Who Will Buy Them?

The above illustration gives a visual as to the serious problem that is coming for the U.S. Ponzi scheme. Remember, we have $15 trillion of outstanding debt...most of which is standing in U.S. Treasury Bills and Bonds. How did we get there? How long can we continue to refinance this debt?

Well...as the chart shows 50% was bought by foreigners, 40% bought by U.S. investors and 10% were mythically bought with IOU's from the Federal Reserve and/or by printing paper money.

But ever since the U.S. economy almost collapsed in 2008, the Federal Reserve has been "buying" 70% of the bonds the U.S. Treasury auctions off almost every week. Remember, the Federal Reserve doesn't really HAVE any money....they just print, maneuver and account their way into the purchase.

And as of June 30, 2011...that impossible buying spree that the Federal Reserve has been cooking...will be over, because Quantitative Easing Part II is scheduled to be over.

That leaves us with the million dollar question.....WHO WILL BUY ALL THESE U.S. TREASURIES WHEN THE FED QUITS BUYING 70% OF THEM?? AND AT WHAT PRICE??

The founder of PIMCO (major investment house) has this prophetic-toned, almost ominous statement at the end of his article;

Investors should view June 30th, 2011 not as political historians view November 11th, 1918 (Armistice Day – a day of reconciliation and healing) but more like June 6th, 1944 (D-Day – a day fraught with hope for victory, but fueled with immediate uncertainty and fear as to what would happen in the short term). Bond yields and stock prices are resting on an artificial foundation of QE II credit that may or may not lead to a successful private market handoff and stability in currency and financial markets.

See full PIMCO article here; http://www.pimco.com/Pages/Two-Bits-Four-Bits-Six-Bits-a-Dollar.aspx

Hat tip to Jared F.