While watching what is happening in Egypt, our nation’s finances are falling apart

[No DUplicitous DUpe]

U.S. Fed Is Now Biggest Holder Of U.S. Gov't Debt!
posted with permission from: http://economiccrisiswritings.blogspot.com/2011/02/us-fed-is-now-biggest-holder-of-us-govt.html

Racing to fund the U.S. Government's mushrooming debt, the U.S. Fed is rapidly printing money and as of last month, now owns more debt than even China, formerly the U.S.'s biggest debt holder.

By June, when the U.S. Fed is scheduled to complete its latest stimulus program, all of the money printed out of thin air, it will own more U.S. Gov't debt than China and Japan, the next largest holder, combined!

The immediate effect is to hold down U.S. interest rates and flood the nation with money. But it is paving the way for interest rates to later skyrocket because global debt investors are learning what I have just told you and will likely demand a risk premium to buy U.S. debt. This will especially be so if prominent credit rating agencies such as Standard & Poor, which just downgraded Japan's debt, does the same with U.S. debt.

If you are an American, please take steps to protect yourself from the rampant inflation to come. If you must sell your home, consult your local real estate professional, but sell it now for higher mortgage rates will drive down values. If you are going to keep your home, consider putting a 30 year fixed rate mortgage at today's low rates on it. When inflation hits, you'll get a one time free ride. Also, pay off or pay down your credit card debt for unless you have a cap on how high those rates can rise, they will devour you in inflation.

If you think this can't happen here, recall that in 2008, almost no-one saw the financial crash coming, least of all the U.S. Fed and the U.S. Gov't. And as you watch the Egyptian Gov't crash, realize that Washington and Cairo were blindsided as to what was coming despite having extensive investigative organizations such as the C.I.A. Even though they are long in building, when these things happen, they happen fast!

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For further financial details, please see the prominent British business newspaper, the Financial Times, "Fed passes China in Treasury holdings." http://www.ft.com/cms/s/0/120372fc-2e48-11e0-8733-00144feabdc0.html#axzz1Cpsyx3OB

[karynnj]

1. You might want to click on his previous posts - he is consistently wrong!

[No DUplicitous DUpe]

5. Yeah, he predicted that home prices would fall drastically, in late 2007...

I guess the author was wrong about that too....oh wait..

I guess this is all wrong too? (an earlier piece from the author)

How To Protect Yourself As The Economy Sinks
WARNING: What I'm about to tell you is very strong. It is the opposite of what most experts say will happen. Why should you believe me? In 2007, I published "How To Protect Yourself From The Coming Financial Crisis" on http://www.saneramblings.com far before most experts knew there was a problem.

Since then I've published updates that were also right, while the experts have been wrong as is obvious from the deepening financial disaster that confronts us all. I have nothing to sell you, no ax to grind:

Our ship hit an iceberg and is taking on water fast. The captain and crew are bailing out the water but they're rapidly losing the battle as the water rushes in and the ship will soon sink.

But the captain shouts, there are "glimmers of hope" and many passengers sigh in relief and return to their normal activities. But those who are more prudent quietly make their way to the life boats taking with them others who will follow.

How do you know this disaster is happening? When our financial ship hit the iceberg aside from the jolt, you may not have felt much more. But you will soon. Interest rates have been manipulated by the Fed to record lows. However, those interest rates will rise and then will skyrocket.

Here is why it will happen, how it will affect you and what you can do to protect yourself:

Why will this happen? The already staggering size U.S. debt is rising faster than a mushroom cloud over an atomic bomb explosion and is every bit as toxic.

As a result the Chinese and other major investors are fearful the U.S. will default on its debts or inflate its currency. Fed Chief Ben Bernanke calmed the global financial markets recently by assuring everyone the Fed would join with them and buy up to $300 billion in U.S. debt.

However, confidence soon fell through the floor as investors realized the Fed is creating the money out of thin air to buy that debt. Compounding their fears, the U.S. deficits are mounting faster than ever.

The current estimate of U.S. debt to be funded this year is $2.5 trillion but don't memorize that number because it will soon be higher. By comparison the Fed buying $300 billion of it is a drop in the bucket.

How will this affect you? Inflation. When the cost of money goes up so does the price of what you buy. At first the government will deny it but you'll know better as you pay higher prices at the grocery store, the gas station, and in your home for electricity and gas. The banks you bailed out will charge you more interest and fees and your taxes will jump as federal, state and local governments become strapped for cash.

What should you do? If you have long term financings planned, do them soon while interest rates are at record lows, and do them with fixed rate financing only. You will not see interest rates this low again for many years and you will be glad tomorrow that you locked in those low rates today.

Second, keep your job. Either become an expert in a field the public needs such as healthcare or become a jack of all trades by learning to perform many different functions.

Third, if you can afford it please invest in income producing assets. For example, buy residential real estate in major job centers, preferably in low crime, good school communities. Everyone needs to live somewhere and most people will make it a high priority to pay you. That money will be in ever inflating dollars as they pay off your property and give you income.

Forth, some sophisticated investors are already buying gold as a hedge against the dollar collapsing. You too may want to buy U.S. Gold Eagles or other one ounce or smaller gold coins.

Fifth, life is precious so enjoy each day you have. It costs nothing to give a hug or to smell a rose.

Because of the rampant greed and a broken system that rewards it with bailouts and stimulus plans, and a powerful dependence on military spending, the U.S. will pay whatever it has to get money. Please take some or all of these steps to protect yourself.

Eventually we will rise from the ashes, hopefully a better and more compassionate society, wiser from the experience. The good news is we are all in this together and together we can help one another, as we persevere and triumph together.
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There is really no harm in being prepared, just in case, don't you think?

[karynnj]

7. There were many people predicting that then - which is why Kerry and Smith

wrote a provision to help with foreclosures - that the Republicans took out of the stimulus bill under Bush.

Look at the rest of the predictions - and you will see that he is wrong more than he is right. He is also ALWAYS alarmist.

[JCMach1]

11. +1, Chicken Little Economics

[JDPriestly]

2. Of course it will happen here.

Read the history of Germany in the 1920s. They were an importing nation just as we are.

We must end "free trade." It is the only hope if our children are to have a future.

In order to have the freedom to end "free trade" and replace it with fair trade, we must switch very quickly, very, very quickly to alternative energy. Those two things are the keys to maintaining at least minimal political and economic independence and autonomy.

[pnwmom]

3. Paul Krugman, the Nobel prize winning progressive economist,

isn't worried about the stimulus causing inflation. I'd trust his judgment more than a conservative blog like this.

[No DUplicitous DUpe]

6. Re: I'd trust his judgment more than a conservative blog like this.

Really. Do you think we can afford our current pace of military/war spending? Neither do I. To point out that our out-of-control military/war spending (mostly under Bush) will be the ruin of this countries prosparity...That is conservative?

[pnwmom]

8. The stimulus bill that was referred to in the first paragraphs

is something that conservatives complain about, but progressive economists thought was not only necessary, but not big enough.

And the harm in this person's writings is that it encourages more people to think that a good stimulus bill -- e.g., investing in the nation's infrastructure -- will damage the economy.

[No DUplicitous DUpe]

9. The author would be fine with "good stimulus bill" if we were not spending borrowed money...

..or if money spent on our foreign military bases and senseless wars were redirected to create jobs and economic growth at home. But my question to you is, if you are up to your neck in credit card debt, will your economic stability be improved by taking out another credit card to pay the minimum charges and spend more? Will this put you on a firmer financial footing, or does this just kick your financial troubles down the road?

And the Author responds to the criticism directed at him in this thread:

I wish more members of DU would read, “This Time is Different: Eight Centuries of Financial Folly,” or address specific issues such as the unemployment figures, home foreclosures, numerous failing small businesses, skyrocketing gov’t deficits, the ¼ trillion dollar trade deficit and the wars. Why do they think we have a $600 billion new stimulus and why is it the Fed must print it all? I don’t make these things up, they are really happening and if they would read “This Time is Different,” they’d understand why they are happening.

[pnwmom]

10. Krugman has no problem with our building our infrastructure

with deficit spending, saying that this type of spending will pay for itself over the long run.

He has made a good case for this in numerous articles in the NYTimes. You should read some -- he has educated responses to this conservative blogger you're posting here.

[leftstreet]

4. "no one saw it coming..." "blindsided..." BS

This was all planned