Posted by
rycK on Monday, March 02, 2009 9:40:39 AM
The Idiot Brits Will
Now ‘Officially’ Print Money: Inflation is their Solution to Debt. Is it Ours
Too??
Abstract: Debt is crushing the
world economies and the frantic quest for unburdened capital has suddenly
become frantic. The solution to a debt-driven deflationary spiral is,
interestingly enough, more debt in most governments current view. That,
deciphered, is a firm decision to allow inflation to roar so the debt will be
paid back by those who still have some untarnished assets. Britain has reached the point
of potential default and will start running the printing presses. It appears
that the United States started this ugly
process sometime back in September 2008. We face massive inflation.
So, this is how the Obama Administration can afford to pay for
several trillion dollars of socialist programs: they will inflate away the
debt. Massive inflation will raise all
taxpayers up to the very top income tax brackets and that will fuel the
socialism they so desperately seek.
The European Common Market will collapse as several of their 27
members will default on their obligations and the system will collapse.
The British situation:
England has now announced, officially, that
they are on the very edge of the Financial
Snake Pit and the Demon is looking them right
left in the eye. They will print money. All this was very predictable and I
made such predictions in 2002.
It is interesting that although they swim in the swamp known as the European
Common Market, they have a separate currency, like the Swiss, and can make some
independent maneuvers to ease their debt while Spain and Germany and others are locked into to
iron grip of the euro. Janet Daley of the Telegraph
cautions:
“This is now an epic battle between Big Government and Big
Business. The mud wrestling over who was responsible for
the public relations catastrophe of one man's pension arrangements is not just
a sideshow: it is a significant metaphor for the ideological struggle which will determine how the history of this economic cataclysm
is written. And whichever side
succeeds in composing the history will also win the right to run the world.”.-- Is a form of state capitalism really
what Gordon Brown wants? When the Prime Minister spoke of 'creating an economy'
he was talking nonsense, says Janet Daley. [Emphasis is mine in
all quotes.]
Now, that
is cheery. Do we find the same thinking in the US? Governments are usually composed
of political parasites with skills in slick oratory not business acumens of
various sorts. The British are being led down the
economic rut by such characters as their monarch the comical Princeling of Wails and other losers. They want to
add massive taxes for CO2.
“The danger is that he [Brown] will be trapped by his own
rhetoric and be forced to embrace a form of state capitalism (which is the technical definition of "fascism"). Those who
worry about the loss of our traditional rights and freedoms might want to give
that prospect a thought.”-- Janet Daley
The US situation:
I suspected
the US has been doing this all along as
there is no way to account for the 4.29 trillion spent on bailouts of various
forms. An article by CNBC seems to show monies that we
cannot account for. We are probably printing money as well.
From 17 Nov 2008
|
FINANCIAL
CRISIS BALANCE SHEET
|
|
Government Entity
|
Sum
in Billions of Dollars
|
|
Federal Reserve
|
|
|
|
|
|
(TAF) Term Auction Facility
|
900
|
|
Discount Window Lending
|
|
|
Commercial Banks
|
99.2
|
|
Investment Banks
|
56.7
|
|
Loans to buy ABCP
|
76.5
|
|
AIG
|
112.5
|
|
Bear Stearns
|
29.5
|
|
(TSLF) Term Securities Lending Facility
|
225
|
|
Swap Lines
|
613 [???]
|
|
(MMIFF) Money Market Investor Funding Facility
|
540 [???]
|
|
Commercial Paper Funding Facility
|
257
|
|
(TARP) Treasury Asset Relief Program
|
700
|
|
Other:
|
|
|
Automakers
|
25
|
|
(FHA) Federal Housing Administration
|
300
|
|
Fannie Mae/Freddie
Mac
|
350
|
|
|
|
|
Total
|
4284.5
|
Note: Figures as of Nov. 13, 2008
|
Financial Crisis Balance Sheet
|
I wonder what a swap line is.
Between a swap line and the Money Market Investor Funding Facility we see
nearly a trillion dollars floating somewhere. Maybe this is a misprint and they really mean
a swamp line.
The (TARP) Treasury Asset Relief Program looks puny when compared to the sum
here. Is TARP a distraction?
Here are some financial
hocus-pocus items featuring some technical language. Some of this money appears
to be in terms of guarantees, whatever that means.
|
Government Entity
|
Amount Allocated in Millions of
Dollars
|
Spent/Lent In Billions of Dollars
|
|
Federal Reserve:
|
|
|
|
(TAF) Term Auction Credit
(allocated)
|
900
|
415.3
|
|
Discount Window Lending
|
|
139.3
|
|
Banks (other loans primary
credit)
|
|
92.6
|
|
Investment Banks (other loans
Primary dealer and other broker-dealer credit)
|
|
46.6
|
|
Loans to buy ABCP (other loans
Asset-backed commercial paper money market mutual fund liquidity facility)
|
|
661.9
|
|
AIG (allocated minus Treasury 40B)
|
112.5
|
87.4
|
|
Bear Stearns (initial loan to
JPMorgan)
|
29.5
|
26
|
|
(TSLF) Term Securities Lending
Facility
|
22
|
200
|
|
Swap Lines (other federal
reserve assets)
|
|
601
|
|
(MMIFF) Money Market Investor
Funding Facility (allocated)
|
540
|
|
|
(CPFF) Commercial Paper Funding
Facility *upper limit from Reuters
|
1800
|
270
|
|
(TALF) Term Asset-Backed
Securities Loan Facility
|
200
|
200
|
|
GSE MBS NO NAME Program
|
600
|
600
|
|
Treasury:
|
|
|
|
(TARP) Treasury Asset Relief
Program
|
700
|
330
|
|
Exchange Stabilization Fund to
guarantee principal in money market mutual funds
|
50
|
|
|
Treasury direct purchases of MBS
since Sept.
|
26
|
|
|
Citigroup (Treasury+FDIC
guarantees)
|
238
|
|
|
|
|
|
|
FDIC:
|
|
|
|
Guarantees for Banks
|
1900
|
|
|
|
|
|
|
Other:
|
|
|
|
Automakers
|
25
|
|
|
(FHA) Federal Housing
Administration
|
300
|
|
|
Fannie Mae/Freddie Mac
|
350.
|
|
|
|
|
|
|
TOTAL
|
7361 billions
|
7.36 trillion dollars
|
[I converted millions to billions
on this chart.]
|
Note: Figures as of Nov. 28, 2008
|
This means that we have ½ of our entire GDP of 14 bln in play in some financial way with the
government fingers on the buttons.
Now, we
learn that AIG has experienced the biggest loss [62 bln] of any corporation in one
quarter ever.
And the government will come to their rescue again.
This
means that if we add our 12.7 trillion National Debt to this 7.36 trillion and
then add Obama’s 5-10 trillion dollar spending dreams over the next 4-8 years
we can see the sum growing to around 25 trillion, TWICE our GDP.
If we look at the bank money multiplier of about 10 this could balloon our money supply
M2 from 8 trillion to 258 trillion. That is 3225.00%. We are all going to be rich like Zimbabwe.
At a mere 3% interest rate, what is the debt service on 25
trillion?? Why, that is 750 bln. At 10%, not enough to fight massive inflation,
the debt service soars to 2.5 trillion! At an interest rate of 20%, which might
not be enough we arrive at the nifty sum of 5 trillion dollars every year,
nearly double the 2008 federal budget. What is left?
This does not look like
a good plan to me. Any comments or corrections to this? I think we are heading
into the tank. Our currency could collapse. Are we heading for “state
capitalism?’
Down we go……….. rycK
Comments:
ryckki@gmail.com
From my comment on Salon Aug 13, 2002:
I said socialism was unsound and that any major
country that tried this would eventually fail. Nearly all have, Sweden being the biggest prize of all for this concept.
Socialism is still unsound despite examples of
states still in the throes of this disease are temporally thriving.
Estonia is at the mercy of the Ruskies for their energy. One touch of the
valve and they freeze this next year. Comintern was constructed for this
purpose. A teat from Mother Russia.
But, why not tell us why Estonia, Latvia, Bulgaria and others didn't prosper under socialism?? Why did they all
crash when the USSR went south?
Putting more sick sisters in with the EU just
invites another major war. Soon, one of the biggies will beg out [Germany or France] and the whole mess will come unraveled like a cheap sweater made
in San Salvador.
They will fail and I salute that. Don't get the
notion from me that [1] there is any to stop this and [2] that such failures
don not benefit the US greatly.
Did you hug a Commie today and thank him for
being a simple mindless sh** who flushed his future down the drain with the
sallow washings from the dirt and slime on the pages of the Manifesto?
One less loser to contend with is one step forward
for capitalism.-- Richard Stout - 08:46 am Pacific Time - Aug 13, 2002 - #8003 of 1001 http://tabletalk.salon.com/webx?13@343.7cSOb6MSmgP.10@.eec4133/8002