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Mounting Treasury Debt Could Push Interest Rates Higher and Trigger a Market Crash

By: Steve Johnson

11/23/2009 - 21 Comments

The White House estimates that the government will have to borrow about $3.5 trillion more over the next three years.

Perhaps an even bigger problem is that Treasury has to refinance, or roll over, a huge amount of short-term debt that was issued during the financial crisis.

Treasury officials estimate that about 36 percent of the government’s marketable debt — about $1.6 trillion — is coming due in the months ahead.

At the same time, central banks all around the world are beginning to lose faith in the dollar.  If the central banks do not purchase this U.S. debt that is coming due, the global recession could quickly turn into a double-dip recession with a U.S. depression.

No matter what the Fed, the stock or the housing market does interest rates are headed a lot higher.

By the middle of next year interest rates are going to be increasing, which will further tighten credit and make it even harder for new businesses to get capital and add jobs.

Interest rates have been held much too low for far too long that the central banks have lost faith in the value of the dollar, which is why they are now turning to gold.

Artificial low interest rates are soon going to spring up very quickly as the Fed tries to save the value of the dollar from a complete collapse.  The Fed will have to forget about putting a bottom under the housing market or putting a bottom under the stock market and focus on putting a bottom under the dollar.

Saving the dollar could mean letting everything else crash.

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