Is it all just a ponzi scheme?

Off Topic Politics & World Issues
1

The article is a few months old, so apologies if this has already been posted

http://www.tradersnarrative.com/is-it-all-just-a-ponzi-scheme-3393.html

Basically, the argument being made is that the US government is using fraudulent accounting methods to hide the fact that no one is buying the huge amount of debt that has been created. For the record, I dont actually buy this argument, but I still found the article pretty interesting.

"So to summarize, the majority buyers of Treasury securities in 2009 were:

1.Foreign and International buyers who purchased $697.5 billion.
2.The Federal Reserve who bought $286 billion.
3.The Household Sector who bought $528 billion to Q3 â?? which puts them on track purchase $704 billion for fiscal 2009.
These three buying groups represent the lionâ??s share of the $1.885 trillion of debt that was issued by the US in fiscal 2009.

We must admit that we were surprised to discover that â??Householdsâ?? had bought so many Treasuries in 2009. They bought 35 times more government debt than they did in 2008. Given the financial condition of the average household in 2009, this makes little sense to us. With unemployment and foreclosures skyrocketing, who could afford to increase treasury investments to such a large degree? For our more discerning readers, this enormous â??Householdâ?? investment was made outside of Money Market Funds, Mutual Funds, ETFâ??s, Life Insurance Companies, Pension and Retirement funds and Closed-End Funds, which are all separate reporting categories. This leaves a very important question - who makes up this Household Sector?

Amazingly, we discovered that the Household Sector is actually just a catch-all category. It represents the buyers left over who canâ??t be slotted into the other group headings. For most categories of financial assets and liabilities, the values for the Household Sector are calculated as residuals. That is, amounts held or owed by the other sectors are subtracted from known totals, and the remainders are assumed to be the amounts held or owed by the Household Sector."

“So to answer the question - who is the Household Sector? They are a PHANTOM. They donâ??t exist. They merely serve to balance the ledger in the Federal Reserveâ??s Flow of Funds report.”

2

Yes, it is a giant Ponzi scheme.

3

The term “Household” clearly is a poor choice because in this case the actual meaning is “any domestic buyer except for the Federal Reserve.”

As to whether the Fed has bought T-bills under the table, so to speak, there is evidence (I can’t recall the article that provided it, though) that this has occurred.

As to whether domestic buyers – not so much “households” – bought a lot of T-bills in 2009, there is evidence that this did occur. Attributed causes were lack of confidence in the stock market and in municipal bonds, and lack of confidence in banks, as FDIC insurance does not go up to high dollar values.

There was even a point, though it may have been in 2008, where T-bills were selling at a very slight NEGATIVE interest rate, yet were being purchased as they were perceived as posing less risk (generally thought to be zero) as means of holding money than keeping the money in a bank account.

4

Our entire economy is a Madoff scheme.