Tuesday, April 19, 2011

It [More] Begins

Something just occurred to me.  Let's look at some facts:

The cost of rebuilding Japan is at least $309 Billion
The vast majority of Japan's currency reserves are in US Treasury Bonds
The US Government's AAA rating is now being questioned by Standard and Poor

In other words, Japan needs its money back.  And now one of the most respected rating agencies is casting doubt on the US Government's ability to pay back its bond-holders.  What better time to cash them in?

If this does indeed happen, it will be like the few small pebbles that trigger an avalanche:

Time 0: Japan redeems some US Treasury Bonds
Time 0: Ipso facto, Japan stops buying US Treasury Bonds
Time 1: With this loss, the US economy becomes even weaker
Time 2: Other nations (read: China) likewise question the safety of their investment and pull out
Time 3: Go to Time 1 and repeat

As a side note, when the populace loses faith in fiat currency, gold and silver skyrocket.  Is this happening?

You better believe it.

Where is this going?  I'm officially calling Dow 4000 within 2 years.

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