| id="body"> | | | | compensate for the heavy losses they are incurring |
| Many people think of any type of dollar denominated | | | | on a weakening dollar. As your costs of doing |
| bonds, whether they are U.S. corporate bonds or U.S. | | | | business and living rise, yields from bonds won't cut it |
| Treasury bonds as a safe place to park your money | | | | anymore. |
| for reliable sources of income stream. In fact, the U.S. | | | | (5) As the massive yen carry trade continues to |
| Treasury Department on their own website, even | | | | unwind, and the Bank of Japan takes increasing |
| tout U.S. Treasury Securities as a "great way to | | | | measures to strengthen the Yen as the Japanese |
| invest and save for the future." | | | | economy continues emerging from its recession, the |
| Many people believe this nonsense because they are | | | | strengthening of the Japanese Yen in addition to the |
| advised of this by a horde of financial consultants | | | | Pound Sterling and Euro will threaten dollar |
| that have zero understanding of how the | | | | supremacy. |
| political-corporate-banking triumvirate operates, and | | | | (6) While most people think that there has been no |
| how this financial triumvirate has produced a most | | | | further attack on the U.S. by terrorists since 9/11, |
| unattractive likely scenario for dollar-denominated | | | | there has been a far more devastating ongoing |
| bonds going forward from 2007. Many people think | | | | attack - an ongoing economic war. Though this fact |
| of U.S. Treasury bonds as safe because of the | | | | is not discussed at all in the mainstream media, |
| "federal guarantee". The ten reasons below render | | | | Osama bin Laden's has repeatedly stated that his |
| that federal guarantee irrelevant. | | | | number one goal to topple the U.S. as an economic |
| And don't think this doesn't affect you just because | | | | power. |
| you aren't American. Non-Americans aggregately hold | | | | (7) In response to (6), the U.S. Federal Reserve has |
| a lot more U.S. dollars in this world than Americans do. | | | | expanded the dollar money supply to provide funding |
| If you are one of those misled people, American or | | | | for the war. With no end in sight to this war, we can |
| non-American, reading the below ten reasons can | | | | expect the dollar money supply to continue to |
| save you a lot of grief in the future. | | | | expand, therefore placing more downward pressure |
| (1) The often repeated financial consultant statement | | | | on the dollar. |
| that bonds are a "safe place" to park your money, | | | | (8) The U.S. has no powerful allies to keep the dollar |
| especially if you are older, is a myth. Who cares if | | | | strong. With protectionism sentiment growing |
| you earn a 5% revenue stream from bonds if the | | | | stronger among the newly elected Democratic U.S. |
| currency they are denominated in loses 15% in value | | | | Congress, the U.S. certainly has no friends in China, |
| over that same time span? | | | | the largest holder of dollar denominated debt at over |
| (2) Many of those in the retirement phase of their | | | | $1 trillion. |
| lives are convinced to invest in longer maturity bonds | | | | (9) The largest holders of Petrodollar reserves include |
| because of poorer yields of short-term bonds. As the | | | | Russia, Venezuela, Iran and other Middle Eastern |
| Euro gradually replaces the U.S. dollar as the | | | | countries. Read that list again. There is not a single |
| international currency of choice, the longer maturity | | | | nation strongly friendly to the U.S. on that list. |
| necessary to ensure a return of face value on bonds | | | | (10) When people finally realize that (1) through (9) |
| presents a significantly greater risk. | | | | are true, there may be a flight from the bond |
| (3) As interest rates go up, the face value of bonds | | | | market, causing bond prices to tumble. |
| go down. Although Wall Street strongly expects the | | | | When you realize the shakiness of your situation as a |
| U.S. Federal Reserve to cut interest rates soon to | | | | dollar-denominated bond holder, think about this. Don't |
| stimulate a faltering U.S. economy, this is how I see it. | | | | you think foreign governments and wealthy private |
| At some point and time, the U.S. Federal Reserve will | | | | institutions and individuals, holders of |
| try to block global flight from the U.S. dollar by | | | | dollar-denominated assets in massively greater |
| propping up interest rates, not cutting them. | | | | quantities, realize the same? When they realize the |
| (4) As the dollar loses value over time, banks and | | | | facts that I've laid out above and take actions, their |
| other financial institutions will increase interest rates | | | | aggregate actions will reflect poorly upon dollar |
| on loans and other financial instruments to | | | | denominated bonds as well. |