THE COLLAPSE OF THE US TREASURIES IMMINENT-THEN COMING DEPRESSION

The First Bubble—The Credit Markets (DONE)

The credit bubble that imploded in August 2007 should have been obvious to everyone. When you give mortgages and loans to NINJA borrowers ( N o I ncome , N o J ob or A ssets ), you can't be surprised when you never see that money again. However, most investors ignored the risks and, despite the widespread mortgage fraud and non-existent lending standards (write down your income, we'll trust you), piled into subprime mortgage CDOs and CDOs squared. Naturally, these subprime CDOs didn't perform as expected, leading the credit markets to collapse.

The Second Bubble—Stock ( DONE)

Despite August 's subprime crisis, stocks rallied to new highs in October as investors fled the credit markets. Considering that the frozen credit markets are the lifeblood without which the economy can't function, these new highs made as much sense as subprime CDOs squared. It shouldn't not have surprised anyone that stocks collapsed.

The Third Bubble—Commodities (DONE)

Running from both the stock and bonds, investors ignored a global economy falling into recession and piled into commodities, driving oil up to an insane level, In the face of the world's plunging demand, the only reason that could possibly have justified $147 oil would have been a complete collapse of the dollar. Since that was not the case, the oil bubble burst and commodity prices plunged.

The Final Bubble—US Treasuries

Now Investors are now panicking into the 'safety' of US treasuries, the last and greatest asset bubble. To be blunt, $147 oil made more sense than .1% yield on the three months note. Anyone who believes treasuries are safe and that commodities will deflate in dollar terms doesn't understand the deep fundamental difference between the 1930s and now.

Back in 1930s, the economy was on much sounder footing than it is today. Stanley K. Schultz, Professor of History at the University of Wisconsin, gives a good description of the US's foreign balance of payments going into the Great Depression:

When the treasury market collapses…

Interest rates on treasury bills (even 3 months note) will quickly rise into the double digits. The dollars purchasing power will collapse, possibly leading to a foreign-currency lockdown like Iceland's Krona. All stocks (except those that benefit from high commodity prices) will crash. The credit markets will suffer further pain due to rising inflation and default risks. Finally, Gold will skyrocket. ITS STARTING TO DO THAT NOW. RUN OUT TO YOUR COIN SHOP AND CLEAN THEM OUT OF GOLD AND SILVER NOW!