Read the Friday Afternoon Wrap-Up for 6/28/2013 and the Monday Morning Commentary for 7/1/2013
Following abandonment of the gold standard in 1971, the ENTIRE WORLD embarked on four decades of reckless, suicidal MONEY PRINTING. The worldwide economy is unquestionably at its low point since 2008’s Global Meltdown I; and if there’s one things we’ve learned in its aftermath, it’s that MONEY PRINTING accomplishes NOTHING other than increased debt and inflation; enriching NO ONE but the criminal bankers that caused the crisis. And thus, according to the Bank of International Settlements’ June 2013 Quarterly Review, global debt securities outstanding currently total $83 TRILLION – up a whopping $17 TRILLION since mid-2008…
As U.S. Treasuries are by far the world’s largest fixed income market, their yields influence more bond prices heavily than any other factor. Given the essentially unlimited PRINTING POWER of the U.S. government since 1971, it should be no surprise the “Greenspan/Bernanke put” supported a MASSIVE, 30-year fixed income bull market. And thus, despite RECORD GLOBAL INFLATION, U.S. Treasury yields plunged to ALL-TIME LOWS this spring…
The fact the Fed averred it may taper QE next year is immaterial (it won’t); as irrespective, GARGANTUAN, GLOBAL forces seek higher interest rates. At this point, only HYPERINFLATIONARY printing can prevent this from occurring in the short-term; but even if Central banks attempt it, interest rates will still find their way higher in time – and likely, MUCH, MUCH higher…
Fed’s Fisher Speaking in Toronto, Says Sees ‘The End of a 30-Year Bull Market in Bonds’
During May, GLOBAL bond losses have been astronomic; particularly for the WORLD’S LARGEST BOND OWNER – the Federal Reserve; care of the “DURATION TRAP” it created via its “Operation Twist” and “QE3” policies; i.e., purchasing longer-dated bonds with dramatically higher interest rate sensitivity…
Ben Bernanke Capital May P&L: ($115) Billion
In June, the “FIXED INCOME CARNAGE” only accelerated; destroying hundreds of billions of investor capital thus far…
…including at least $25 billion in the U.S. banking sector ALONE…
How the “Taper Tantrum” cost US Banks $25 Billion in Q2 Net Income
…and the terrifying fact remains that fixed income is the WORLD’S LARGEST ASSET CLASS; while the only other category even close is equities – itself, an asset class with a HEAVY negative correlation with interest rates…
TPTB’s accommodative monetary policies of the past five years have specifically targeted the re-inflation of asset prices; thus, aiming to generate a “wealth effect” via higher stock, bond, and real estate prices. However, now that the miscalculated “tapering” comment is out there, the “button has been pushed”; thus, commencing a new, potentially horrific bond bear market…
The Button has been Pushed…Ready or Not – Bill Holter, Miles Franklin
…threatening decades of fixed income gains…
California on the Brink: Pension Crisis about to Get Worse
…but particularly those ill-begotten of post-2008 Central bank “QE” policies…
The Trigger has been pulled and the Slaughter of the Bonds has begun
In other words, the “FIXED INCOME CARNAGE” is just starting; and if not arrested ASAP by additionalMONEY PRINTING, higher rates threaten to destroy the ENTIRE GLOBAL FINANCIAL SYSTEM…
