parachutes, what's really to lose is the business, which is going down in flames anyway.

Keep in mind that a LOT of what is being "stolen" was a mirage to begin with.  Because it's all predicated on a Ponzi -perpetual growth on a finite planet- EVERYTHING is but a bubble.  No more wisdom required than this:

https://www.youtube.com/watch?v=Jj4nJ1YEAp4

Fri, 05/08/2015 - 15:46 | 6073871 daveO
daveO's picture

Google Jim Willie and Scheiss Dollar. They kill off the current dollar and leave dollar holders holding the bag, which is what they have done, incrementally, with QE and ZIRP anyway. 

Thu, 05/07/2015 - 16:33 | 6070396 Dan The Man
Dan The Man's picture

I thought it was a nice review....but dont agree with the jubilee.

a 'selective' jubilee would be more accurate. 

Thu, 05/07/2015 - 16:27 | 6070374 KnuckleDragger-X
KnuckleDragger-X's picture

No matter what, the bond market will eventually crash and somebody will eat the loss, but we'll have to wait and see who it kills.....

Thu, 05/07/2015 - 16:25 | 6070368 Lazane
Lazane's picture

Ok Nielson lets not be confusing the olks here by referring to bond interest rate when you actually mean bond yield. I think you should stick to the metals and leave the bonds to the fixed banksters

Thu, 05/07/2015 - 15:22 | 6070096 stewie
stewie's picture

Ok, let's all take on HUGE debts so it can be forgiven at some later point?  I seriously doubt that the muppets will be forgiven all debts so we can all start over a new financial life.  Not gonna happen.  All pensions would go bust, all savers would instantly be wiped out, no more wall street, the top .01% would loose all power, Jamie Dymon would be forced to take the subway....  Sorry not buying this crap.   

Thu, 05/07/2015 - 20:55 | 6071208 Buck Johnson
Buck Johnson's picture

I agree, they are going to try to find another reason for the economy to implode and blame that and so when people are impoverished they can say it wasn't us it was ___________.

 

 

 

Thu, 05/07/2015 - 16:45 | 6070451 Seer
Seer's picture

Really doesn't matter what anyone "wants."  Despite the apparent lack of any real signs of there existing any economy there most certainly IS one, and sooner or later the very notion of the true value of assets will burst through all the papering that's obscuring us from seeing reality: I took heed of the necessities of life quite some time ago- "food, shelter and water." (if you're not based from here then you're going to be flapping in the wind)

It's a growth-based system, always has been.  And, it's run headlong into the finite world which is now the thing that is controlling things.  What is happening now is attempts to reshuffle the deck chairs.  No magic, no "secret plan" is going to change physics.

The conforts brought to us underlings by way of "economies of scale" are about to go bye bye.  It's no "plan" of the big titans, it's the reality of a finite world.

Thu, 05/07/2015 - 19:38 | 6070968 Pinche Caballero
Pinche Caballero's picture

"The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity.”

Probably just some othe crazy Canuck.

Or,

Abraham Lincoln.

Really starting to think more and more about the issuance of debt by government for infrastructure without all the interest. Still not sure, though, if .gov can handle the responsibility...

Fri, 05/08/2015 - 15:41 | 6073846 daveO
daveO's picture

Ol' Abe was shot and his killer was never tried in court, just like JFK. Even Reagan's shooter was 'judged' mentally unstable on the most ridiculous claims ever. The bankers have ruled since 1865.

Fri, 05/08/2015 - 09:32 | 6072558 p00k1e
p00k1e's picture

I'm not sure which country you hail from but the U.S. Constitution was voided way back there somewhere.

The first step is to stop pretending. 

Fri, 05/08/2015 - 19:58 | 6074586 N3mo
N3mo's picture

Worse. It never applied to the Common Rabble in the first place.

Possibly the most successful Con job in history so far.

Thu, 05/07/2015 - 18:27 | 6070787 Seer
Seer's picture

"Change" isn't going to happen by asking those in power to change.  Unfortunately it'll end up being a big mob revolt, which will only produce another set of clowns from which the Big Circus Ponzi Tent will spring up again.  We'll keep doing this until we've killed off enough of each other (through xenophobia and ignorance of the true underlying problems) that there cannot be anything sufficiently scaled to produce most of what we've become accustomed to.

Even IF everyone were to agree to that we'd STILL be faced with everyone being in debt and being OLD, plus natural resources further diminished: on this last point Canada is really running on fumes, as the tar sand bonanza is pretty much run its course.

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