The professions of surprise at the recent carnage in the bond market sound disingenuous. Did anyone really think that governments could just keep borrowing obscene amounts of money without a bond market reaction? From Matthew Piepenburg at goldswitzerland.com:
The foregoing title may seem a bit sensational, no?
With all the recent hype about a gold-backed BRICS currency emerging from this summer’s South African meet-and-greet vanishing like oar swirls, one can understand the argument that many gold bugs chase (and create) click-bait like teenage bloggers.
And the precious metals space is no stranger to being labeled perma “doom-and-gloomers” to keep the retail trade forever moving.
Fine. Understood. Yep. I get it. We are all “just selling our book.”
The Current Facts are Sensational Enough
But here’s the rub: One doesn’t need to be a doomer or a gloomer to interpret bond signals, basic math, historical lessons, current geopolitics, or openly obvious energy and precious metal flows with common sense.
If so, one sees the writing on the wall of nations going broke, currencies losing faith and sovereign bonds falling like rocks.
In short, one doesn’t need to sensationalize headlines or forecast doom when the current facts and numbers are more than sensational enough.
USTs: Crying Alone in the Corner
Foreigners hold about $18T worth of US assets, of which $7.5T are Uncle Sam’s increasingly embarrassing and unloved IOUs.
But those IOUs are looking a lot less attractive as an increasingly debt-soaked USA ($33T and counting of public debt) seeks to borrow an additional $1.9T (net) into the back-end of 2023 and issue another $5T of USTs into the next year, all of which has even Jamie Dimon pulling at his hair.
But who will buy those IOUs? Be honest.
And if foreigners start simultaneously dumping existing USTs into an already obvious US debt crisis, subsequent pain levels here and abroad, already felt, will only rise exponentially.
This is not fable but fact.
