Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And that's not counting any additional deficit spending, which is estimated to be around $1.5 trillion.
Put the two numbers together. Then ask yourself, how in the world can the Treasury borrow $3.5 trillion in only one year? That's an amount equal to nearly 30% of our entire GDP. And we're the world's biggest economy. Where will the money come from?
Debt to GDP is perhaps useful in assessing the ability of a country to pay off its debt, but at this point Japan, the US, and others have no chance of ever doing that.
Annual deficit compared to GDP is perhaps useful to assess to what extent govt debt is crowding out private borrowing. On this score the US, Japan, and others are awful. Non-productive govt borrowing is crowding out productive private borrowing, which means we can't get out of this recessionary hole, just like Japan.
I'm not sure if comparing debt to GDP is the best way to evalualte a countries debt level. It's a very complicated matter because you have to look at how much tax income the country is generating and how strong the currency vs. other currencies.
You make a good case for Gold also. It's very sad how much money our government printed. There is a cause and effect. The debt is not substainable, and printing money only ompounded the problem. I see a day, in the not to distant future, when banks lend freely, based off a prime rate of 10%, most likely higher. Gold could easily double or triple. The turth is the stage is set for a dramatic change and many will be caught off guard.
BTW, america has money to burn, did anyone ever think that thos 30 yr bonds given out during 80's are coming off the books soon, usa just handled their own refinancing at record low rates, so when inflation does come, usa did great job in securing financing at the right time... imagination
Dont let the door hit u in the arse when everyone runs to the door to get out of the bubble, tbt will appreciate till options exp. let's see gold up, commodities up, but 1982 gold high never happened with high unemployment, this is america not Japan, so rates should start goin back to normal levels...
I am going to buy a great amount of GLD on Monday. The effect of the governments undertakings, will be reflected in the price of these 2 investments.
Times have changed, yet markets do not to reflect reality. We all need to face the truth. Interest rates have been kept down artificially by our government for way too long. LT Bond yields aren't attractive to anyone. Why would anyone want to wait 30 years, be locked into a 5% return, and then get paid back with dollars, which will have significantly lower buying power???
Question: Had it not been for our government buying back it's own debt, what would the yields have been on the 5, 10 & 30 year bonds?
the usa is deadman walking!!!!if you have any savings convert it to something oil gold stocks run from the dollar.usa bonds will be toilet paper usa will default!!!noway around it.other than every american paying 70% of there income in taxes.
If the US defaults or default appears to be a possibility to many, what happens to TBT pps? Obviously, buying your own debt has to end sometime, either in default or hyperinflation. Bernanke will opt for the latter. Commodities are on a tear. Gold is real. Fiat money is not. Something has got to give. Is TBT a good place to hide? Maybe sell some covered calls to downsize risk?