Market Sense and Sentiment

[bbgold]

If Ponzi had a Fed

Lets see, the US sells bonds to raise money to keep the Govt being able to spend. The funds raised from the bond sales also go to pay off the previous bonds sold. So prior bond purchasers are being paid off by new bond purchasers. Usually there are many buyers but lately the number one buyer has been the US itself. In order to buy it's own bonds the Govt just prints more money and continues to devalue the $. The reason for keeping the Bond purchases going is to try and keep interest rates down. Otherwise with less buyers the US would have to raise interest rates to attract buyers, much as Greece did. But in order to keep the economy moving the Govt wants low interest rates to keep people spending rather than saving. This will create an economic bubble as the debt increases but the US is Gambling that the debts will never be called in and that it will not have to raise interest rates to keep selling Bonds to be able to keep spending. We have all seen what problems the prior Market and Housing bubbles have created. Now what will happen when the current Economic bubble breaks?
"An economic bubble: A bubble is similar to a Ponzi scheme in that one participant gets paid by contributions from a subsequent participant (until inevitable collapse). A bubble involves ever-rising prices in an open market (for example stock, housing, or tulip bulbs) where prices rise because buyers bid more because prices are rising. Bubbles are often said to be based on the "greater fool" theory. As with the Ponzi scheme, the price exceeds the intrinsic value of the item, but unlike the Ponzi scheme, there is no single person misrepresenting the intrinsic value."
http://en.wikipedia.org/wiki/Greater_fool_theory