Sunday, April 7, 2013

The Ripoff of T-Bills to Junk Bonds...L&C

There are many things that are baked into the price of bonds, far too many for a blog, however the underlining principle is a range of safety for your cash investment, depending on the type of bond that you purchase to which will determine the interest that you will receive during the term of the debt issue. The two key words in this is interest and debt.
Today, the fourth branch of government, irregardless of the country, sets the interest rate of payment in bonds, the largest investment vehicle. Of course, the present lie of all democratic governments is that these agencies are above party politics, looking out for the best interest of the nation and separate from all interference. Do you know what that is, a fairy tale. They are appointed by people in power that choose people for positions because they have the same attitudes about government and the economy. If they don't perform as to expectations, they are replaced by someone who will. Does B. Born ring a bell? A republican, she was dismissed because she spoke out about the dangers of derivatives. This is reality. Now, how does this affect the current bond picture which is in a dangerous bubble engineered by the Fed?
Ten Year T-Bills
set the standard rate for all bonds and presently they pay only 1.69%. Are you kidding me! There has never been a ten year period in modern history where the price of a product went up only 1.69% in ten years. The lie screams like a lighting bolt in a dark sky. Just since January of this year, gas is up 12%, eggs up 60% and the list is as long as yours going grocery shopping. This is the root of the problem and the effects will be another financial bubble, generated by central banks throughout the world with the US Fed being the chief instigator. Another sad casualty in all this will be the end of the US as the reserve currency of the world. If, or when this happens, the One World people which are the same bankers, will seek more power through a new reserve currency. Of course, other players like the BRICS and emerging markets will all want their two cents, but everyone will suffer because one aspect in all this is the spirit founded in the birth of America which is truly positive will be replaced, buried by the elites. Sorry about that rant dear reader.
Inflation is one of the main aspects for bond pricing. We know the government massages the CPI numbers and for many reasons like Social Security payments(see L&C), however the biggest danger in interest payments is with the national debt. The government and the Fed say inflation is in their 2% range. Oh, really? According to John Williams of recommend)the real CPI, calculated the way the government did during the Carter Administration is 9.6%. That sounds more accurate to me. This is the real reason for the low rates and everything else that is said about the Fed and central bankers is a lie or spin to make them appear legitimate. The real reason for the Fed is a security blanket for the banking industry and every time these thieves screw up, the Fed comes to their rescue just like in 2008.
When I was a kid, 5% was the standard interest rate for savers everywhere. This was before money market funds, CDs and all the various investment vehicles. Now, if rates were to return to 5%, the interest on our national debt would equal the amount of revenues the government presently collects. In addition, the transition of higher rates will cause the lower paying bonds to decline which will affect other investment vehicles like derivatives and this chain reaction along with the next tidbit will cause a financial implosion.
Junk Bonds
average just 5.7% for a dangerous risk that at one time caused these type of rated bonds to pay 15% to over 20% interest and now, they too like the Fed, are stealing from people. One quarter of these issues will go south and the numbers are crazy. In 2008 junk bonds totalled $43billion and now, $329billion or up 665% and that will add over $82billion in defaults. Can you now see the chain reaction danger? It gets worse.
understand the picture and 37% are getting ready to issue according to National League of Cities. They are getting while the getting is good. The only fear that they have is the federal government taking away their tax exempt status.
of companies understand the big picture and that is why they are dumping their stock even though analysts bullishness is at multi-year highs.
Bottom line: All of the above are reasons to End the Fed! They are guilty of manipulation and theft through inflation due to the devaluation in the dollar.
Why do I write this now? April is Financial Literacy Month. In my unpublished book I have an idea to save the system, but if I give away all my ideas, no one will buy the book. Here is a clue: it involves gold.
Liars and Crooks: President Obama will offer cuts in Social Security this week even though he pledged in his campaign to protect the elderly. He will seek to reach a big deal with the Republicans. These cuts will center around a new way to calculate COLAs. It will go lower to lower the payments people receive. They are stealing. It is like I've stated many times, he is all talk, no action, no conviction, an appeaser.