In FY 2009, the US government spent $383billion on interest payments on the US debt.

1) if you believe high inflation is coming to the US, you won’t be holding Treasuries which explains why US Primary Dealers have dumped 90% of their Treasuries holdings since June 2009. You will find this data at Zero Hedge’s article on Primary Dealers’ Holdings - $100billion in June, $10billion today.

2) China has stated that it stopped buying Treasuries in May 2009 and that the world does not have enough USD to mop up future Treasuries auctions due to the US consumer no longer buying China exports - this point is made also by morph366

3) creditworthiness of the US: Forbes in “Trillions of Troubles Ahead” notes US debt is 141% of GDP and only Zimbabwe, Japan and Lebanon have higher ratios. US debt including public, private, corporate and unfunded liabilities Forbes pegs at 840% pf US GDP. As these ratios continue to deteriorate, why would anybody in their right mind buy the long dated Treasuries? The US makes no effort to drastically reduce government spending and this makes the entire proposition of Treasuries even more absurd.

In the coming week there are no less than 3 Treasuries auctions. This is akin to a dog going round and round in circles chasing its tail at an ever faster rate. When the US drastically curbs federal spending and finally lives within its means, Treasuries may have more credibility than at the present.

I have read the White House budget for 2010-2019 at whitehouse.gov. In “Summary Tables” it assumes a virtually limitless appetite of the public for US government debt such that this debt almost doubles from 2009 to 2019. Spending on the social services doubles in that time. Nowhere do you see evidence of budget cuts. I think that says it all. The US government debt has no credibility whatsoever. I’ll leave you with a real jewel: in FY 2009, the US government spent $383billion on interest payments on the US debt.

- bluesky

Related Posts:

• What one person receives without working for, another person must work for without receiving.
• The big question is, Where to put money?
• Comparing anything to GDP is the Washington equivalent of Enron accounting.
• Want to see where GDP without the 11% jump in government spending?
• Government needs to fill up the gap for consumer spending to delay the collapse

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