Wednesday, December 30, 2009
Sprott Wonders If Treasury Has Created Its Own Epic Ponzi Scheme
Sprott Asks If Treasury Has Created Its Own Epic Ponzi Scheme
Sprott Asset Management, which has about $4 billion under management, just released its December newsletter. To say the least, it's quite provocative.
Titled, "Is It All Just a Ponzi Scheme?," the newsletter makes the case that the Treasury Department has invented its own bond market.
This isn't an entirely new thesis; Dr. Chris Martenson has been saying the same for months. But Sprott's research is very compelling.
In fiscal 2009, foreigners scooped up $698 billion of Treasuries while the Fed upped its holdings by $286 billion. But the public debt increased $1.9 trillion.
So who bought all the rest?
According to Treasury, “other investors” bought $510 billion, up from just $90 billion in 2008.
Can the Treasury maintain this charade in 2010? If they can't conjure up more phantom buyers, the bond market will dry up and the only alternative will be the Federal Reserve's printing press.
Either way, it's an ugly and frightening scenario.
Like any pyramid or Ponzi scheme, the system is in continuous need of new money to refinance debts and keep itself afloat.
I encourage everyone — all concerned citizens — to read this crucial report, which can be viewed here in PDF form.