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Analyst: Skyrocketing Debt Cannot Be Supported By Money Printing Forever

Mac Slavo
May 2nd, 2018
SHTFplan.com
Comments (21)

Something is eventually going to have to give.  The United State’s debt which has shot up over $21 trillion dollars cannot be sustained by printing money forever, says a financial analyst.

According to TeleTradeBel analyst Mikhail Grachev, the US debt, supported by the printing of dollars could be coming to an end. “From 2009 to 2014. The Fed was actively buying Treasuries as part of a quantitative easing policy (QE). After the QE was scrapped, the Fed continued to purchase the securities, only in smaller quantities. American legal entities and individuals have always been the third major buyer of debt. The growth of debt and the volume of issuance of securities was possible due to the continuous flow of liquidity from the Fed at zero interest rate. It has also supported the unrestrained growth of the American stock market,” Grachev told RT.

But the tides have now turned and the Federal Reserve has begun hiking interest rates citing a “strong” market. In fact,  interest rates are expected to increase to 3.75 percent by 2020, the analyst noted. The investors’ interest in treasuries began to decline and the yield automatically went up. This week, 10-year securities showed a yield of 3.018 percent. This factor led to nervousness in the markets and raised a lot of questions, Grachev says.

As other analysts have pointed out, rising interest rates and a $21 trillion debt present a problem. With the rising interest rate and Treasuries’ yields, the question of servicing the mounting debt could become a problem for the US economy, the analyst warns. Although the economy of the US is great, even they don’t always have the extra money,” said Grachev. When the yields on the 10-Year US Treasury Note rise, it indicates that the demand for the American securities falls, Grachev explains.

“If the yield continues to grow, it can lead to a massive exodus of capital from Treasuries, and even result in the collapse of the world dollar financial system,” Grachev said. The analyst added that a dollar collapse seems far-fetched at the moment since the global economy is very dependent on the greenback. According to the expert, it is more likely that the dollar bubble will continue growing for the while, but a dollar collapse is all but imminent.

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Author: Mac Slavo
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Date: May 2nd, 2018
Website: www.SHTFplan.com

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21 Comments...

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  1. DWEEZIL THE WEASEL says:

    Yes, it COULD happen. And, the Yellowstone Caldera could erupt or the Cascadia Subduction zone could quake and wipe out everything on the NW Pacific Coast. As long as ALL of the players agree to the rules of the Big Monopoly Game, this will continue to lurch on.
    Look at Japan. Their GDP-Debt ratio has been upside down for over twenty years. That anthill is still there. Financial Doom Porn is just that. None of the Oracles or Soothsayers can predict WHEN this will happen. Ever.

    • durangokidd says:

      “When the yields on the 10-Year US Treasury Note rise, it indicates that the demand for the American securities falls, Grachev explains.”

      Not really.

      When yields rise it means that sellers of existing bonds in the Secondary Market have found a more productive use of their cash and want to liquidate those bonds and buy superior performing tangible assets. To liquidate they must drop their price enough to increase the yield on the coupon rate enough to induce other investors to buy their bonds.

      When the FED raises the rate on NEW treasury issues, they will peg the rate where they want regardless of what the market might desire. Anyone here think that buyers of US Bonds over the past ten years set the yield on those new issues at ZERO RATES by supply and demand ???

      Use your brain My Peeps. All markets are rigged. The US Bond market most of all !!! 🙂

      • durangokidd says:

        Money is created and destroyed every day in many ways. All US debt except recent NEW debt has been refinanced at zero rates or near zero rates over the past ten years.

        You can sustain that level of debt for a very long time since the payments are minimal (next to nothing) and unlike your credit card debt, the rate on that debt is not changing the payment by the US Treasury.

        The yield on all that debt changes in the Secondary market as investors buy and sell their bonds to each other to meet their liquidity requirements. It doesn’t cost the Treasury to service those bonds.

        The Treasury pays the same near zero rate to the next Secondary Bond holder whose yield is higher than that of the original buyer of that bond because the original buyer has discounted the price of that bond to the next buyer.

        Aggregate debt for the US Treasury may increase but its ability to service that debt without default is really a function of the RATIO of DEBT TO GDP, because GDP generates TAXES which are used to pay bond holders (among other things).

        NOTE: The IRS has received a RECORD amount of taxes this year from Individual and Corporate taxpayers. Just saying, don’t get your dick in a wringer because there is a lot of National Debt; or because gten year bond rates now exceed 3%.

        Can you say FEAR MONGERING by anal ysts who have their head up their ass and still don’t know shit ??? 🙂

    • yourdaddy says:

      you meant to say, “except for Peter Schiff, in late 2007 who NAILED the 2008 crash…None of the oracles can predict WHEN this will happen. Ever.”
      There, I corrected your (mis)quote.
      -Dad

      • buttcrackofdoom says:

        well…..there WAS one other guy….ME! i sold my house in 06 at the top of the housing bubble….i got triple what i paid for it 14 years earlier….it was all so predictable….interest rates go DOWN….home prices go UP. now it’s time to start paying savers to rent their money to banks again, so interest rates go UP. home prices will be half of where they are now, when this really gets going. there MAY be people that know exactly when, but we aren’t able to hear them, from all the screaming. too many KNOW what’s about to happen. 22,792 is the dow target short-term, in the next week or two. who knows where it goes from there. i been pounding the table that prices are too high for 15 years, and i was right for a minute…..but those FED’s are awfully good at propping up our failed-state.

        • Kevin2 says:

          “but those FED’s are awfully good at propping up our failed-state.”

          Its like playing poker with someone that has aces up their sleeve.

          • buttcrackofdoom says:

            yup…..we MUST end the FED…….why is it that the american PUBLIC puts up with the FED, anyway? our monetary system was DESIGNED to take purchasing power from U.S. since inception, over a hundred years ago….we need to EDUCATE the dumb masses.

    • buttcrackofdoom says:

      that it WILL happen is pretty much beyond doubt…..but happen, it WILL…..and then we get to laugh at all the dumb masses that ignored the warnings…..got preps?

  2. Heartless says:

    Ctl-P 4evah!! “To the Moon, Alice!!”.

  3. the blame-e says:

    Again it bears repeating. All of these so-called experts that say things like how “the money-printing cannot go on forever,” are missing the point. And quite frankly, they are clueless.

    Responsible stewardship of the nation’s budget disappeared for good after the Crash of 08-09. After the Crash and the subsequent bailout the economy has been whatever the “Powers That Be” (the FED. the banksters, the Deep State / US government), say it is. Period.

    I don’t know what it is but I know that facts mean nothing. Consequences mean nothing. Common Sense means nothing. One-hundred years of economics means nothing.

    This mess will go on until it can’t and then (and only then), will it stop.

  4. AlphaDelta says:

    Does the debt matter? Only to the extent we pay interest on Federal Reserve Notes, currently running around 6% of GDP which is rent we pay to the central banks. Let’s review, the Fed buys UST in FRN’s, and we pay interest on it?

    Repeal the Fed, repudiate the debt, stop paying interest on our own money, then we can begin addressing the over $200T in unfunded federal obligations.

    Where we don’t want to end up is where the US Congress will lead us, a two tier system of retirement and health care. One for them, and one for the rest of us.

  5. If a private individual prints his own currency, it is counterfeiting. If the government does it, it is “quantitative easing”. I really can’t see much difference. Maybe we should have stuck to trade beads and wampum.

    • the blame-e says:

      When the Crash of 08-09 happened the FED stepped in and started “printing” money out of “thin air.”

      But that was okay we were told. The FED was allowed to do that we were told. But only the FED could print money out of thin air. Comforted the money printing went on at a furious pace. QE1. QE2. QE3.

      Then the news came out that the central banks in Europe were printing money, too. MSM stepped and said: “No, only the FED can print money. They are printing money and sending it to Europe.”

      And then somebody said that the FED monetizing foreign governments and economies was illegal, which it supposedly is. At least it use to be.

      Things went quiet for a while after that.

      Later on it was repeated that (but of course), “all” central banks (the EU, Japan, China, Russia, etc.), they “all print money.

      And with each dollar that was printed its value fell more and more. From 1913, when the FED was re-created until today, the value of the U.S. Dollar has fallen 98-percent.

      That last 2-percent to “zero’ is going to really, really, really hurt.

  6. Sgt. Dale says:

    So far so good.
    Sgt.

  7. Anonymous says:

    What is the problem with just having the treasury print interest free United States dollars to pay of the Federal Reserve Note debt and take over the issuance of our money in the amount that Congress directs it to issue?

    Both the Constitution and the Federal Reserve Act allow that.

  8. 2018 Is Now says:

    Paper currencies throughout history have not survived.

  9. All banks around the world including in our country are not solvent.

    Prepare and plan accordingly: cache food, water, flashlights, batteries, extra clothing, precious metals, etc. etc.

  10. Old Guy says:

    I keep trying to explain. That there are not anywhere near the amount of actual printed cash dollars to equal the trillions of USA digital currency. There is very little percentage of the actual printed green back bills in existence. Paper money wears out very fast. And truckloads of worn out paper is burned every day. And yes the mint does print 24×7. but nothing larger than a $100 bill. There is very little actual paper cash USA money in circulation. Its the created out of thin air digital money that’s on the increase. There is a plan by some to do away with the physical cash entirely. Cashless society.

  11. Old Guy says:

    Dumb ass article. Now the trillions of created out of thin air digital money. That is USA digital Petro Dollars. Not Paper cash. Digital Dollars backed by the USA military enforcing that all the buying & selling of oil be transacted only in the USA digital Petro dollar. The Digital Dollar will not collapse and the debt will continue to grow. Until the USA Petro Dollars are no longer the dominate currency used for the trading of oil.