Manarin Investment Counsel, Ltd.

Fortune - Those buying Treasury bonds at record low yields are turkeys being led to slaughter, Pimco's Bill Gross writes.

Gross, manager of the world's biggest bond fund, writes in his monthly investment outlook newsletter released Wednesday that the 30-year-long bull market in bond prices will end next Wednesday. That's when the Federal Reserve is expected to announce it will start another round of asset purchases known as quantitative easing.

The market has been anticipating QE2, as this second attempt at loosening financial conditions is known, for some time now. Bond yields have plunged to lows last seen half a century ago, as the economy has visibly weakened and traders have rushed into bonds ahead of the voracious Fed appetite for debt.

At the same time, investors are worried that the Fed will eventually succeed all too well in restoring economic growth. Some rushed this week to lock in a negative nominal return on some inflation-adjusted bonds in hopes of hedging against a successful Fed campaign to boost inflation.

But however QE2 goes, bond prices can't keep soaring forever, Gross warns. That's because ultimately the United States must come to grips with its fiscal profligacy – a process that won't be pretty for those holding fixed-income securities.

Read the full article here.

---

Via The Heritage Foundation

---

From Scott Grannis: [The Chinese] sell us mountains of cheap goods, then turn around and invest most of the proceeds (equivalent to our trade deficit with China) in U.S. Treasury securities. We get the goods, and we get to keep the money. Then we devalue the dollar, and they lose on their investment. Why we would want them to stop doing this is beyond me, though if I were a Chinese citizen, I would be furious with my government for directing such massive quantities of my country's export earnings to Treasuries. The central bank of China has no need to further increase its already-massive reserves; instead, the government should be relaxing capital constraints, allowing Chinese citizens more freedom to save and invest abroad in the types of vehicles with which they feel most comfortable. China's workforce is aging daily, and like Japan a few decades ago, China's economy cannot accommodate all the savings of the Chinese people—they are essentially forced to save overseas.

Contrary to what you read in the press—which mistakenly believes that our large trade deficit with China is something we need to worry about—China is the one that needs to worry, not us.

---

Link:  Wall Street Journal

---

Link:  davycrockettstory.org

---

Bottom line ... Hold no paper instruments: CDs, bonds, annuities or indexed annuities.  Own stocks, real estate and gold.  You must be an owner to build and maintain wealth

---

---

---

Audio Link: Where Does Government Get the Money It Spends?

To attend, please register here.

---

Don’t count on the federal government to wave away the country’s economic troubles with some refurbished fiscal wand. The wand didn’t work in the 1960s and 1970s (it only contributed to “stagflation”). The wand is an illusion that should have died with Keynes long ago. We will also relearn the oft-repeated wisdom of Keynes when he wrote, “Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”

Via There's No Magic Keynesian Fiscal Wand

---