Dollar Default Now Underway?

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Nichoman's picture
Nichoman
Status: Gold Member (Offline)
Joined: Nov 1 2008
Posts: 422
Dollar Default Now Underway?

In a macro (or general) sense, is potentially today the clearest sign yet a USA currency destabilization is now well underway toward capitulation and chaos.

As of 1240 PM CDT...10 Year Treasuries up 30/32 from yielding 2.84% to 2.95%.   Now at 110 PM...CDT down 24/32 to 2.93 still almost a tenth point rise.

Taken in context of numerous articles, including CM's posts add the article released recently below with sobering key data and facts...

 http://www.leap2020.eu/GEAB-N-34-is-available!-Summer-2009-The-international-monetary-system-s-breakdown-is-underway_a3129.html?PHPSESSID=1c654d3ea42b86c9f0595ecab6c2a6bc

Add today to yesterday US Treasury actions, where financial commentators yesterday commented yields rose despite Fed buying Treasuries but Government auctioning debt needs still overwhelmed market resulting in rising rates which shouldn't have happened unless the supply demand is so far out of wack the Fed is now irrelevant.

Can anyone provide more what's happening here?  Isn't this a major event unfolding, possibly of near epic to epic proportions?

In a broad sense, how can the magnitude of this suggest anything but a accelerating tide to default/collapse and soon?

Wouldn't our whole economy collapse as rates rise mercurially?   From my understanding and rough internal calculations (gov't and private debt, pensions, bonds, etc.) this is as I define it...an economic showstopper of multiple levels (2X or more beyond current inflow/outflow shortfalls).

Thoughts?  Observations?  Where am I incorrect?

Thanks,

 

Nichoman

BSV's picture
BSV
Status: Silver Member (Offline)
Joined: Jan 26 2009
Posts: 170
Re: Dollar Default Now Underway?

I noticed that nobody has eagerly jumped into this thread, so here goes (deep breath). People may be too busy scratching their heads. I know that I am. Futurists tend to speak in terms of a range of possible outcomes. Is this a major event unfolding? Quite possibly, even probably. Does it mean inevitable collapse? I don't know. Helicopter Ben doesn't know for sure. I suspect that fingernails are being chewed on and worry beads fingered in high places, though.

In terms of a range of possible outcomes, it is helpful to eliminate the outliers and "Black Swans" if possible (though they can't be disregarded entirely as possibilities) and stick wtihin the Bell Curve of possibilities. On the positive side, probably the most hopeful outcome is that we somehow, in some way, muddle through. We can probably eliminate as an outlier the possibility that business as usual will continue. On the negative side, the least hopeful alternative is that we crash and burn. That leaves some room in the middle for possible outcomes ranging from barely muddling through to barely crashing and burning. Take your pick.

A central theme throughout this website is the notion of being prepared. As a practical matter that means preparing for a range of possible outcomes. Some are a bit more hopeful than others. Is it possible that we will see a total collapse of civilized society as we know it? Certainly. It is within the range of possible outcomes, but I would like to regard that as an outlier. Are we going to need those firearms and ammunition that many have stockpiled just in case? Again, this is within the range of possible outcomes. Is is possible that an economic recovery has begun and the stock market will rise? Yes. Is it possible that this is a sucker's rally and stock prices will test the low point of the past six months? Yes. Is it possible that the price of gold is being manipulated by government intervention? Absolutely. Is it possible that gold will fall to half the current price? Yes. Is it possible that gold will be selling for $2,000 an ounce a year from now? Yep. Is it possible that China will use its huge reserves of dollars to purchase vast quantities of gold? Now there is an interesting possible outcome.

On these lines, is it possible that the Fed will suck all the excess liquidty out of the system in time to head off an inflationary spiral? Yes, that is a possible outcome. Is it likely? Um, that's another matter, but still within the range of possibilities. Is Peak Oil going to torpedo a budding recovery? Quite possibly.

We have to accept and grow comfortable with the idea that we cannot predict the future with any certainty. We all crave some certainty in our lives, but it is elusive. The best we can do is prepare ourselves for a range of possible outcomes, and then react in a sensible manner as events unfold. This probably does not add much to the discussion but it's the best I can do. My crystal ball is pretty cloudy. How's yours?

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Re: Dollar Default Now Underway?
Re: [roeoz] Dollar Default Now Underway?
 
 
Yesterday's rise to 2.95% is just a small up-tick,
well within the daily fluctuations of the last 10 weeks or so.
But I keep this chart going because it is where the collapse will show up when its happens.
 
When the Fed prints some money and uses it to buy bonds off the Treasury,
they don't do it in the open marketplace like ordinary investors,
so it doesn't influence the market price.
 
You can sign up for Treasury announcements at
which gives the amounts of new bonds being auctioned -
about $200 billion per week (mostly rolling over maturing bonds).
You really need to keep track of that supply over a period
as it obviously influences the price as much as demand.
 

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