Bond Auction Meltdown?

We have talked many times about how the U.S. Treasury raises money for the Federal Gov't to spend by selling I.O.U.'s at auctions. Foreign governments, national banks, mutual funds and other finance houses all show up to bid on the bonds...and the one who bids the lowest interest rate actually gets to purchase the bonds. So what happens when the interest rate is deemed too high?

They send the Federal Reserve in to bid on bonds and the result is to shove the interest rates down. Yep! Classic Ponzi scheme...because the Federal Reserve doesn't have any money! But we all just agree to look the other way and HOPE that it all works out. Today the National Inflation Association had this to say;

Harvard economics professor Gregory Mankiw wrote an article that was published in the NY Times yesterday entitled, "It’s 2026, and the Debt Is Due". In this article, Mankiw gave a hypothetical Presidential address the President of the U.S. might make in the year 2026 after a failed bond auction. Mankiw's hypothetical Presidential address takes place in a scenario where in the year 2026, the U.S. Treasury "tried to auction its most recent issue of government bonds" but "almost no one was buying." According to Mankiw's hypothetical speech, during this 2026 crisis the President will admit, "The private market will lend us no more." Unfortunately, Professor Mankiw fails to understand that the U.S. has zero chance of surviving until the year 2026. What Mankiw predicts will happen 15 years from now is already happening today right under his nose, but somehow he fails to realize it. The public today has already stopped buying U.S. treasuries. The Pimco Total Return Fund, which was the largest private holder of U.S. government bonds, has just reduced their holdings down to zero. The private sector was buying 30% of U.S. treasuries, but today is no longer buying at all. The Federal Reserve is currently buying 70% of U.S. treasuries. If it wasn't for the Federal Reserve buying U.S. treasuries, we would already be experiencing failed bond auctions today.

What?? Can it be possible?? Could the USA be about ready to go down in a ball of smoke like we are already seeing in Greece, Iceland, Portugal others? Is it possible that our comfy lives of vacation homes, lavish vacations, 4 cars in every garage and ski trips over spring break are soon all going to come to a crashing end??

I read in a devotion recently that idolatry is anything that leads us away from our first love of Jesus Christ. Is it possible that most of us have been woefully guilty of idolatry and our jealous God is soon going to purify us from all these things that have taken us from our claimed first love? Will we still glorify God if He takes away our idols?

We may soon find out.