Posted by
rycK on Monday, May 25, 2009 9:06:59 AM
The Demise of the US
Dollar and the Road to Serfdom
Abstract: Out phony government
is now buying debt and the Chinese object loudly. As alert and concerned
creditors they fear that we are just printing money hence ‘monetizing our
debt.’ They object to the US Treasury buying debt and throwing more phony money
around to ostensibly fight deflation or whatever. Our AAA bond rating is now in
jeopardy as is the UK rating. The promise
that the fed has the ability to “unwind and reverse” this wild spending is
no longer believable. Marxian radicals now seem to have control of the levers
of finance and taxation in our country.
Our
citizens are now too simple and trusting to make a nasty scene when our elected
[and worse…some appointed] officials tell us all about the economy, debt and
such and that we will recover from this mess. We should be outraged that they
breath our air.
The IMF
[International Monetary Fund] has warned the Brits that their AAA bond rating
is in jeopardy and, due to their horrendous debt, may soon be relegated to junk
status or worse.
A reading
of the recent book Read The Ascent of Money by Niall
Ferguson gives us several exciting examples
of past bond bubbles and the aftermath of such foolishness. We are now playing that kind of game. We are
looking straight into the financial abyss. We cannot sustain this
spending. A tax rate of 100% is now not
high enough to get us out of this mess.
The
central issue here is that we do not have enough capital to finance our federal
debt nor do the Brits or many others in our new global economy. To keep the lid
on the steamer, our Treasury Secretary, Little Timmy Geithner, has elected to sell us
on the notion that the fed can do this:
“… [the
fed people] are very committed to making
sure they have the ability to unwind and reverse the exceptional measures they
have taken once we have achieved the necessary stability in our financial
markets and an economic recovery is back on track."—Geithner
[Emphasis is mine in all quotes.]
Can we believe this?
We have some serious doubts about our
government and its ability to handle finances. California is in a pecuniary panic and beyond rescue. Our union-crushed
automakers in Detroit are now being subsidized by the government with the bond
holders having been pushed aside and the unions given a majority of shares in
these ‘restructured’ companies that bring so much money into Democratic Party
slush buckets. When could they ever sell bonds again? Not on this planet.
Now, China is warning us that we may be
‘monetizing’ our debt:
“Richard
Fisher, president of the Dallas Federal Reserve Bank, said: "Senior
officials of the Chinese government grilled me about whether or not we are
going to monetise the actions of our
legislature."
"I must have been asked about that a hundred times in China. I was asked at every single meeting about our purchases of
Treasuries. That seemed to be the principal preoccupation of those that were
invested with their surpluses mostly in the United States," he told the Wall Street Journal.”-- China warns Federal Reserve over 'printing money.' China has warned a top member of the US Federal Reserve that it is
increasingly disturbed by the Fed's direct purchase of US Treasury bonds by
Ambrose Evans-Prichard 24 May 2009
“The
Oxford-educated Mr Fisher, an outspoken free-marketer and believer in the
Schumpeterian process of "creative destruction", has been running a
fervent campaign to alert Americans to the "very big hole" in
unfunded pension and health-care liabilities built up by a careless political
class over the years.”
"We at the Dallas Fed believe the
total is over $99 trillion," he said in February.
"This situation is of your own creation. When you berate your representatives or senators or presidents
for the mess we are in, you are really berating yourself. You elect them," he said.”-- Ambrose Evans-Prichard 24 May 2009
Our dollar is sinking fast. Gold is soaring. Our
hapless leftist radicals, oblivious to reason or any admitted knowledge of
finance, are planning to spend 10 trillion more during ‘Obama’s First Term.’
Gold prices are soaring and our currency
is sagging as measured by the dollar index. We are so far in debt that
we cannot manage either the spending or the interest on our current debt. China has built up a large reserve of US dollars and now fears that
we will just debase our currency and inflate their holding. We won’t default;
we will just print money and pay them off. They understand this so they will
now REFUSE TO BUY ANY MORE US BONDS. So,
who buys them? How many suckers do we have left in the world?
This is not the time to perform some
more magic feats of finance by spending our way into prosperity. What we face
is a degradation of our currency, soaring dollar prices for oil and any exports
and a collapse of our financial structure. The fed is spending and printing
money wildly in what should be a battle against deflation, but it looks like
there is more mischief here. It looks like the plan is to actually wreck the
financial system so the government can ‘rescue’ us from the evil
capitalists. To think that Chrysler and
GM could ever again be viable
companies with such labor costs and piles of rules and laws about their
products is beyond the imagination of even Harry Potter’s creator.
That elfin creature Geithner offers no
believable financial mechanisms to “to unwind and reverse the exceptional
measures they have taken…” I think he is lying. The slimy Marxian radicals who somehow got to
power by importing poverty and other nefarious measures such as ballot box
stuffing, reprehensible energy taxes and carbon caps and nurturing union corruption tactics now have their
chance to ‘change’ our society. We won’t like that.
Business
taxes and red tape will drive more unemployment to depression levels. Businesses
cannot operate with higher and higher costs—they will have to cut workers or
move out of the country, a good bet in our new global economy. Detroit will be another wretched failure
and Michigan will look like Somalia in just two years or so. California will view Michigan as some kind of paradise compared
to what they are facing. We could sell California to Mexico if they had any money.
Our phony
government just ruined the corporate bond market when they put bondholders in
the creditor’s lines somewhere behind the trash collectors and gave some
foreign company 20% of Chrysler for nothing but a promise to peddle their puny
little death traps called ‘cars.’ Now, our phony governments [state and
federal] will try to peddle more bonds to finance their social programs that
are now well beyond the definition of broke. They have gone fascist.
They are
frantic for money so look out for a wealth tax or the attachment of your 401(k)
s to feed the monster known as Social Security. We need to unelect most of our officials and
so-called leaders.
rycK
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