For decades we were warned that someday our politicians would push things too far.  We were warned that someday our national debt would spiral out of control, servicing that debt would become extremely oppressive due to soaring interest rates, existing bonds would crash thanks to the shift in interest rates, and foreign sources would start stepping back from buying any new debt that we would be issuing.  Unfortunately, that time has arrived.  The government debt crisis that we have been warned about is here, and it is going to be incredibly painful.

At this moment, our national debt is sitting at $33,836,693,993,860.35.

It is probably going to hit 34 trillion dollars by the end of the year.

To put this into perspective, when Barack Obama first entered the White House we were about 10 trillion dollars in debt.

We are literally committing national suicide, but for a long time most Americans didn’t really care because we were not experiencing any serious consequences.

But now the party is ending.

Thanks to rapidly rising interest rates, U.S. Treasury bonds “are in a bear market worse than the dot-com bust and almost as bad as 2008”…

Elementary economic forces — too much supply and not enough demand — have collided to create the worst stretch for U.S. government bonds since the Civil War. The government keeps borrowing to cover its budget deficits, while once-reliable buyers of that debt, both at home and abroad, have pulled back.

The result: Investors are demanding the steepest yields since 2007. Auctions of fresh bonds that were once routine are now going terribly. And bond portfolios are getting absolutely hammered. The longest-dated Treasury bonds are in a bear market worse than the dot-com bust and almost as bad as 2008.

A bond crash normally precedes a stock market crash.

That is exactly what happened in 2008, and it appears that the same pattern is being reproduced now.

So if you have a lot of money in the stock market, you may want to brace yourself for what is ahead.

In the past, we could always rely on China, Japan and other foreign buyers to keep the party going, but now they are not very interested in our bonds…

China and Japan, once reliable buyers of Treasury bonds, have been selling them to prop up their weakening currencies. A decade ago they held more than 22% of U.S. government bonds; today it’s 7%.

The Ukraine war has dampened demand among Eastern European buyers, said Steve Ricchiuto, the chief U.S. economist at Mizuho. Increasing U.S. oil production means fewer petrodollars in the Middle East to be reinvested through the Treasury market.

U.S. banks, too, are stepping back.

I certainly can’t blame our banks for “stepping back” from buying more bonds.

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