The coming catastrophe in government debt.


I’ll keep this brief.

Everybody is cheering the stock market as a sign the world loves Trump. It’s an illusion. maxresdefault

This story starts will Bill Clinton and Timothy Geithner. In an attempt to finance globalism, the treasury department decided it was going to finance the government with VERY short term borrowing. This dropped the interest rate on government debt and caused Clinton’s “balanced budget.”

Like everything the Clintons did, it was pure smoke and mirrors. It allowed foreign central banks (which can only hold debt that doesn’t have risk) to use the dollar as a reserve currency. It also allowed them to finance trade worldwide without having a currency of their own. (China still can’t trade in their own currency)

Now, after 8 years of unrelenting money printing by the idiot Obama, the US has $14 trillion in debt, most of that in durations under one year. This debt ALL must be refinanced continually.

Unfortunately, the euphoria of the stock market is overshadowing the collapse of the bond market. Bond market yields are soaring.

In a nutshell, every 1% rise in the yield of US bonds adds $130 billion to the deficit. If the short-term bond market were to revert to being a real market, not a FED gamed market, the budget deficit would be well over $1 trillion.

Donald Trump may very well be the most brilliant politician in history. Unlike most people, Trump has a history of “contests”, boxing, The Apprentice, The Tour de Trump, beauty pageants. He understands that the people will be drawn to fights based on primal biology they don’t understand. The election was just another silly war that the participants (voters) erroneously feel is about them. It was Ali-Frasier, or the Cavs against Golden State. Now that it’s over everybody will go home forgetting why they were there.

Trump is mending fences. Why? Two reasons. First, the WikiLeaks emails have ALREADY disappeared like a fart in a windstorm. Second, he, being a real estate guy, knows what I know. That continuing the fight against somebody he already beat is a fool’s game and the crisis America faces is a lot bigger that we know.

If you think Trump is hated now, wait a few months. His approval will be at levels we equate with pedophiles. Trump knows this, which is why he’s collecting “friends that matter.” We aren’t on that list. He knows us. This is why he had 26 million viewers at the final episode of the first season of The Apprentice.”

The real US budget deficit is at least double the official numbers and it’s going up. The unraveling of free trade is going to be ugly. There will probably be a war. This is something (metaphorically speaking) Joseph Schneider knew in 1945 and Paul Trifthauser figured out later. It will all come out in book five of the series, due out next year.

Paul Schwartzmeyer

Medellin Colombia, November 23, 2016.

(Please excuse typos, no time to edit)

PS: On a side note, intellectuals (and Republicans) think everything is academic. They cling to the mosty idiotic quote ever uttered (IMO) by Warren Buffet, “I could close the deficit in 6 months”

The cut in government spending, public and private pensions and welfare will be ANYTHING BUT academic. I prefer Mark Faber’s quote, “In 5 years, most American cities will be unlivable.”



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