Treasuries "Most Overvalued" Bonds, Bill Gross Says: Beware End of QE2

Since China and the USA are locking into each other's currencies...despite the European complaints to find something other than the dollar standard...we should see economic growth as the US picks up consumer demand with China. As we increase our money supply without much inflation (oil withstanding), we will see a behind the scenes expansion of our M1 money supply, and the sudden easing on credit in about 6 months, to try an introduce this virtual money into the markets. BTW, without a gold standard, most of the money is virtual anyway. I do think gold is in a price bubble, btw. Silver usually follows at a 16:1 price ratio. With gold at $1400, silver should be at $80, but it is still at around $30.

We all save on energy, btw, as solar chip costs get reduced overseas. Look for most roof replacements to have solar properties soon. As folks save on electricity, as high efficiency bulbs sweep the country, it will move into other parts of the economy, as electric cars are brought to market, and hybrids too.

Cheer up...we were over our heads 3x higher per GDP to debt ratio after WWII, than today, and we had 25 years of fantastic growth.

The biggest problem was dropping interest rates to zero, re-inflating the markets and making the pros dependent on a price-of-money regime that's not sustainable. The market has no underpinning from the real economy and almost none from retail investors. The pros keeping pushing the market up against trading among themselves with zero cost money. Inflation is all around us- food, commodities, energy, construction cost, the money supply, the government sector... You have to be naive to believe the policy makers when they wave around their price indexes that show inflation at like 2%.

I applaud Bill Gross's honesty, just wish guys like Aaron would take notice.

If you want to truly protect yourself from the devastation headed our way read: How to Protect Your Life Savings from Hyperinflation & Depression by author John T. Reed

Treasuries "Most Overvalued" Bonds
The logical extension of this assertion is that the value of Treasuries must fall. The consequence is rising interest rates after the Federal Reserve ceases holding the interest rate curve down. The errosion of bond capital implied by even a fairly small increase in interest rates (and fal in values) is enormous, something like the bursting of a Treasuries bubble.

Consider at the current low interest rates, fairly small changes in interest rates sould result in a fairly large loss of value. If the hypothetical 0.5% impact of QE2 mentioned in teh article comes to fruition, then one might reasonably expect bond values to fall by 10-15%! The 'leverage' built into today's low interest rates is staggering. We saw the upside in 2008-2009 when bond funds easily earned 25% year over year. Reverse the cycle and bond prices fall by a similar amount. That is the nature of debt instruments. The fall may be great. Like he says, it may be time to get out a little early while there is still some value left?

SILVER SILVER SILVER is one way trade your paper and buy $1000.00 bags of pre 1964 coins and 100 oz bars

Readers....

Once QE2 is over and done with, please....there is nothing to fear or worry about....

They will launch QE3 in all its worthless glory.

Bernank's plunge teams are really hitting it with all they got, that new huge 2 Billion gallon per minute Bilge pump has got the water below the boilers, Pimco's Gross say's bad stuff about bonds and now he is a know nothing according to Bubble Vision talking heads

Using debt as money always ends badly. The US Federal Reserve Note is a debt note, not real silver money. A bond is a debt note not money. Credit cards are not money and are evil, harming people. Debt is an addictive drug, fun now but bad when the high ends. Expenses have to be cut willingly or by force.

Somehow, somewhere, the system must default and cleanse itself. This should happen with a 1:1 gold ounce to Dow Jones index ratio as it did in 1980 at $850 gold and less than $850 Dow.

If history repeats we will see $4,000 an ounce gold and $4,000 Dow Jones index to cleanse people out of risk and debt. It could even go back to $600 Dow which is the current price of the Dow in real 1963 silver coins. Price reality in real silver money to find real value today.

In real 1963 US silver money the Dow is $600, house is $8,000, and gasoline is cheaper now than in 1963 at 20 cents a gallon, or two silver dimes from 1963. The US Federal Reserve bank is a private, secret, foreign owned bank charter that has a plan to destroy the United States the way wolves eat sheep.

Default on debt. End the Fed. Restructure. Will we? Maybe, but it will have to be forced on politicians. We are in deep trouble going forward due to lazy baby boomers living on debt. Good luck to us all. The children will suffer badly. So will seniors. Those with real jobs, real skills, will always do okay.

Bernanke and Obama have put themselves between a rock and a hard place. If QE stops and is unwound, interest rates will skyrocket and more of the federal budget will be committed to debt servicing. If QE continues, investors will lose faith in these two and abandon investments denominated in US dollars. This summer will be interesting.

Bill Gross is a great guy! One of the most honest investors and straight talker.