The Coming Bond Market Collapse

The coming financial apocalypse and what government and individuals can do to insulate themselves against the worst shocks In this controversial book a noted adherent of Austrian School of Economics theories advances the thesis that the United States is fast approaching the end stage of the biggest asset bubble in history. He describes how the bursting of the bubble will cause a massive interest rate shock that will send the US consumer economy and the US government--pumped up by massive Treasury debt--into bankruptcy, an event that will send shockwaves throughout the global economy. Michael Pento examines how policies followed by both the Federal Reserve and private industry have contributed to the impending interest rate disaster and highlights the similarities between the US and European debt crisis. But the book isn't all doom and gloom. Pento also provides well-reasoned solutions that, government, industry and individuals can take to insulate themselves against the coming crisis. * Paints an alarmingly vivid picture of the massive interest rate shock which soon will send consumers and the government into bankruptcy * Backed by a wealth of historical and economic data, Pento explains how the bubble was created and what the U.S. can do to mitigate the impending crisis * Provides investors with sound strategies for protecting themselves and their assets against the coming financial apocalypse * Explains why retirees, in particular, will be at risk as real estate prices decline, pensions weaken, and the bond bubble bursts

Introduction xi Acknowledgments xv Chapter 1: As Good as Gold? 1 The Great American Money Machine 4 "Dad, Where Does Money Come From?" 8 The Implications of a Fiat Currency 11 Notes 14 Chapter 2: The Anatomy of a Bubble 15 The Great Depression--A Historical Comparison 19 Two Decades of a Bubble Economy 25 Does CDO Rhyme with Tulip Bulb? 29 Today's Bubble in Bonds Rhymes with the Debt-Fueled Real Estate Crisis 31 Notes 33 Chapter 3: Bernanke's Hair-of-the-Dog Economy35 Austrian Trade Cycle Theory versus Keynesian Toys and Candy 36 "End This Depression Now!"--The Game Show41 "I'm Not Addicted to Easy Money . . . and I Can Stopat Anytime" 50 No Way Out--Starring Ben Bernanke . . . 56 The Thirty-Year Party in the Bond Market 62 Notes 65 Chapter 4: Deflation Phobia and Inflation Philos 67 Fed Busters 69 Common Fed-lore Myth 1--The Myth of the Deflationary DeathSpiral Monster 69 The Truth about Price Deflation 72 Fed-Lore Myth 2: Japan Proves that Debt and Deflation Go Hand-in-Hand 77 Myth 3: The Keynesian Fed-Lore of the Phillips Curve 86 Myth 4: You Can Rely on Government Statistics 92 Myth 5: The Fed Was Created for Your Benefit 100 Notes 101 Chapter 5: The Bubble Reality Check 103 The Investor Reality Check 104 The Interest Rate Reality Check 110 The Teaser Rate on U.S. Debt--Reality Check 115 Banker Reality Check 119 The China Reality Check 127 Washington's Addiction to Debt--Reality Check 134 Notes 140 Chapter 6: The End of an Empire 141 The End of a Monetary System 145 The Economic Laws of Debt 152 U.S. Debt--This Time It's Different 153 Is Austerity a Bad Thing? 157 Where Will All the Money Go? 160 The Bell Is Ringing for the Bubble in the Bond Market 163 Banana Ben to the Rescue 167 The Cost of an Empire 169 Notes 173 Chapter 7: Real World Europe 175 The Creation of the Euro 176 Greece 183 Dr. Hayek vs. Dr. Keynes 190 Dr. Keynes and Dr. Hayek and America's Bout with Hyperinflation 195 I'll Take Currency Debasement for $40 Billion . . . aMonth 200 Final Jeopardy 203 The Canary in the Coal Mine 204 Notes 205 Chapter 8: The Debt Crisis 207 From Pioneer to Penurious . . . 207 The Sixteenth Amendment . . . The Beginning of the SlipperySlope 209 Mexican Debt Crisis 215 The Asian Contagion 218 Russian Debt Crisis 220 The Debt Crisis Fallout 223 What Would It Look Like Here? 225 It Can't Happen Here? 233 I Don't Want to Be Right 238 Conclusion 247 Notes 248 Chapter 9: What Can the Government Do to Mollify the DebtCollapse? 251 The Principles of a Free Market 252 Solution 1: Allow the Deleveraging Process to Happen 257 Solution 2: Strengthen and Stabilize the U.S. Dollar 260 Solution 3: Allow Interest Rates to Rise to the Supply ofSavings versus the Demand for Money 262 Solution 4: Balance the Budget 264 Solution 5: Aggressively Reduce the Amount Of Regulatory Burden270 Solution 6: Simplify the Tax Code 273 Solution 7: Fair Trade and a Free Trade 276 Solution 8: Overhaul Education 277 Conclusion 278 Notes 283 Chapter 10: How to Invest Your Money Before and After theBond Bubble Bursts 285 What to Own When U.S. Debt and the Dollar Collapse 289 Notes 294 About the Author 295 Index 297