Imagine my surprise when I ran across this story.

Two Japanese nationals were detained by Italian financial police last week after trying to enter Switzerland with $134 billion worth of undeclared U.S. bonds, mostly Treasury bonds, an Italian daily said Wednesday. The Japanese consulate general in Milan confirmed that the detention had taken place and said it was trying to confirm with Italian authorities whether the two were indeed Japanese nationals and their identities.

According to the report in il Giornale, two unidentified Japanese in their 50s concealed the bonds, including 249 U.S. Treasury bonds each worth $500 million, in a suitcase with a false bottom that was searched by the Italian authorities June 3 when they were in Chiasso, at the border with Switzerland, about 50 kilometers north of Milan. The daily did not say on what charges they have been detained, but the two may have been detained on suspicion of attempting to take a large amount of securities out of Italy without declaring it because the paper said they had not declared the bonds.

Are you saying to yourself, Wow!, I haven’t hear about this? Well there is a reason for that.. other than Bloomberg, the only other mainstream media source in the U.S., that had any information regarding this story was Glenn Beck.  Bloomberg’s, William Pesek and Karl Denninger have two interesting perspectives regarding this under-reported event, and they also make reference to the lack of media attention this story has received, especially considering the amount of  the  undeclared  U.S.  bonds involved. I suggest reading both Bloomberg pieces but as a teaser, here is an excerpt from Denninger.

So let’s assume that the certificates are real, as German media seems to believe and which, by the way, makes logical sense given what they were and the sheer impossibility of cashing a fake $500 million bond.

Ok, who has $130 billion in bearer bonds?  Remember, bearer instruments haven’t been issued by the Treasury since 1982, when they became illegal to issue, at least to US institutions and residents (there was an exception carved out for Treasury instruments issued to non-US residents in 1985 – a time of high deficits)  The answer to that question: it is rather unlikely that there remains $130 billion of legitimate US Bearer issuance outstanding anywhere – to anyone.

Mr. Holmes would be initially puzzled by such a caper.  On the one hand we have the impossibility of the bonds being real, because there simply isn’t $130 billion of issues remaining outstanding.  On the other hand we have the impossibility of negotiating a fake $500 million bearer instrument, making the exercise of counterfeiting one expensive and futile.

This leaves us with more questions than answers at this point.  

Or does it?

As Mr. Holmes is famously rumored to have said, “once you eliminate the impossible, whatever remains, however implausible, must be the truth.”

So what remains?  Let’s run a theory here – one of the few possible remaining options, given the exclusion of what we know not to be true…

Are we willing to assume that all the “issue” of Treasury bonds has been done “above board” as required by law.  If Treasury has been surreptitiously issuing bonds to, say, Japan, as a means of financing deficits that someone didn’t want reported over the last, oh, say 10 or 20 years, then the following is about to occur:

I had to include Denniger’s visuals and yes, that is shit hitting the fan and that is exactly what will happen if it turns out the bonds are real (the German media insist they are). Keep in mind that only Governments would have this amount of U.S. Bonds to play around with, which leads me to a couple of very interesting questions. 1) Is someone dumping huge amounts of US dollars? (The Japanese own about $600 billion in US debt, the discovered bonds represent 25% of their US debt) 2) Exactly what have those U.S. Government printing presses been up to? 3) Is there an enormous sum of counterfeit US debt out there and these guys were trying to sell some of it. The first two could mean our dollar is about to become worth less or is it worthless?   

I can only remember one other story that dealt with such a large amount of cash, getting buried or blacked-out by the US mainstream media. 

  “According to some estimates we cannot track $2.3 trillion in transactions,” Donald Rumsfeld admitted.

$2.3 trillion — that’s $8,000 for every man, woman and child in America” or 25% of the Pentagon’s funds and CBS News was the only mainstream media to report the story, some four months after Rumsfeld’s made the announcement on September 10th, 2001.  Let’s see if a measly $134 billion in U.S. bonds which included 249 U.S. Treasury bonds each worth $500 million continues to go unnoticed or under-reported.