The crash is coming very soon and will probably occur when interest rates are cut.
Checkout the latest bond auction results. (See here.) Short term debt is still being auctioned at around 5.3% (see below). But the 3 year rate is 3.8% and the 10 year rate is 4%. This shows that the yield curve is uninverting.
But why does the short term debt (eg 4-weeks) have 1.3% higher interest rate than the long term debt??? Surely, short term means less risk and therefore lower interest rates??? Or are we missing something here?
Yes => This indicates that the pin is pulled and the debt bomb is exploding!
The US gov needs money from bond sales to cover its operating costs and interest on debt. Without this money the US gov will go broke. This makes the US gov akin to a beggar with a beggar bowl who must go to the banks every week and say: "Please sir, I want some more - because no one else will buy my bonds".
In response, the banks are saying, "Ok, but I am only prepared to buy the low risk short term bills and I want a to be paid a premium - because money is getting scarce you know and you seem to be wanting more and more and more and I am worried about that!"
=> This is because every 4 weeks or so, the gov has to issue bonds to cover the money they need to pay their running costs. In addition to this, they have to issue more and more short term debt to roll over the short term debt they just issued in the previous weeks. This is an exponential growth equation that will explode if nothing is done. Furthermore, the banks still have cash requirements based on the SLR formula, so when they run short on cash, they will have no money left for buying bonds and the interest rate on bonds will explode also as supply outstrips demand.
So, the only solution to this problem is to print more money, but first they will have to crash the economy to prevent the new printed money from causing hyperinflation and a heap of other problems.
Also, remember that when interest rates go up, bonds go down in value and no one wants them. The gov is still going to need its income from bonds while it waits for QE to restart.and can't afford the bond buying to stop. So, once interest rates are cut, they have to keep cutting rates all the way to zero and then start QE. This will require a crisis of some sort. No ifs or buts about it.
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