Karora Resources Inc T.KRR

Funding crisis?

[goldenrob]

I follow the bond market from time to time as it is much bigger than the U S equities market and is the principle way the U S government funds their budget.  I have read from more than one source that they have to borrow about 7.6 trillion dollars this year alone.  Plus the deficit of say about, to make it easy, 1.9 trillion for about 9 trillion in total for this year and it may be more than the entire system can swallow.  

China and Japan buy hardly any of our treasures anymore and have actually been large sellers in the last couple of years and it is the treasury department that is on the hook for them whenever they are redeemed.  The Social Security systems is also reportedly ready to start selling their vast amount of bonds instead of buying many more.   So who is going to help us out and fund the government?  

Well, the FED pumped so much money, out of thin air of course,  into the system in 2020 and 2021 that it couldn't be released into the financial system without causing a tremendous amount of inflation so they put about 2.5 trillion into the reverse repo fund and have been using that account for the last few years to fund the market.  However, it is down to about 600 billion and is expected to be drained by the end March of this year.  Do you see why I think this whole thing is a little disconcerting?

The first three days of next week, according to future auctions at Treasury Direct, they are scheduled to try to sell 389 billion dollars of bills and notes.  I personally have not seen so much offered in that short period of time.  I hope they will be able to do it.  I don't think we will see gold really make a significant move up until there is a financial crisis.  It may be closer than we think.  I hope it is not one of those be careful what you wish for moments.