The US government has borrowed $4.2 trillion in the last 12 months, pushing the total national debt to over $27 trillion. In order for Uncle Sam to borrow, somebody has to lend. So, who is buying all of these government bonds?
Foreign and domestic investors, commercial banks and US government entities all buy US debt, but increasingly, the Federal Reserve is backstopping the market and making this borrowing binge possible.
The 2020 budget deficit surged passed $3 trillion in August even as the US government continues to borrow and spend at a torrid pace. Since March, the federal government has added $3.3 trillion to the national debt. That is on top of the $1.4 trillion in debt Uncle Sam piled on in the 12 months through February 2020.
So, who is buying all of this government debt?
There are a lot of buyers out there, but when you boil it all down, the US government wouldn’t be able to maintain this level of borrowing and spending without the backstop of the Federal Reserve.
The Chinese are threatening to dump US Treasuries even as the federal government borrows money at a torrid rate. If the Chinese were to follow through, it could wreak havoc on the bond market and send interest rates surging despite the Federal Reserve’s best efforts to hold them down.
Peter Schiff recently called the stock market the biggest bubble ever. But he says he should have qualified that by saying it’s the biggest stock market bubble ever. There is an even bigger bubble floating out there – the dollar bubble. Peter talked about that in his podcast.
July was a month for the record books.
The Nasdaq and the S&P 500 had their highest monthly closes ever. Meanwhile, gold broke its all-time price record and is knocking on the door of $2,000 an ounce.
On the flip side of stocks, gold and silver going up, the dollar going down. In fact, Peter said that’s a better way to look at it.
Celsius Network, founder and CEO Alex Mashinsky calls the bond market, “the biggest bubble that hasn’t burst yet.” And when the massive bond bubble pops, that’s when the real earthquake begins.
The US Treasury Department is pumping out bonds like there’s no tomorrow. It announced this week that it plans to borrow $2.99 trillion in this quarter alone. The projected borrowing for fiscal 2020 comes in at a staggering $4.48 trillion.
It’s been a wild ride on Wall Street this week — all downhill. Stocks entered correction territory Thursday and are on track for the worst week since the 2008 financial crisis. As Peter has put it, this stock market is a bubble looking for a pin. Is the coronavirus the pin? In this episode of the Friday Gold Wrap podcast, host Mike Maharrey talks about this chaotic week in the stock market, the bond market and the gold market.
As turmoil continues in the markets with stocks selling off due to continued fears over coronavirus and its potential economic impact, Peter Schiff says gold is doing exactly what it’s supposed to do — serving as a safe haven and a store of value.
Peter Schiff recently appeared on Fox Business Claman Countdown along with Stephen Guilfoyle and Luke Rahbari to talk about gold, bonds and coronavirus.
Stocks have sold off two straight days as investors pile into safe-havens due to coronavirus fears. Yields on both 10-year and 30-year Treasuries fell to record lows this week. Gold has also gotten a healthy boost over the last few days. The yellow metal pushed to $1,690 per ounce on Monday, but gave up some of its gains on Tuesday in the midst of profit-taking.
As gold has rallied over the last few months, silver has lagged behind. The silver-gold ratio spread to near-record levels. This tells us that silver is extremely undervalued compared to gold. But last Tuesday, that spread began to narrow ever-so-slightly and silver crossed a key price level on Thursday. Could this be the beginning of the breakout in silver we’ve been expecting? On this episode of the Friday Gold Wrap podcast, host Mike Maharrey breaks down what’s going on in the silver market along with the big leg-up in gold this week. He also highlights the ever-growing levels of consumer debt and tells you the latest on China’s move to dump US bonds.