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Old 12-27-2018, 03:59 PM
Danny B Danny B is offline
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Join Date: Oct 2012
Location: L.A. Ca.
Posts: 4,887
The piggy banks (bond market) is breaking

1908, the bankers started a panic to justify the creation of a Central Bank.
1913, we got a Central Bank
1914, WW I started
1917 America entered WW I
1917, the FED was coerced to buy war bonds.
Apr 24, 1917 Emergency Loan Act authorizes issue of $1.9 billion in bonds at 3.5 percent.
Oct 1, 1917 Second Liberty Loan offers $3.8 billion in bonds at 4 percent
Apr 5, 1918 Third Liberty Loan offers $4.1 billion in bonds at 4.15 percent.
Sep 28, 1918 Fourth Liberty Loan offers $6.9 billion in bonds at 4.25 percent.

The FED was created as a private liquidity backstop for it's members. It loaned from the overnight window to create emergency liquidity. The short-term loan was repaid and, the liquidity was destroyed. Buying State bonds was never a part of it's original design. The FED was to provide emergency liquidity to private companies for a very short term.
In 2003, the banks were required to create sub-prime housing loans to increase the rate of home ownership. In 2004, both the FBI and SEC warned that a serious bubble in RE was forming. Both units were disbanded.
It all blew up in 2007--2008. The FED was required to buy many $trillions of mortgage backed securities. Their balance sheet eventually reached $ 4.4 trillion. They have been trying to sell all this dodgy paper but, have only sold 10%.

The FED is much maligned but, they never asked to buy and broker GOV bonds.

In 1925, Social Security was created to support widows and orphans. It paid out old age benefits after 65 years of age,,, back when the average life span was 57. It was financed by contributions from workers and their employers. Eventually, ALL the funds in SS were replaced by non-negotiable GOV bonds. If SS had invested in stocks, it would have much more money.

"The roots of IRS go back to the Civil War when President Lincoln and Congress, in 1862, created the position of commissioner of Internal Revenue and enacted an income tax to pay war expenses. The income tax was repealed 10 years later."
"The United States imposed income taxes briefly during the Civil War and the 1890s. In 1913, the 16th Amendment was ratified, permanently legalizing an income tax."
We got an income tax in 1913 and a war in 1917.

America's history is a long litany of war and taxes. Since LBJ instituted the war on poverty America has spent $ 25 trillion.
51% of Americans receive a check from GOV. 44 million receive direct support.
"There were 21,995,000 employed by federal, state and local government in the United States "
GOV debt is growing faster than exponentially. 44% of Americans pay no income taxes.
The bond market is the big piggy bank that was subverted 100 years ago to ensure the continuation of wars and welfare. The FED has been an unwilling enabler.
There is much talk of ending the FED but, the FED buys up all the dodgy assets when the credit markets freeze up. The FED and IRS support the GOV. GOV does redistribution. GOV does much of it's distribution by creating make-work jobs and wars.
The ultimate problem is; GOV tries to create make-work jobs in an amount equal to the jobs lost to automation and outsourcing.

Here is an article about our coming system that will no longer include money. we will just receive everything that we want.

12/27 Mutual fund outflows surge to $56 billion, most since 2008 – Bloomberg
12/27 Mother of all sucker rallies sends Dow 1,000 points higher – Mish
12/27 Richmond Fed mfg index record plunge coupled with twilight zone hiring – Mish
12/27 Bid-to-cover at U.S. 5-year auction weakest since 2009 – Reuters

Avoiding GOV debt.
12/27 Insider stock buying surges to 8-year high – Bloomberg
Insider stock buying used to be illegal.
12/27 China to take over Kenya’s largest port over unpaid Chinese loan – Zero Hedge
What did you think would eventually happen?

"U.S. credit market debt is about $70 trillion. The 10 year rate doubled in the past two years. Suppose that 1.7% increase applied to $70 trillion of debt. The cost to corporations, state and local governments, credit card holders, students etc. would be $1.2 trillion of reduced spending on other necessities."
This is a good article in credit markets.
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