For those who don’t know, we have just finished the longest ever economic expansion in history. But we just crossed the yield curve inversion – that means that short term loans are paying MORE than long term. What does this mean? Why is this happening?
We have two contradictory figures. The debt requires a HIGH rate of return to offset our debasement of the currency. But our debt is so massive, there are few buyers. China and many other nations have stopped buying and are now selling. The FED corporation was planning on selling the 4T they have on their balance sheet by taking fake mortgages from the criminal banks to hide their dirty dealings, but cannot sell their own debt into the markets because the markets are saturated.
At the same time, the economy is dumping. So the fed should be LOWERING interest rates. But it can’t. Because it needs to sell bonds. So it’s trapped. Lower rates and fewer buyers for debt will exist. Do nothing and there will be a credit crisis.
As Nomi Prinz’s new book “Collusion” clearly details, the bankers kept all the bailout money for themselves, papered over their shady mortgage securities (they put the same mortgage into 20 different securities, aka they sold the same dollar 20 times!). None of the last bailout made it to the middle class and loans for average people. It all went to bonuses and gold plated toilets, yachts, and really nice cars.
So what now? Because they f-ed up the last bailout this time it will take TEN TIMES as much to bail out – maybe 50T! At that point we will have crossed over to a banana republic, inflation will shoot to hyperinflation, and nothing will ever be able to be fixed.
GAME OVER DUDE.
The next crash, if it really comes, will be truly frightening.