The Big Collapse Could Be Very Near

Economic Policy Journal ^ | 5/31/09

[FromLori]

The Federal Reserve appears to be increasingly nervous about the long term bond market. This is serious. How panicked are they? After leaking a story on Friday, they are back at it on Sunday.

The Federal Reserve leaked to CNBC's Steve Liesman on Friday that they weren't targeting long rates. Why such a leak? Probably because the Fed did not want to appear impotent in controlling the long rate. So they put out the word through Liesman that they weren't targetting the long rate. Can you imagine what would happen to the markets if it sensed long rates were beyond the control of the Fed?

The Fed can of course print money to buy up every Treasury bond in existence, but the inflationary ramifications would be Zimbabwe like, and crush the dollar on international currency markets. Are we near the phase where all hell breaks loose? I have never even answered, maybe, to this question before. It's always been, "no." Now it's maybe.

What really has me spooked is another article out this afternoon (on a Sunday) that Drudge has even picked up. It's a Reuters story by Alister Bull. The headline: Federal Reserve puzzled by yield curve steepening.

Translation, the Fed doesn't know what is going on, but they are really scared.

Here's more from Bull:

[Madistan]

Good question. I have another:
Should I buy some land to live on with money now tied up in investments?

[Ancesthntr]

Can you imagine what would happen to the markets if it sensed long rates were beyond the control of the Fed?

Long rates ARE beyond the control of the Fed - and any player in the market who doesn't know that is an idiot. The Fed can, in an indirect way, influence the overall perception of inflation and risk, but that's it (and that takes a lot of what the Fed no longer has - credibility).

[razbinn]

Coming soon to a bank near you.What you get with an African for president!!!!!

[Thunder90]

Just make sure you have access to an underground shelter away from the larger cities and away from the Pak and Chinese borders. Also, make sure said shelter is well stocked with provisions.

[Thunder90]

Obama is going to beg Putin to buy more of our debt, because China won’t. Problem is that Putin has lent most of Russian wealth out to Europe so they could buy oil and natural gas on credit.

[GonzoGOP]

In the nightmare scenario it will be more like the Great Depression in Germany than Mad Max. No money, or the money that does exist won't buy you anything. 50% unemployment. Some jobs, but nothing that lasts. A few days work here or there, but then you are out of work again. Everything will be old, because nobody invest in the future when there is high inflation. That which can't be patched up will simply be abandoned.

The key will be if the power and communications networks break down. You have to maintain power grids, phone networks and highways. Once there is no money to buy cement and copper they will begin to fail. As we speak the GPS network is about to fail because they stopped launching new satellites and the ones that are up there are beginning to fail at the end of their 20 year lifespan. It won't be all at once, it will just be harder and harder to get a lock until one day your GPS just doesn't work any more.

[bert]

...........In other words, a new civil war or revolution?....

Or perhaps a coup d’etat

There is going to be a war overseas on top of it all.

[Pagey]

bttt

[mountainlion]

The new currency is

ammo.

A guy could really make a killing on that, later especially but I guess I could trade ammo for veggies.

[dfwgator]

Looks like I picked the wrong week to quit drinking.

[mad_as_he$$]

Look at the volume compared to the last two years. GM euphoria.

[Crawdad]

You can’t spell Liesman without ‘Lie’.

[kcvl]

Not to worry, the Messyah says we have hit bottom and are on the road to recovery thanks to his stimulus plan. /s

And we know Bambi would never lie to us. /s

He thinks everyone is as stupid as the people who voted for him!

[bert]

Meanwhile in Knoxville there is a new football coach and they are printing new menus with deep fried gator appetizers

[mojitojoe]

Buy ammo, guns, gold coins, silver coins. They will always be worth something. Dollars worth nothing are..... worth nothing.

[Age of Reason]

The ignorance at the Fed is astonishing. They want to pretend they didn’t know what was going to happen when they started buying T-bills? That all of Obama’s debting was going to kill the demand for US bonds? That screwing around with the markets wasn’t going to bite them in the ass?

Not ignorance: the Fed probably knew it all along--they just didn't want us to know it.

And once treasuries start paying higher interest, up go mortgage rates, and down go real estate prices (how many can afford to pay high interest rates on the still bubblized prices of houses?).

[dfwgator]

Meanwhile in Knoxville there is a new football coach and they are printing new menus with deep fried gator appetizers

Well I hope you munching on them while we hang 70 on you guys.

[longtermmemmory]

attention Fed, we are under attack DUH!!!!!

the new weapon to attack the USA is paper. Deather by a thousand paper cuts.

Could it be soros? why not he has done it before in europe.

Could it be one of the multiple sovereign funds? why not our enemies now deal with free markets.

[SatinDoll]

“...why is the Dow up 221 pts today?”

Because all other investment instruments, like bonds, are too unstable.

Scary, huh?

[Centurion2000]

Besides buying gold and silver, does anybody have any idea on how to prepare for rampant inflation?

Food, brass, silver and lead. I'd advise farmland but private property rights are toast in this country right now.

Portable wealth and a very low profile at the moment is the best way to go.