Treasury Auctions Disappoint Due To “Overwhelming Supply”

MarketWatch reports why investors will monitor treasury auctions closely.

(emphasis mine) [my comment]

Market Snapshot
Jul 27, 2009, 4:15 p.m. EST
Why stock investors will monitor Treasury auctions closely
U.S. 20-year inflation-indexed securities awarded at 2.387% and a healthy cover
By Kate Gibson, MarketWatch

NEW YORK (MarketWatch) -- Unlike some past years, the U.S. stock market will pay close attention this week as the Treasury sells a record amount of government debt involving $235 billion in assorted bills, notes and its inflation-indexed 20-year bonds.

"The one thing that makes this all plausible is that last week,
the Fed Chairman [Ben Bernanke] in his testimony to Congress stated that while the recovery may be underway, it will not likely include inflation [WOW. So, according to Ben Bernanke, the Fed has printed trillions (very inflationary) AND the economy is recovering (also inflationary), but inflation is still "not likely"? Bernanke is either incompetent or dishonest, take your pick]," said Kevin Giddis, head of fixed income trading and research, Morgan Keegan.

"This was the best news the markets could hope for and it is likely the reason for the rally in stocks,"
said Giddis of last week's trade, which on Friday had the Dow industrials closing at their highest level since early November.

On Monday, stocks and Treasury prices fell as the government kicked off what will be a record $235 billion in government bills and notes put up for sale this week. Read the Bond Report.

Financials and consumer discretionary shares fronted the late-session turn higher as the Dow Jones Industrial Average ended at 8,108.51, up 15.27 points, or 0.2%. The S&P; 500 Index added 2.92 points, or 0.3%, to 982.18, its highest closing level since the broad-market gauge topped the 1,000 mark on Nov. 4, 2008, while the Nasdaq Composite [s: comp] rose 1.93 points, or 0.1%, to 1,967.89.

Supply issues

The auctions, which will surpass the record $104 billion sold in late June, should bring back in play the issue of "overwhelming supply," a valid concern offset so far "by the outlook for growth, or lack thereof, in the second half of the year," said Dan Greenhaus, an analyst with the market strategy group at Miller Tabak & Co.

"Should below trend growth prove a reality, the potential impact on corporate earnings, stock prices and the Treasury market cannot be discounted," said Greenhaus.

"If the stock market is right and the economy in the second half of the year will have a strong rebound, then interest rates are going higher due to higher inflation and demand on the part of foreigners, who own half our debt, and others for higher yields for the enticement of buying the enormous new supply," said Peter Bookvar, equity strategist at Miller Tabak.

Monday's auction had the Treasury selling $6 billion in inflation-indexed securities at a yield of 2.387%.

"The backdrop of this auction was implied inflation expectations that have ticked up over the past few weeks to the highest level since mid June,
with the rally in stocks and also the U.S. dollar index trending near the lowest level since December. The other key auction of the week will be Thursday's seven-year as the others are shorter term in nature that should not present a problem in selling," said Bookvar.

The government on Tuesday plans to sell $42 billion in two-year notes, with MF Global Inc. researcher Nick Kalivas expecting average to lower demand.
"The supply may be too much and the leading data suggests foreign interest may be weaker," Kalivas wrote.

Tuesday will also bring the sale of $27 billion in 52-week bills and $30 billion in 4-week bills, followed by $39 billion in five-year notes Wednesday, and $28 billion in seven-year notes on Thursday.

"I am not hoping the auctions go poorly, but people worry whether or not these things will be fully subscribed," Peter Cecchini, a partner at Seven Bridges Management, said in a phone interview on Friday

The Wall Street Journal reports that shorter-term Treasuries are down after 2-year auction disappoints investors.

JULY 28, 2009, 4:15 P.M. ET
Shorter-Term Tsys Down After 2-Yr Auction Disappoints
By Deborah Lynn Blumberg
Of DOW JONES NEWSWIRES


NEW YORK (Dow Jones)--
Treasurys maturing in the next two to five years were weaker Tuesday on the heels of a disappointing two-year Treasury auction that was seen as a barometer for the government's remaining Treasury note sales this week.

The worse-than-expected results don't bode well for Treasury's auction Wednesday of a record $39 billion in five-year notes. Treasury will also sell seven-year notes Thursday. In total, the government will offer up more than $200 billion of Treasury notes and bills this week, a record amount.

"The rather poor two-year auction results are concerning," said Robert Allen, managing director at Banc of America Securities, "because supply should be more difficult to digest as the maturities move out the curve. At a minimum, we might see buyers take a wait-and-see approach," Allen said.

In late trade, the two-year note was off 3/32 in price to yield 1.08%; the three-year was down 4/32 at a 1.65% yield; and the five-year was off 4/32 to yield 2.60%. Longer-dated Treasurys were faring better with stocks down. The 10-year note was up 6/32 for a 3.69% yield, and the 30-year bond was up 28/32 at 4.56%.

Trade took Treasurys' benchmark yield curve, the gap between the two- and 10-year yields, to 261 basis points from 268 basis points Monday.

A major factor playing into the weaker results of the $42 billion two-year note auction was the hefty size of the offering.
This month, Treasury added to the amount of two-year notes for sale for the first time in 2009. George Goncalves, managing director and head of fixed-income rates strategy at Cantor Fitzgerald, said investors were nervous about how much more the government could bolster its two-year auctions.

The fact that "we don't know where we're headed from here could introduce some volatility into the front end [of the yield curve]," he said, and likely kept buyers at bay at Tuesday's sale.
"The risk has been put back into" shorter-dated securities, that they are "not going to be steady and less volatile with the Fed on hold," Goncalves said.

The two-year auction results were disappointing
since investors had expected to see good demand given recent reassurances from the Federal Reserve that interest rates will remain low for some time, and after last month's sale drew very strong interest from large institutional investors - including foreign central banks. That interest, though, plunged in July to about half of what it was at the last sale, to 33%, compared with 68.7% June and the 39.1% average of the past 12 sales.

Market Oracle asks why is the US financing its debt at the short end of the yield curve.

Why the U.S. is Financing its Debt at the Short End of the Yield Curve
Jul 28, 2009 - 12:37 PM
By: Michael_Pento

The Greatest Subprime A.R.M. of All is our Debt - It troubles me greatly to know that while the 30 year Treasury bond is yielding a mere 4.6%, we are not locking in that low rate for our newly issued debt. Any thinking American knows it would be best to take advantage of that ridiculously low yield and finance the Treasury's borrowing at the long end of the curve.

However, much like those homeowners who chose to think in terms of weeks not years when evaluating their long term finances, our government has subjected us all to what amounts to the mother lode of all subprime adjustable rate mortgages.

The fact that the Treasury Department must issue a record amount of debt in the ensuing years will put upward pressure on interest rates. Add to that a record-low Fed Funds rate and a $1.7 trillion monetary base, and the prospects for higher inflation and interest rates are fairly certain. So why are those in power refusing to ensure the future solvency of our country?


Here are the relevant facts to make you aware of just how significant this problem really is. The U.S. will sell $42 billion in 2-year notes, $39 billion in 5-year notes and "just" $28 billion of 7-year notes this week alone. That's $109 billion in auctions for the week—an all time record high! But the most troubling aspect of this auction isn't the sheer volume of debt that must be sold, it is the fact that most of it is being sold on the short end of the yield curve.

The overall debt picture is subject to the same fiscal irresponsibility. Of the total $6,591,740,000 publicly traded marketable securities outstanding, over $5.4 trillion are due in less than ten years. And according to the Department of the Treasury themselves, 55% of that total debt will mature in the next two years!
It remains a mystery as to why our government refuses to lock in a low interest rate for our ballooning debt obligations [No it isn't. Much of the demand for short term treasuries comes the global derivative and securities lending markets, where they are used as collateral (long dated treasuries are considered riskier and inappropriate for collateral requirements). So everytime an investor buys a call option on gold, this creates demand for Treasury bills.]. Of course the initial outlay of interest would be higher, but wouldn't that be worth it to know we are locking in a rate that is near an all time record low? My guess is since the current budget deficit would be higher if the debt was sold longer term, it is just more politically expedient to mortgage our future instead. [This is also part of the reason, for course.]


There's no denying the huge gamble that we have undertaken.
Because our surging debt load must be rolled over more frequently, we have made a bet that rates will stay low for a very long time. However, we now have in place what amounts to the perfect recipe for creating inflation--low interest rates, easy money and runaway debt. All of which virtually guarantees interest rates will be much higher in the future.

The options subprime mortgage borrowers hoped for of either being able to refinance at a lower rate or sell their homes at a profit never materialized. Instead, many were forced to declare bankruptcy and/or walk away from the properties. Unfortunately, if the U.S. Treasury does not get its fiscal house in order, we may be forced to effectually walk away from our debt either through default or by paying it back in worthless dollars.

On July 6, I explored the makeup of the US debt.

Makeup of the US Debt

On the TreasuryDirect website, I looked up the Monthly Statement of the Public Debt (MSPD) (which lists the types of Treasury Securities issued, the related maturity dates, and the "Amount Outstanding") and downloaded the Excel File for Primary Dealers for May 2009. From this, I got the following data:

Total Treasury Bills.......................................... 2,065,401 million (32%)
Total Treasury Notes....................................... 3,211,303 million (50%)
Total Treasury Bonds......................................... 632,546 million (10%)
Total Treasury Inflation-Protected Securities........ 531,019 million (8%)

Amount due in second half of 2009 which needs to be rolled over: 2,260,123 million (35%)

The falling 30-Year Treasury yield over the last three decades



The shrinking supply of 30-year Treasury bonds is a big reason why long term interest rates have fallen. Treasury Bonds only make up 10 percent of the national debt today. There are several reasons for the reduced supply of long dated treasuries.

1) With many regarding Treasury bills as the least risky investment available, it became the preferred collateral for the global derivative and securities lending markets. As these markets expanded,
the Treasury took advantage of the growing demand for Treasury bills to fund its operations with more short term debt. As a result, the size and frequency of long-term bond issues declined significantly in the 1990s and early 2000s, reducing the supply and pushing down yields.

2) The US government used its budget surpluses to repurchase 30-year Treasury bonds in the late 1990s. This helped drive the yield of Treasury bonds under 5 percent.

3) The U.S. Federal government stopped issuing the 30-year Treasury bonds for a four and a half year period starting October 31, 2001 and concluding February 2006. This lack of supply helped keep the yield of Treasury bonds under 5 percent.

The Treasury's funding problem

Bloomberg reports that $1.1 trillion new Treasuries need to be sold by year-end.

Investors anticipating another "summer rally" may be disappointed as Treasury Secretary Timothy Geithner accelerates debt sales to finance a record budget deficit. After more than doubling note and bond offerings to $963 billion in the first half,
another $1.1 trillion may be sold by year-end, according to Barclays Plc, one of the 16 primary dealers that are obligated to bid at Treasury auctions. The second-half sales would be more than the total amount of debt sold in all of 2008.

Combined with the 2.2 trillion debt that needs to be rolled over,
the treasury needs to sell 3.3 trillion dollars in the next six months. It will be very interesting to see how they manage such a feat.

Treasury yields are rising



My reaction: Treasury auctions are disappointing investors due to the "Overwhelming Supply" of US debt flooding the market.


"Overwhelming Supply" Of US Debt

1) This week the Treasury will sell a record amount of government debt involving $235 billion in assorted bills, notes and its inflation-indexed 20-year bonds.

2) The U.S. will sell $42 billion in 2-year notes, $39 billion in 5-year notes and "just" $28 billion of 7-year notes this week alone. That's $109 billion in auctions for the week-an all time record high!

3) The auctions, which will surpass the record $104 billion sold in late June, will bring back in play the issue of "overwhelming supply."

4) The backdrop of this auction was implied inflation expectations that have ticked up over the past few weeks to the highest level since mid June

5) Leading data also suggests foreign interest may be weaker.

Disappointing two-year Treasury auction

1) Treasurys maturing in the next two to five years were weaker Tuesday on the heels of a disappointing two-year Treasury auction

2) The worse-than-expected results don't bode well for Treasury's auction Wednesday of a record $39 billion in five-year notes.

3) This month, Treasury added to the amount of two-year notes for sale for the first time in 2009.

4) "The risk has been put back into" shorter-dated securities

5) Last week, the Fed Chairman (Ben Bernanke) in his testimony to Congress stated that while the recovery may be underway, it will not likely include inflation.

6) Investors had expected to see good demand given recent reassurances from the Federal Reserve that interest rates will remain low for some time and were disappointed.

The US is financing its debt at the short end of the yield curve

1) Of the total $6,591,740,000 publicly traded marketable securities outstanding, over $5.4 trillion are due in less than ten years. 55% of that total debt will mature in the next two years!

2) The US is financing its debt using the short term treasuries because:

3) Much of the demand for treasury securities comes from the short end of the yield curve via the global derivative and securities lending markets, where short term treasuries are used as collateral.
4) The current budget deficit would be higher if the US debt was sold longer term, making it more politically expedient for the US to use short term financing to lower its interest costs.

5) Since its surging debt load must be rolled over more frequently, the US is financially vulnerable to a rise in short term interest rates.

The Treasury's funding problem

1) The treasury needs to roll over 2,260 billion (35%) of its debt in second half of 2009.

2) On top of the rolling over old debt, the Treasury also needs to sell another $1.1 trillion by year-end.

3) Combined, the treasury needs to sell 3.3 trillion dollars in the next six months.


Conclusion: The simply aren't enough investors to absorb all the US debt being auctioned off, which means treasury yields will continue to rise. Furthermore, remember that the treasury sold an enormous quantity of one year bills around September and October of last year after Lehman collapsed. Rolling over this mountain of debt could prove challenging if inflation starts rearing its head.

This entry was posted in Currency_Collapse, News_Developments, Treasury. Bookmark the permalink.

31 Responses to Treasury Auctions Disappoint Due To “Overwhelming Supply”

  1. Anonymous says:

    Eric,

    You are gong to make me eat my words aren't ya?

    And make no mistake, I can see Numonic sayin, "1+1 doesn't always equal two, you fool!"

    However, I will still like to remind some people (the most hostile critics of my view - see Numonic) that the future is still to be determined.

    With that said I must say Eric this is the type of reporting I have longed to see; just the facts no bullshit.

    For example Eric, this is a key jem: So everytime an investor buys a call option on gold, this creates demand for Treasury bills. And it is because it shows how America taxes the world because it owns the world reserve currency. I never thought of gold being apart of that tax before.

    Also Eric, what did you mean by this statement: "... the economy is recovering (also inflationary)..."

    How can a recovering economy be inflationary?

    Good work on this entry Eric, it was a joy to read, and reminds why I keep coming here.

    The Anonymous Coward

  2. Anonymous says:

    Eric,

    I also have one more question...

    Do you know where or is there any way one can find out who is buying American treasuries now, for this info does't seem to be public anymore.

    And I'm asking for a real source here ;).

    Thanks in advance,

    The Anonymous Coward

  3. dashxdr says:

    Regarding who is buying treasuries, probably look at the 500 billion currency swap that Bernanke was raked over the coals for. That was a currency swap with foreign central banks. They now have 500 billion in US dollars.

    Recently they've been told to buy US treasuries.

    Also China buys some and turns around and uses them as collateral to buy real stuff in the world (commodities and their producers), through financing. So if the US tries to kill commodities through the corrupt COMEX, etc., there will be calls for the collateral, which is US treasuries, which will have to be sold. So China is using the US debt mountain to eliminate US's options.

  4. Anonymous says:

    Woot!

    Dollar hit almost 79.4, it's sitting at 79.392.

    Heheh, at this rate the dollar will hit 82.5+ by the end of the week!

    Mahahah!

    So I was a week off ;).

    The Anonymous Coward

  5. Anonymous says:

    Ladies and Gentlemen
    We are the thing of shapes to come
    Your freedom's not free and dumb
    This Depression is Great
    The Deformation Age, they know my name
    Waltzing to scum and base and
    Married to the pain

    Bang we want it
    Bang we want it
    Bang bang bang bang bang
    You came to see the mobscene
    I know it isn't your scene
    It's better than a sex scene and it's
    So fucking obscene, obscene yeah.

    Be obscene, be be obscene
    Be obscene, baby, and not heard.

    The day that love opened our eyes
    We watched the world end
    We have "high" places but we have no friends
    They told us sin's not good but we know it's great
    War-time full-frontal drugs, sex-tank armor plate

    Bang we want it
    Bang we want it
    Bang bang bang bang bang
    You came to see the mobscene
    I know it isn't your scene
    It's better than a sex scene and it's
    So fucking obscene, obscene yeah.

    You want commitment?
    Put on your best suit, get your arms around me
    Now we're going down down down
    You want commitment?
    Put on your best suit, get your arms around me
    Now we're going down down down

    Be obscene, be be obscene
    Be obscene, baby, and not heard.

    You came to see the mobscene
    I know it isn't your scene
    It's better than a sex scene and it's
    So fucking obscene, obscene yeah.

    You want commitment?
    Put on your best suit, get your arms around me
    Now we're going down down down
    You want commitment?
    Put on your best suit, get your arms around me
    Now we're going down down down

    Ladies and gentlemen, be obscene! Be be obscene!

    Be obscene, be be obscene
    Be obscene, baby, and not heard.

    Bang bang bang bang bang.

    Marilyn Manson: Mobscene

  6. Jimmy says:

    dashxdr,

    You were very bullish on silver, I believe. Stocks are probably heading lower in near term, USD probably higher. Would that mean a much lower price for silver again (pretty much like last year when silver was sold like & 8.8 per oz)?

  7. Anonymous says:

    Jimmy,

    Usually if the dollar goes up, commodities goes down.

    Note, usually...

  8. Anonymous says:

    Oh,

    As of right now the sits at 79.617...

    Be interesting if it hits 80 today ;).

  9. Numonic says:

    Anonymous, what is the point of a stong dollar if there is nothing to buy with it? You do realize that we are facing a situation of mass starvation VS a weak/collapsed dollar, which one do you think people will choose?

    On a semi-unrelated note I'd like to get Eric's opinion on this news I read of China's hidden debt. It's probably just talk because I'm just finding out about it and there isn't much about it anywhere. The two articles I see it in is:

    http://www.reuters.com/article/wtUSInvestingNews/idUSTRE56Q10920090727

    http://money.cnn.com/2009/07/27/news/international/china_debt.reut/index.htm

    The articles barely say anything about it. This might be BS.

    Ah but it doesn't matter, their credit was going to contract anyway. If not by voluntary contraction in response to extremely rising prices then by defaults from stretching the currency too thin with too much debt/credit. But I think, it will be the former as I'm far from sold on this "hidden debt" issue.

  10. Anonymous says:

    @Numonic

    "what is the point of a stong dollar if there is nothing to buy with it?"

    Numonic, have you thought this through clearly?

    I mean just look up at dashxdr's post, which states,

    "China buys [treasuries, aka dollars] and turns around and uses them as collateral to buy real stuff in the world"

    And you want to know something? dashxdr is right, the consensus for why commodities, such as metals, has been going up is because china has been using dollars to go on a shopping spree (not just commodities either, land and I do hear of other currencies as well).

    So Numonic, given that the dollar is relatively weaker then a year a go china is still able to buy a shit load of stuff in the world - yes, with a WEAK dollar.

    Never mind the fact that the reason that they are doing this is to protect themselves from from a collapsing dollar (by cashing in dollars for real assets that will appreciate like a motherfucker when the dollar collapses).

    "You do realize that we are facing a situation of mass starvation VS a weak/collapsed dollar, which one do you think people will choose?"

    Well I think the mass starvation situation isn't directly tied to the value of the dollar, but more tied to changing weather patterns.

    And besides, if we are talking about food production I can guarantee that when you look at all the nations in the world America has the most land for food production. And in the end that might be the only thing that will help America.

  11. Numonic says:

    Anonymous you clearly misunderstood what I said.

    While govt. is pumping dollars in to the Treasury Market to keep rates down and keep it liquid, other parts of the country that need liquidity are deteriorating and evaporating. Debt is deleveraging at a masssive pace even as the govt. is doing everything in it's power to stop it. Supply is decreasing more than demand is and will continue to unless we stop the debt deleveraging which is a beast that is eating up the supply of everything. As I said before the beast has a stomach for $1 Quadrillion worth of things and will continue to devour things untill the combined price of those things equals it's hunger desired capacity(which is over $1 quadrillion). This means we either have to feed this debt deleveraging beast over $1 quadrillion in physical Federal Reserve Notes or raise the price of things in the world to total over $1 quadrillion, just so the beast will leave us humans with something to live on. This is what I mean when I say a strong dollar means global starvation. I should say a "non-collapsed" dollar means mass starvation. The dollar and all fiat currencies for that matter have to devalue massively for this massive debt deleveraging to end. This massive debt deleveraging is starvation as it is causing the closing of massive companies and projects due to a lack of liquidity.

    Also i hope you know that China can't buy our debt if we're not giving them dollars through buying their stuff. If their exports are dropping(meaning they are not exchanging their goods for our Federal Reserve Notes), where will they get the Federal Reserve Notes to buy our treasuries. I hope you know that that is how it works. But that's not even the main issue. The reason treasuries default won't be because China and others stopped buying our treasuries, it will be because the printing presses can't print fast enough to make good on all the debt(including Treasuries) that is deleveraging(coming due)(at least not without Zimbabwe size bills). Other's buying our debt is nothing but a bailout to pull in Federal Reserve Notes to use to stop the massive deleveraging but that form of bailout is limited as it is dependent on exports(which exchange goods for our FRN and our FRN for our debt). If exports are falling, there are less FRNs going out for others to use to buy our debt. Not to mention all the past years of selling our debt that has pulled allot of those Federal Reserve Notes out of circulation. Which is why the Fed is printing like crazy, because there is hardly any Federal Reserve Notes out there to buy our debt with.

  12. Numonic says:

    To be clear, when i say supply is decreasing more than demand is, I'm talking about the supply of things.

  13. Jimmy says:

    Numonic,

    Are you still in hyperinflation mode now? Are you still busy buying silver or waiting for a better price in the near future?

  14. Numonic says:

    I'm still in hyperinflation mode. I'm buying silver with every pay check regaurdless of the price(but I do look for the best prices). But regaurdless I make sure to put a portion of every pay check in to physical silver.

  15. Jimmy says:

    Numonic,

    I spent a lot of money on physical silver at average spot price about $12.35 per oz. It seems to me that most experts (including Chris Martensson) expect inflation in early 2010 or later. Probably the Stock market is overbought and will correct. If it does correct, USD would go up substantially and we might see silver at 8.8/oz again (like last October).

    What do you think?

  16. Anonymous says:

    @Numonic

    "The reason [why] treasuries [will] default won't be because China and others [have] stopped buying our treasuries... [it will be because] exports are falling, [and that] there are less FRNs going out for others... to buy our debt."

    This seems to be the crux of your argument, and one which I personally don't agree.

    The reason I do not agree with this argument is because there are factors at play here that you haven't considered.

    For example, the American government has only spent a 1/8 of the stimulus money, so far, that was passed by congress to sustain and create jobs throughout America.

    The true opening of this flood of cash is not to start happening until sometime in September of this year, while peaking output of cash by middle of next year.

    This process should create the much needed liquidity for main street America, which should also increase demand for imports... at least within the short term (2 to 5 years).

    In that time you will also see the government create much needed laws to reduce American spending in both healthcare and education - the two leading causes of why Americans are in debt.

    For example, you will see laws that will allow Americans to do volunteer civil duty work in exchange for lowering debt costs for education.

    As time goes on more and more of the debt created will be from the government. And although this may seem like a bad thing at first it's actually not as bad as it may seem.

    Because taxation wont be pressed on the working or the poor, tax increases will occur within the business sector as will as on the affluent of our society.

    We will change from a society of individualists who largely thought independent from each other and thought that consumerism was the ticket to status, to a nation who will learn to seek others for support, learn to be frugal and a nation who will realize the beauty of collectivism.

    These things will have to be done because our gdp wont grow that much for a while to come, perhaps 10 years.

    But there will be pockets of good to extreme growth in our nation. For example, energy, agriculture and healthcare.

    But as time goes on we will slowly ween off of imports and look more inward to meet the needs of our changing consumer base.

    Do these events mean the there will be inflation, or even hyperinflation, and that a dollar collapse is imminent?

    Also does it mean that of such things were to occur that there would be great unrest within America?

    Not necessarily, for those that give into the fear of these thing occurring underestimate the innovation of the human spirit and the need for normalcy among the populous.

    A far greater threat would be a war to break out at this time then for inflation, hyperinflation, or even the dollar collapse.

    But then again the future is never fully realized until it's passed us, at least that's my view...

  17. dashxdr says:

    Someone asked if I still like silver. Yes, I'm a long term investor in silver. I don't trade the minor ups and downs, I don't try to time it. I just buy and hold. I'm still holding. Who knows? Maybe I'll pass my silver on to my kids.

  18. dashxdr says:

    Yeesh. Someone hyping up "collectivism". And doing so under the courageous cover of "Anonymous".

    What a joke. Collectivism will result in only collective misery. I'll be first to leach on this wonderful new system as much as I possibly can to try to suffocate it to death.

    Good news? So will everyone else. Why work when you can let everyone else be the sucker for you? The system will be quickly bankrupt. Then no more eggheads talking about the beauty of collectivism.

    For a while at least.

  19. Anonymous says:

    @dashxdr

    I don't know why people attack me for being anon all the time... I mean really who cares...

    Can you not tell who I am from the other anons?

    "What a joke. Collectivism will result in only collective misery. I'll be first to leach on this wonderful new system as much as I possibly can to try to suffocate it to death."

    I disagree...

    See this is the problem that I have about how people look at things in life.

    First, people look at life for the opportunities where they solely benefit.

    Second, once they get to that point they only share with blood.

    Third, they lobby for laws that would increase what they have.

    Forth, when the system finally falls under the rules and regulations that were made to increase what they have they bitch about having to change and having to give something up to make that change possible.

    Yet, they never consider all the other people who have to change constantly in life just to make ends meet.

    Life is not sustainable like this, and if you look though the history books there has been countless revolutions because of this cycle.

    However, with that said, I think what is really tragic here is that you disregard people. You think of them as lazy and unproductive. Again, you are looking at people through a lens in which you think you are better then someone else because you have more then other people...

    You would claim that it was because you have more skill, that you have more intelligence... You would attribute all the good things you have in your life based on your attributes alone.

    But woe to anyone who thinks like this...

    For humans are a mirror of the environment in which they were born in, grow up and live in as an adult.

    Humans do not make choices in a vacuum...

    If you think that things are so bad out there why don't you try to help some people?

    Please, if you want to look at the world in such doomster, pessimistic ways so be it, but don't push these things on other people... All because your afraid of change.

  20. Numonic says:

    Jimmy, a stock market fall does not mean the dollar will rise(or silver will fall). What you are seeing is the govt. not being able to chew gum and walk at the same time. Meaning they can't keep both the dollar up and stocks up and are forced to choose which one to keep up. As this depression gets worse, they will fail at keeping either up and both the dollar and the stock market will fall together. And they will also fail at keeping commodity prices down.

  21. Numonic says:

    Anonymous, if a dollar collapse will prevent global starvation starvation and spark global prosperity how is a dollar collapse doom and gloom? As far as i'm concerned it's the dollar bulls that are doom and gloomers, only they don't see it. A surviving dollar = global starvation. That is doom and gloom, luckily we humans have not lost our self preservation mechanism and we will raise the price on things that are becoming low in supply. So I don't know about you but I'm celebrating the dollar/credit collapse. The problem was credit, what we are experiencing now(this depression) is the solution.

    And everything else you said makes no sense. When i say One Quadrillion dollars, does that just go in to one ear and out the other? Do you know what that number represents? Do you know what is going on? Do you know what the Plunge Protection Team is? Do you know that the printing presses are running at full capacity? You are talking non-sense.

    I'll respond better later.

  22. Anonymous says:

    @Numonic

    "... if a dollar collapse will prevent global starvation starvation and spark global prosperity how is a dollar collapse doom and gloom?"

    First of all most of the globe does starve, that is most of the globe lives on a wage that is less then 40 dollars a month. And the fact that you don't recognize this shows just how out of touch with reality you are.

    Anyways, a dollar collapse is doom and gloom because such a collapse, mark my words, will have unintended consequences.

    Consequences that very few will escape.

    The truth is you long for a dollar collapse because you believe it will free you of your situation, and reverse course of the situation you find yourself in.

    But I hate to break it to you Numonic: you will not be one of the few that will escape the unintended consequences of a dollar collapse - no matter how much metal you have stockpiled and hidden (so the US government wont take it away from the citizen like in the 30s).

    And if you think there wont be unintended consequences, Numonic, why hasn't the world moved away from the dollar by now (or even before now)?

    "Do you know..."

    I know many things Numonic, and the things you have asked are elementary questions, however, you are wrong on one of them.

    The vast majority of dollars, treasury bills, treasury bonds, treasury notes, and TIPS are created digitally - not printed.

    Just to note Numonic, I been following the (so called) demise of the dollar since 2005 when I first heard about the Iranian oil bourse, and my perdition in 2006 that America would face an economic collapse within the next two years (at that time) came true.

    And what I can tell you is this: Many people have benefited from my knowledge in this - mostly from people having put their retirement funds in the money market before the crash, putting it back into stock options after the bottom hit, and then teaching shorting principles on the way back up.

    It's amazing how much opportunity you have missed, Numonic.

    All because you have given into fear, and now that you have you convinced yourself (and trying to convince others) that hording metal, something you cannot even eat, is your only way out of (should it happen) the dollar collapse.

    You have closed yourself off of making yourself liquid and malleable, and because of that you will never see world as I when (and if) the dollar collapse should happen.

    For you it will become a game of survival, while for me a quadrillion doors of opportunity will have been laid at my feet.

    That's the difference between you and I Numonic, and our thinking.

  23. dashxdr says:

    Regarding the glory of collectivism, to anonymous when I hear someone speaking like that, it's obvious that you want a free ride.

    A free ride through the use of government forces confiscating wealth from one group and giving it to another.

    And in your twisted little mind, you have it worked out that you will be the recipient of this action. You'll get the free ride.

    The news for you is this: You won't get your free ride. The people who produce real wealth, people like myself, won't produce wealth under these conditions. Instead, they'll figure what's the point, why can't I get a free ride also?

    And pretty soon there won't be anyone producing anything of value in excess of their own needs. In all likelihood you'll starve to death. And good riddance!

    Collectivism, communism, socialism, fascism -- these don't work. They never have. They never will. Enjoy learning this the hard way. Have a good day!

  24. Anonymous says:

    @dashxdr

    "... when I hear someone speaking like that, it's obvious that you want a free ride."

    Is it so obvious, to you, that my intention is for me to receive a free ride?

    If I wanted a free ride I would be in the camp with you, and be praying for a dollar collapse.

    However, since I'm the only one here that won't give into such an idea (even though I'm very mindful of the fact that it can occur) shows the complete opposite of what you claim I want.

    "The news for you is this: You won't get your free ride. The people who produce real wealth, people like myself, won't produce wealth under these conditions."

    If you're an owner of manufacturing, service or agricultural company I hope in fact you do do that.

    Because such action will only create opportunity for me (read my post above yours). And thus, would play right into my hands.

    "Collectivism, communism, socialism, fascism -- these don't work."

    I don't know how you can equate fascism with the others, but since you do I can see how you think they would never work.

    But then again, the never has truly seen collectivism, communism or socialism - just dictatorial governments who use ideologies to justify taking the collective resources of the citizens away from the people.

  25. Numonic says:

    Dashxdr, Anonymous doesn't even realize that the society/economy he wants is the economy he's been living in for the past 100 years. See how well it's working out anonymous.

    Also Anonymous, Stop saying "I've given in to fear". I'm not buying silver for fear, I'm buying it to get a head start in the global prosperity that will come from the global credit collapse. Saying I'm buying silver because I'm giving in to fear is like saying someone who is trying to make more money than others is giving in to fear.

    And again, you ignore the $1 quadrillion I mentioned.

    "First of all most of the globe does starve, that is most of the globe lives on a wage that is less then 40 dollars a month. And the fact that you don't recognize this shows just how out of touch with reality you are."

    Yeah key word is "most". What I am saying is that if we allow this over $1 quadrillion debt deleveraging to continue without using proper forces to stop it(which are higher prices of things to the tune of over $1 quadrillion or printing larger bills to the tune of $1 quadrillion, or a combination of these two) we will see this debt deleveraging devour all of the globe and that "most" you say will become "all".

    I don't know why you can't understand this. But it doesn't matter, like i said you can't have winners without losers. The world is headed for global prosperity with this global credit collapse, some(like me and other buying physical gold and silver now rahter than later) will come out ahead richer than others but all will be wealthy as they to will be producing and recieving gold and silver(which will be appreciating in value) as pay.

    So I don't know about you but I'm far from a doom and gloomer.

    The world hasn't been robbed of it's goods and products it's just been robbed of it's producers which is a result of credit. When that ends, more people will become producers and with the larger population in the world there will be more production than ever in history.

    So I'm celebrating.

    "The truth is you long for a dollar collapse because you believe it will free you of your situation, and reverse course of the situation you find yourself in.

    But I hate to break it to you Numonic: you will not be one of the few that will escape the unintended consequences of a dollar collapse - no matter how much metal you have stockpiled and hidden (so the US government wont take it away from the citizen like in the 30s).

    This guy just said a dollar collapse is bearish for silver. Why am I still responding to him?

    "All because you have given into fear, and now that you have you convinced yourself (and trying to convince others) that hording metal, something you cannot even eat , is your only way out of (should it happen) the dollar collapse."

    Yeah this silver isn't as nutritious as my Federal Reserve Notes.

    "You have closed yourself off of making yourself liquid and malleable, and because of that you will never see world as I when (and if) the dollar collapse should happen."

    So you're saying when the dollar collapses, you who is holding dollars will be liquid and I who is holding silver won't.

    Why am I still responding?

    "For you it will become a game of survival, while for me a quadrillion doors of opportunity will have been laid at my feet.

    Those aren't doors, those are Federal Reserve Notes flooding the streets.

  26. Anonymous says:

    @Numonic

    Lets be perfectly clear here, ok?

    First, you state this:

    "Stop saying "I've given in to fear". I'm not buying silver for fear..."

    Second, you state this:

    "Yeah key word is 'most'..."

    And finally, you state this:

    "What I am saying if we allow this over $1 quadrillion debt deleveraging to continue without using proper forces to stop it.. we will see this debt deleveraging devour all of the globe and that 'most' you say will become 'all'."

    Numonic, if this is the reason why you buy metals its fear based. You can say whatever you want to justify the why, but anyone who sits down and talks with you can easily see, from your own words, that your true motivation is fear based.

    But I'm sure you will keep on denying it...

    "The world is headed for global prosperity with this global credit collapse..."

    History shows that such a statement is, at best, an extreme long view approach - we are talking at least 50 years before the world could recover from such a collapse.

    It would even be much more worse then that given how dependent nations have become on each other in this age of globalism.

    But keep stating that black is really white Numonic to justify your position.

    "Those aren't doors, those are Federal Reserve Notes flooding the streets."

    No those are real doors, because I wouldn't have put all my eggs in one basket, unlike you.

    But the truth is you missed the entire point of that statement.. it wasn't about what you have, but what you do...

  27. Numonic says:

    "Numonic, if this is the reason why you buy metals its fear based. You can say whatever you want to justify the why, but anyone who sits down and talks with you can easily see, from your own words, that your true motivation is fear based."

    You are not hearing me when I say that a strong dollar = global starvation and the most important thing that shows that I do not fear this starvation is my purchase of silver. If I'm purchasing silver that means I believe the value of silver will rise high, well if I believe the value of silver will rise hight that means I believe the value of the dollar will drop low and if I believe the value of the dollar will drop low that means I believe the world will not choose starvation over a weak dollar. The world will rather have a collapsed dollar than starve. My purchase of silver proves that I believe that. My buying of silver NOW(key word is NOW) is a profit move even though I will continue to get it later, only later I will be trading my labor for it and not these pieces of paper. Silver is extremely cheaper than what it will be and I am taking advantage of that, it's only socialist fascists like you who look at true capitalism as fear.

    You keep ignoring this $1 quadrillion debt deleveraging and how it is massively destroying the supply of tangible necessities by causing companies, industries and projects to be shut down due to a lack of liquidity to pay the rising borrowing costs. Borrowing costs the govt. is working harder than ever in history to keep the price of down. I said before the inflation/deflation debate is over. You know what the most popular item to own in the world over the past several decades has been? It's been credit. And right now there is more money being spent(printed) to make credit available and it's still not enough to make it available. That means credit is demanding more and larger bills to be printed. If I told you there is more money being spent on food around the world than ever in history, you would agree that that is infact inflation and if I told you that there is extremely more money being spent on food than ever in history and that it's still not enough money to get food, you would agree that that is hyperinflation. So the inflation deflation debate is over because we are experiencing hyperinflation, credit(the most used item in the world over the last several decades) has never been so expensive.

    "History shows that such a statement is, at best, an extreme long view approach - we are talking at least 50 years before the world could recover from such a collapse.

    It would even be much more worse then that given how dependent nations have become on each other in this age of globalism."

    Wrong, this is where our massive world population comes in to good use. This mass world population transforming from consumers to producers will get us out of poverty fairly quickly.

    Also it doesn't matter how dependent people have become, it won't be a choice to produce/provide for yourself, you will be forced to or you will starve. There will be no credit. Credit will have collapsed.

    "No those are real doors, because I wouldn't have put all my eggs in one basket, unlike you."

    Oh but you have put your eggs in to one basket. As far as I'm concerened there are only 2 baskets that exist: 1. debt and 2. Not debt. I don't care how many different names you have on your debt, it's all debt. And debt is collapsing and will have a total collapse within the next year.

    We are moving from a world of consumers to a world of producers and the tools in this era are gold and silver. Hold them.

  28. Anonymous says:

    @Numonic

    "My buying of silver NOW(key word is NOW) is a profit move..."

    That is yet to be seen, in other words don't count your chickens before they hatch.

    "I will be trading my labor for it and not these pieces of paper."

    This is a fundamental mistake in your reasoning, and the reason I stated "something you cannot even eat".

    Listen I realize that metal is seen as a hedge against the devaluation of the dollar, but if you life in the US and have lots of metal and hardly any dollars...

    Eventually at some point you will need to convert that metal into dollars, because you need to still use the legal tender of America to use and buy goods and services.

    The thing is, if what you are talking about when you talk about the collapse in the dollar, starvation and other negative shit - who is going to buy your silver?

    Will there be enough money in banks to buy it and allow you to convert into US tender?

    I mean have you thought this all the way through to its logical ends Numonic - and don't think I'm playing some stupid ass game, I'm dead serious.

    "You keep ignoring this $1 quadrillion debt deleveraging and how it is massively destroying the supply of tangible necessities by causing companies, industries and projects to be shut down due to a lack of liquidity to pay the rising borrowing costs. Borrowing costs the govt. is working harder than ever in history to keep the price of down."

    There is no doubt, you are right about this but what will arise from this will be a lot worse then you what you think, which puts emphasis on my point above.

    If you are an American, and if you believe what you say you believe then your best bet is to get the hell out of dodge right now before its to late...

    If you stick around, you might end up a pillar of salt /me gives an evil grin/.

  29. Numonic says:

    "That is yet to be seen, in other words don't count your chickens before they hatch."

    So you're telling me that there is a possibility that the world will choose starvation over a collapsing the paper currency? You're telling me that a man will sell his last piece of food for cheap, just to hold a piece of paper he can say has value even though the world will be void of things to spend those pieces of paper on. I ask this question again and again: What is the point of having value in these pieces of paper if there is a shortage of things to exchange those pieces of paper with? I know you don't believe people will choose starvation, what it seems to be is you don't understand or agree when I say a strong dollar = global starvation. And if we can't agree there then we have nothing further to talk about.

    "This is a fundamental mistake in your reasoning, and the reason I stated "something you cannot even eat"."

    This is stupid. I'll have you know that silver is a tool of production and even though you can't eat silver(even though it has it's anti-bacterial properties which makes it safer to eat than Federal Reserve Notes if you want to go there), silver will make it easier and more efficient for the machines that help to produce the foods you do eat. A world that is looking to produce more will benefit with silver which is another reason the value of silver will rise high. The paper currency does not have those properties which is why it must get it's value through fiat, it's commodity value is worthless and this will be proven when credit(which is a synonym for fiat) collapses.

    "Eventually at some point you will need to convert that metal into dollars, because you need to still use the legal tender of America to use and buy goods and services."

    This is wrong. People will begin demanding silver instead of paper for goods and services. Notice I said people will demand silver, it's not something I will have to work to try to get people to accept it. People will demand it and stop accepting paper when prices rise high enough.

    "If you are an American, and if you believe what you say you believe then your best bet is to get the hell out of dodge right now before its to late...

    If you stick around, you might end up a pillar of salt /me gives an evil grin/."

    What the hell are you babbeling about? You are not making any sense. Too late for what? the global prosperity? I don't know how many times I have to say that a strong dollar/other paper currencies = global starvation. A collapsed dollar and all fiat currencies for that matter = global prosperity. I'm buying silver because I know the world will not choose starvation(which is a strong dollar). The world will choose to raise the price on their products which are decreasing in supply. The rise in price will be massive to end the credit contraction/collapse and from there the world can begin producing for themselves instead of having everything get eaten up by this debt deleveraging beast.

  30. Numonic says:

    I'm done with you Anonymous. You obviously do not understand what I mean when i say a strong dollar = global starvation and I know damn well you do not believe that people will choose to starve than to raise the prices of their products to end the massive debt deleveraging that is eating up all their supply. You just don't get it. Again my purchase of silver is proof that I see a bright future ahead, a future full of mass production and growth, something that was being halted with the use of credit. Credit is a tool of mass consumption, hoarding is a tool of mass production. It is inevitable that people will choose to collapse the value of the dollar than starve. There is no reason to believe otherwise. I'm happy that the dollar and credit is collapsing, it means the world will NOT face starvation. A collapse in credit and the fiat currency means tha beginning of a productive and prosperous world. That is far from doom and gloom. It is the total opposite. Anonymous, You too will be prosperous(even though you don't realize exactly how that prosperity will come) and believe it or not I am happy for you. :)

  31. dashxdr says:

    This anonymous fellow seems awfully screwed up in his thinking.

    He says, "I will be able to profit very well under all the new opportunities brought upon by collectivism!"

    That statement in itself is a contradiction. There is no "I" in the collective. There is no individual profit motive in the collective. The individual cannot rise above the croud. Yet he is enjoying a very profitable year as society slips more into socialism.

    It's like saying, "I'll be able to profit handsomly if the country can be induced to descend into hell!"

    And the smarmy, "Don't be afraid! Everything will be all right!" is the same sleazy statement a Nazi doctor would tell a patient just before he injects him with sodium cyanide.

    In retrospect it's not too mysterious why he doesn't post his real identity.

Leave a Reply to dashxdr Cancel reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>