The well known economist John Williams, told World Net Daily recently, “The Fed is monetizing U.S. Treasury debt in order to debase the dollar, to create inflation, in hopes of avoiding deflation. This move also sets the precedent for the Fed acting as a lender of last resort to the US Treasury, if foreign and other investors in US Treasuries balk at upcoming auctions or look to dump existing holdings. The record federal deficits ahead, mean record Treasury borrowings. Fed monetization of debt eventually means surging money supply growth and much higher inflation.” In other words, suppose they had an auction, and no one bid?
Not as dense as Sir Alan would have put it, but in plain words, the government has been unable to sell its debt in sufficient quantities to China, India, and sucker John Q. public, and in order to keep on spending, they have bought their own debt. Nice trick, huh? Robbing Peter to pay Paul? Not quite. How about robbing the populace (Peter) to pay for all the crud, earmarks, welfare, warfare, handouts, bureaucracy, regulations, et al (Paul) in order to stay in office? How much debt do you, the reader have? I’ll bet not much. If you have debts, you have to budget your income and expenses to pay that debt. Not so in D.C. All they have to do is vote to raise the national debt, which currently, and ’officially’ is over $12 trillion, and will soon be ’officially’ at $13 trillion. I use the quotes around ’officially,’ because it’s a damned lie as is most figures emanating from D.C. are. Do you actually believe that the unemployment rate is 10.2%? Do you really and truly believe the inflation rate is 2%? I don’t. Throughout history, all governments have lied to their citizenry to cover up their mistakes. The Obama gang is no different.
The debt which Uncle Sam is committed to pay in the form of Social Security, Medicare, and the like over the years, was $65.5 trillion in 2008, and with the Obama gang in residence, it will soon be $100,000,000,000,000. That’s twelve zeros, an amount incomprehensible to me.
Williams continued, “Because of the U.S. government’s effective insolvency with $65.5 trillion in obligations, even before the Obama administration deficits, the higher inflation caused by the Fed buying Treasury debt has the early potential of evolving into an uncontrolled hyperinflation, in which the US dollar becomes totally worthless.” The $65.5 trillion in debt is accounted for by “Generally Accepted Accounting Principles,” (GAAP) which all businesses use, and it means that by GAAP rules, the U.S. Government has a negative net worth of $65.5 trillion as of a year ago, and climbing.
Of course, no one in their right mind would buy anything from, use a bank, or trust a business that was trillions in the hole or which had a negative net worth. Why do China and India still buy any US debt? They almost have to, in order to keep the whole thing from collapsing and crashing like Humpty Dumpty. They own so much of our debt, that they have to play it safe to preserve their wealth. They buy ever less and less, and sell more and more, till they are rid of it, while at the same time continuing to sell their stuff to the remaining US citizens who can afford to buy anything at all. China has hundreds of thousands of unemployed also, thanks to reduced buying all over the world from them.
The entire world’s economy is hanging by a thread! It would take but a few little glitches to take the whole thing down. The UK is in terrible shape, as is France, Italy, Germany, and even Russia. Everyone in government is scared to death, but they keep on spending. Is Congress that stupid? Are they so dumb, that they can’t stop spending? It appears to be so, or they would cease and desist. Shouldn’t they all be ousted, with the exception of Ron Paul?
The stock market is doing almost an exact repeat of the 1929 crash. The stock market didn’t actually reach the bottom till July 8,1932, when the Dow sunk to 41.22 “Black Thursday,” occurred on October 29, 1929, when a record 16.3 million shares were sold. After the crash, many businesses and factories went broke and fired their employees. The unemployment figures grew and grew, just like they are growing now, till the unemployment rate reached 23.6% in 1932. Ours, is “officially” at 10.2% and rising. You decide if it will hit the 1932 level. When Roosevelt took office, like Obama, rather than reducing taxes, he raised them, thereby exacerbating the situation. Obama is in lock step with FDR…doing everything wrong. FDR got America out by getting us into WW II. Will Obama do the same in Afghanistan, Iran, or who knows where? The markets went up and down erratically until FDR took office, and then the Great Depression really began. George Bush preceded Obama with stupid moves, such as TARP, which the Republicans and Democrats grabbed on to with a great enthusiasm, even though 95% of the American citizens begged, wrote, and called their representatives, telling them a big NO. They voted for it anyway, and I can still hear John McCain telling voters that he had to rush back to DC to vote “yes.’
Are there any Republicans who might just be smart enough, forceful enough, young enough, and appealing enough to the voters, to capture the White House in 2012? So far, I’d take Texas Governor Perry and Sarah Palin. If Republicans are smart enough to change their voting habits and reform themselves, it is possible that both Houses could be re-captured in 2010. Will it happen, or should we just forget about politics, and concentrate on protecting ourselves? I’m ever an optimist maybe, but I am ordering “Perry/Palin in ’12” bumper strips and will send out one with each order till the thousand run out, and then maybe I’ll order more. Perry is a young, handsome guy, deep voice, excellent speaker, a conservative who has threatened to take Texas out of the union if they don’t behave, and Sara is just great. There simply has to be a light at the end of this dark, Democratic tunnel.
P.S. to show the utter ignorance of the general public, a client sent me a you-tube of a fellow trying to sell an $1100 one ounce, gold Maple Leaf to people for $50. He tried over and over again, and no one would buy a one ounce gold coin for $50. He tried to sell it for $5 several times, and there were no takers. The economic ignorance is appalling.