Ending the Feds buying of Treasury Bonds and MBS will be an Event!


GALTGULCH8

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But Bernanke backed off after his attempt to prepare the markets for cutting back his purchases from $85 Billion a month by an amount he didn't specify. He backed off I understand because the interest rate on the 10 year Treasury Bonds moved up from 1.5% to almost 3%.

Presumably if he went ahead with the Taper as it came to be known interest rates would have gone up even more. That will prove to be intolerable for a number of reasons. Higher rates would impact the housing industry which would be adversely affected. Some would say it would be devastating to that entire market.

In addition, higher rates would mean that interest on the national debt would become a higher percentage of the federal budget and depending on how high the rates go could become a major non discretionary item which would crowd out everything else the administration would prefer to spend money on. If the rates go up enough it might exceed the entire federal budget!

That kind of event is virtually inevitable, especially with Janet Yellen about to replace Bernanke as head of the Fed as her solution to any problem is to print even more new currency.

So a hyperinflationary depression is going to happen in the near future. Certain laws of Nature in the realm of economics are being violated with predictable consequences.

At least that is what I understand from my reading of the Austrian school of economics which appears to be understood by those who contribute to my favorite source of info and outlook which is www.KingWorldNews.com which has new interviews every day.

It will happen suddenly probably as a result of rejection of the dollar by those who normally have bought US Treasury Bonds over the years.

Pleasant dreams.

GG

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