Looking at US Government Bond Yields, which are currently increasing by around 0.5% each month, they could be at nearly 5% this December!!!.. marketwatch/investing/bond/TMUBMUSD10Y?countrycode=BX This is why that would be a real problem: "The Fed has no viable exit strategy is because, when the Fed tries to withdraw its artificial support for US Treasuries, and tries to unload its $3 trillion portfolio, the results will be disastrous for the US Treasury and the economy. In 2013, according to Bloomberg, the Fed is expected to buy nearly 90% of new Treasury bonds. This subsidy has kept 10-year yields at 1.8%. The market is now dependent on the Fed purchasing $85 billion a month in Treasuries, and mortgage backed securities. When the Fed stops its purchases, and begins selling Treasuries, the ten year rates will triple. If rates triple by 2015, and another $2 trillion or so is added to the national debt, the annual interest on national debt will increase from $240 billion to $720 billion. At the end of President Obama’s second term, the national debt is projected to reach $20 trillion. If the cost of 10 year treasuries rose to 5%, the annual cost to carry the national debt would be $1 trillion. Social Security, Medicaid and Medicare costs are expected to reach $2 trillion by 2017. These four fixed entitlements alone would exceed current revenues of $2.4 trillion, and leave no money for defense or running the government!" prlog.org/12092363-does-the-fed-have-an-exit-from-quantitative-easing-and-do-we-have-new-worldview.html
Posted on: Thu, 22 Aug 2013 22:26:27 +0000
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