9 votes

Jamie Dimon: U.S. Treasury Bond Market WILL Crash. Unless...

Duh. Isn't is obvious? Everyone knows the Treasury market will eventually collapse, but when a big guy like Dimon says it, it is big news. After all, you can't borrow money forever - especially not at rates this low. Eventually rates will rise, and at some point during the rise, a tipping point is reached and there is a stampede for the exits.

Unless...

Unless it is averted. It will not be averted by reigning in government spending. And it can't be averted completely, but it can be delayed. When push comes to shove, the Powers that Be (TPB) will likely pull another Nixon.: They'll say, "Well geez, there's all that money sitting around in IRAs and 401ks not doing anything. We could sure use it to solve our National Emergency called the National Debt.

At that point, They magically "convert" those holdings into US Treasuries. Heck, you're not using that money. Ha! You can't even touch it. This calls into question whether it is in fact, "your money" and another reason why 401Ks are viewed with skepticism by many here. (But that is another story.)

The court system can no doubt conjure up with some esoteric ruling by which it is deemed "legal" for the government to do such a thing. This is what governments always do. There is no reason to think things will be any different this time.

Here is the Dimon video:

http://www.bloomberg.com/...

Comments and thoughts appreciated.



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I thought the POS Dimon had been indicted.

Ambassador Murray is right and Dimon ought to be looking over his shoulder every minute of the day.

How would that happen?

The bulk of retirement account assets is in the stock market. Here http://retirementincomejournal.com/upload/567/ICI_Retirement... is a 2011 report that shows 83% of IRA assets in stocks and mutual funds, 7% at life insurance companies (annuities?), and only 10% in bank accounts.

Forcing the conversion of IRAs and 401ks into treasury bonds would require forcing the sale of the mutual funds and stocks held in those retirement accounts. The stock market would collapse if they tried that or even hinted at plans to try that. So I don't see how this is a realistic option for them to try to create demand for treasury bonds.

Michael Nystrom's picture

Nationalize the assets and do a swap

Now the government owns the stocks that were once in your IRA. Those assets are then traded for another asset of "equal value" - i.e. T-bonds.

They'll figure out a way to convert them without selling. It will be a matter of life and death for the government, and under such circumstances, they can get extremely creative, believe me.

He's the man.

If they don't sell the assets

then they haven't raised the cash they need to pay off the maturing bonds, so how does that help their problem? They need cash to pay off maturing bonds in order to keep pushing the problem further into the future. Sorry, I'm probably just missing your point here.

Yup.

And who here knows how a little guy can go around shorting the long bond? Is it possible without a few million?

If so, what kind of timing prediction would on need? Within a month, six months or a year?

All sorts of ways you can do that with as little as say $5k

and as much as you want.

Options, futures.
I do spreadbetting I can bet on 10 or 30 year US treasuries if i wanted to, but there are onerous restrictions placed on Americans betting :)

You just open a trading account in the US, there are many to choose from.
Shop around for the best commission rates - but watch out for the CBOT - they might steal your money.

"In the end, more than they wanted freedom, they wanted security. They wanted a comfortable life, and they lost it all -- security, comfort, and freedom. When ... the freedom they wished for was freedom from responsibility, then Athens ceased to be free."

Ironic isn't it?

He is all for fiscal restraint now, it seems like yesterday Dimon was more than willing to let the government bail out the banking industry to the tunes of trillions and if the government didn't the world was gonna end.

No doubt he is correct in saying that the government needs to start balancing budgets, but where was mr fiscal hawk in 2007-2008? These people are something else...

I do not doubt

that the gov't will come after everyone's IRA's, 401k's, and other retirement accounts in the near future. And when that happens nothing would make me happier than if all the "Atlases" just shrugged and said "enough is enough".

Everyone just refusing to work, or contributing, or complying, or doing anything that gives the government any means to weasel their way out again would finally bring the truth to light.

Our family's journey from the Rocket City to the Redoubt: www.suburbiatosimplicity.com