If we buy our own debt, will that make us rich? Answers on a postcard....but not to us!

ALAN FRANKLIN comments: A trillion Dollars here, a trillion Dollars there and soon you are talking serious money. The British government just found out the hard way what happens if you keep printing and borrowing money. Soon the world gets tired of your debt. Its auction of debt just failed to find sufficient buyers. America could soon follow suit, as "Helicopter" Ben Bernanke cranks up the printing presses.This is not trivial.  This is a clear warning of what will happen as Britain and America get further into debt.
This website has already reported moves this week to create a new world reserve currency, replacing the Dollar. This will mean America's ability to print money and use it buy goods round the world will be severely limited.
The next step will have to be massive job losses in the public sector, despite the socialist inclinations of both Obama and Britain's Gordon Brown.  This could lead to increasing civil disorder as more and more unemployed people are turned out onto the streets. Expect trouble- big trouble. Alrerady riots are being planned in London next week to "greet" the world's finance leaders at the G20 summit.
Conditions of unemployment and fear always lead to trouble and this is just the situation that lead to the rise of the Nazis. Across Europe the far right is rising.  They will be looking for scapegoats and immigrants and Jews could be in the firing line once more. These are troubled times, just as Matthew 24 told us we would have before the second coming of our Lord.
Now here's the story that sparked my comments:
FINANCIAL TIMES 25.3.09  Public finance fears hit gilts auction

By David Oakley, Capital Markets Correspondent

A UK government bond auction failed for the first time in seven years on Wednesday as investors refused to buy the securities because of worries over the country’s deteriorating public finances.

Alarm over rising UK debt levels and renewed fears over inflation saw investors shun the auction, with bids for the long-dated bonds, due to mature in 2049, falling short of the £1.75bn wanted.

A warning by Mervyn King, the Bank of England governor, when he cautioned the government from announcing a second stimulus package in next month’s Budget also sent shivers through the bond markets.

Steven Major, head of global fixed income research at HSBC, said: “The bond markets are increasingly worried about the large amounts of debt the UK is taking on, while poor inflation numbers added to worries about the economy.”

Consumer price inflation in February rose to 3.2 per cent from 3.0 per cent in January, confounding expectations that inflation would fall to 2.6 per cent, while Mr King warned that the UK could not just keep spending to pull the economy round.

The International Monetary Fund has forecast the UK budget deficit will balloon to 11 per cent of national income in 2010, while the UK Debt Management Office has said bond issuance will rise to a record £147.9bn in the 2009-10 financial year.

It is the first time a conventional bond auction has failed since the DMO was created in April 1998. The only other two failures were in auctions for inflation-linked bonds, in September 2002 and April 1998.

The only auction failure of a conventional UK bond on record was in September 1995. Most banks only hold records as far back as the early 1990s.

Gilt prices tumbled after the auction result, with the June future dropping as much as 1.9 points on the day and the 40-year gilt yield rising 8 basis points to 4.54 per cent.

Strategists said the lack of demand was also because the 40-year bond was outside of the Bank of England’s gilt buying programme. It plans to buy up to £75bn of gilts in maturities between five and 25 years.

There are also growing worries that the government will increase bond issuance even further in next month’s Budget. Bond issuance for the 2009-10 financial year could rise to £200bn because of deteriorating growth forecasts, analysts say.


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