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Druckenmiller Calls Out The Treasury Ponzi Scheme: "It's Not A Free Market, It's Not A Clean Market", Identifies The Real Bond Threat
We hadn't heard much from legendary investor Stanley Druckenmiller since last August when he decided to shut down his Duquesne Capital hedge fund. Until today. In a must read interview, the man who took on the Bank of England in 1992 and won, says that he join the camp of Bill Gross et al, making it all too clear that all the recent fearmongering about the lack of a debt ceiling hike by the likes of Tim Geithner, Ben Bernanke and, of course, all of Wall Street, is misplaced, and that the real threat to the country is the continuation of the current profligate pathway of endless spending. From the WSJ: "Mr. Druckenmiller had already recognized that the government had
embarked on a long-term march to financial ruin. So he publicly opposed
the hysterical warnings from financial eminences, similar to those we
hear today. He recalls that then-Secretary of the Treasury Robert Rubin
warned that if the political stand-off forced the government to delay a
debt payment, the Treasury bond market would be impaired for 20 years. "Excuse me? Russia had a real
default and two or three years later they had all-time low interest
rates," says Mr. Druckenmiller. In the future, he says, "People aren't
going to wonder whether 20 years ago we delayed an interest payment for
six days. They're going to wonder whether we got our house in order." Which begs the question: if interest rates are so low today, is the market not appreciating the current path of "financial ruin"? And here is where Druckenmiller joins the Grosses and the Granthams of the world. Asked if the future is not so bad judging by today's low bond rates he says, "Complete nonsense. It's not a free market. It's not a clean market." The Federal Reserve is doing much of the buying of Treasury bonds lately through its "quantitative easing" (QE) program, he points out. "The market isn't saying anything about the future. It's saying there's a phony buyer of $19 billion of Treasurys a week." Of course, there is another name for this type of arrangement and so far only Bill Gross has used it: Ponzi Scheme.
More from the interview:
The moment couldn't be better to consult Mr. Druckenmiller, who almost never gives interviews but is willing to speak up now because he thinks that fears about using the debt-limit as a bargaining chip for spending cuts are overblown—and misunderstand the bond market. "The Treasury borrowing committee letter speaks about catastrophic financial crises, comparing it to Fannie and Freddie. That's not what we're talking about here," he says.
He contemplates the possibilities for bond investors if a drawn-out negotiation in Washington creates a short-term problem in servicing the debt but ultimately reduces spending:
"Here are your two options: piece of paper number one—let's just call it a 10-year Treasury. So I own this piece of paper. I get an income stream obviously over 10 years . . . and one of my interest payments is going to be delayed, I don't know, six days, eight days, 15 days, but I know I'm going to get it. There's not a doubt in my mind that it's not going to pay, but it's going to be delayed. But in exchange for that, let's suppose I know I'm going to get massive cuts in entitlements and the government is going to get their house in order so my payments seven, eight, nine, 10 years out are much more assured," he says.
Then there's "piece of paper number two," he says, under a scenario in which the debt limit is quickly raised to avoid any possible disruption in payments. "I don't have to wait six, eight, or 10 days for one of my many payments over 10 years. I get it on time. But we're going to continue to pile up trillions of dollars of debt and I may have a Greek situation on my hands in six or seven years. Now as an owner, which piece of paper do I want to own? To me it's a no-brainer. It's piece of paper number one."
Why the efficient market would mcuh rather the government take its medicine and actually offer people like him a viable investment option instead of merely a Fed frontrunning scheme:
Mr. Druckenmiller says that markets know the difference between a default in which a country will not repay its debts and a technical default, in which investors may have to wait a short period for a particular interest payment. Under the second scenario, he doubts that investors such as the Chinese government would sell their Treasury debt and take losses on the way out—"because I'll guarantee you people like me will buy it immediately."
Now suppose, Mr. Druckenmiller adds, that he's wrong. If the market implodes on day two of the technical default, Mr. Obama and Congress would be motivated to finally come to agreement. But he doesn't expect such market chaos. "My guess is that the bond market would rally as long as it believed the ultimate outcome was going to be genuine entitlement reform—that we wouldn't even have to find out about a meltdown because it wouldn't happen. And I have some history on my side here."
On why everyone should ignore threats of untold destruction unless the adminstration and Wall Street apparatchiks get their way:
Mr. Druckenmiller had already recognized that the government had embarked on a long-term march to financial ruin. So he publicly opposed the hysterical warnings from financial eminences, similar to those we hear today. He recalls that then-Secretary of the Treasury Robert Rubin warned that if the political stand-off forced the government to delay a debt payment, the Treasury bond market would be impaired for 20 years.
"Excuse me? Russia had a real default and two or three years later they had all-time low interest rates," says Mr. Druckenmiller. In the future, he says, "People aren't going to wonder whether 20 years ago we delayed an interest payment for six days. They're going to wonder whether we got our house in order."
The real MAD, Druckenmiller says, is letting the debt spiral out of control. As anyone with half a working brain will realize.
Mr. Druckenmiller is puzzled that so many financial commentators see
the possible failure to raise the debt ceiling as more serious than the
possibility that the government will accumulate too much debt. "I'm just
flabbergasted that we're getting all this commentary about catastrophic
consequences, including from the chairman of the Federal Reserve, about
this situation but none of these guys bothered to write letters or
whatever about the real situation which is we're piling up trillions of
dollars of debt."He's particularly puzzled that Mr.
Geithner and others keep arguing that spending shouldn't be cut, and yet
the White House has ruled out reform of future entitlement
liabilities—the one spending category Mr. Druckenmiller says you can cut
without any near-term impact on the economy.
Next we move to the topic of the US ponzi and why the Fed is at its core.
Some have argued that since investors are still willing to lend to the Treasury at very low rates, the government's financial future can't really be that bad. "Complete nonsense," Mr. Druckenmiller responds. "It's not a free market. It's not a clean market." The Federal Reserve is doing much of the buying of Treasury bonds lately through its "quantitative easing" (QE) program, he points out. "The market isn't saying anything about the future. It's saying there's a phony buyer of $19 billion of Treasurys a week."
Warming to the topic, he asks, "When do you generally get action from governments? When their bond market blows up." But that isn't happening now, he says, because the Fed is "aiding and abetting" the politicians' "reckless behavior."
And blow up they will if nothing changes. Druckenmiller's conclusion:
"I think technical default would be horrible," he says from the 24th
floor of his midtown Manhattan office, "but I don't think it's going to
be the end of the world. It's not going to be catastrophic. What's going
to be catastrophic is if we don't solve the real problem," meaning
Washington's spending addiction.
Well that's wonderful. And we are confident Madoff also had comparable thoughts just shortly before his scheme imploded. However, for him, like for the US, it is now too late. The best option is to actually get out of Washington's way so they destroy the status quo as fast as possible and a fresh (and probably very violent) start is implemented.
The rest is rhetoric.
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Spare me the tax increases and the Welfare Queen reaganite bullshit. This is pretty simple. In 2008, a small portion of the bond market was about to blow up because they made absolutely fucking ridiculous short-term loans (GE Capital, et al.). This was not going to the cataclysmic event that was reported at the time. A few banks were going to go to have to restructure and a lot of people would have been fired and lost their bonuses. In response, they crashed the market and threatened the planet with M.A.D. if the bill wasn't put on the public ledger. People objected. They crashed it even further. 3 years later, how is this all paid for? Default on public entitlements. During that three years, we got a lot of political posturing and Wall Street charlatans tell the world how they saved the planet yadda, yadda, yadda and more spending is needed. All the while paying themselves in higher government wages, higher bonuses, insider equity market manipulation.
Bottom-line: if the choice was presented as "a wall street bailout will cost your social security and Medicare" in 2008, it wouldnt have been 80% disapproval for TARP. It would have been 80% approval for head removal
Totally agree, it is so hypocritical of these elites that think the answer is cutting entitlements of the lower class when they are already set for life and won't be needing them anyway. Look at the defense budget and all the things interconnected to it, look at the entitlements for our politicians that have passed Tarp, trade agreements, deregulation of the financial sector, big oil tax exemptions, wars ect.. all at the peril of the average citizen. On top of that we are bailing their asses out and we have to have our entitlements cut?
Unaccounted Trillions from the Pentagon budget. Unbelievable wastful spending on the wars. Bob dabolina is worried about the minority living off the government, but look at all the corporations, banks, and elite that have been raping the government for decades. Politicians being bought off by lobbyists. All at the peril of the common man.
Fucking brilliant... Think I said this the other day but its just as applicable here. It's incredible and bizzare how the lower-ish conservatives has been coopted by the rich. How some sheep could ever imagine they have something in common with the warren buffett, george soros, red shield banker crowd boggles the mind.
Entitlements do not need to come from the poor, it hurts them the most. Nieve as it may be I do not understand this level of ultra greed. This excessive and perverse profit taking and lust for power is insanity.I realise there has to be incentive for the most creative to make more than those that maybe try a little less, but at a certain point it becomes grotesque. Even worse when its a group of fairly smart fuckers that have acrued power over time and all they want to do is take it all.
I also cannot believe anyone is rooting for these motherfuckers and acting like the uber rich should not have to shoulder any of the responsibility (read: payments) after they raped and pillaged this country/world. I don't understand why people are so keen on not trying to bring up the lowest common denominator of society (especially when you probably arent so far from it) and instead trying to shit on them as if it makes you look like a bigger man.
/ramble
If one wants to illustrate the utter degeneracy and arrogance of the worthless, useless banker-gangsters, this post is Exhibit A.
Stop blaming the victims of your FAILED economic system, one that produces only misery and landfills, and look in the mirror.
Exactly. It's hardly surprising that his solution - "KILL GRANDMA SO I CAN KEEP GAMBLING" - has so much support here.
The banker-gangsters think that their right to make money is the only thing sacrosanct in the world.
He refuses to recognize that the PERCEIVED power that he and the parasites like him hold over the public are the chief problem the planet must overcome.
Stan is lucky the palindrome gave him enough hell to blow out of tech stocks back in 2000. Imagine Soros and Drunkenmiller screaming at each other about the direction of the market and tech stocks. George won and saved his shirt.
http://www.youtube.com/user/peacsees
silver, rock me baby.
.
btfd
.
who is creating the dip? and why? and
what are "they" doing with the dip?
"they" are buying it, physical. "they"
don't trust their own system because "they"
know what it's all about.
no? hmmmm.
rock me baby.
instead of arguing over static you should
be out buying the dip and help your friends
protect themselves from le grande wipeout.
no?
Apologies for being slightly off subject but I can not help my self,
I just saw this article on Drudge and feel obliged to share it,
The newest of 'our' Federal buildings could hold the Statue of Liberty in the atrium.
Hoping for fiscal sanity from the Feds or the industrial military complex is futile,
the arrogance, delusion and cajones required to place this one millionth burden on the US tax payer beggars belief.
http://federalnewsradio.com/?nid=475&sid=2381254
But the rain collected on the roof will water the lawns, so it cant all be bad?
IQ 101:
There is a large segment of our working population, who have on a collective basis experienced little if any lifetime economic pain. I say this not to denigrate them, but simply pointing out the obvious. They work primarity in government positions protected by public unions. I would include here teachers, and the military who have well defined 20 year minimum career spans.
They have not experienced what the rest of us have experienced in the private/corporate work sector, relative to changes in the workforce, globalism, outsourcing, immigrant workforce competition, technological obsolescence, etc.
Other than on an intellectual level, they do not understand what is going on with the country. They live in a protected financial world. The government will fight very hard to protect that world. Regardless of political affiliation, they are the government at every level. To lose them to financial anarchy would invite political disaster.
As long as money flows to that group, there will be no change in this country.
Thank you for your well informed reply.
It is my belief that the internet has set about mankind an
massive game changer,and that ZH is foremost in making
information accessible to persons who otherwise would not have
access to information. I am a construction dude,by destiny not choice.
I am fully aware of the wealthy pension getters who have never seen a blister upon their hands.
They who have NO KNOWLEDGE of the world as it actually is.
It is an honour of sorts to be part of the ZH coversation.
The strange thing is this, all wordly concerns mean nothing when God is injected into the situation,
I find this profound,that all who speak here neglect the possibillity of an omnipotent and higher power.
This wordly garbage market that proves nothing of price or supply is an offence to humanity.
How can these theives consider themselves EVOLVED if they are MERE BACKWARDS DE-EVOLUTIONISTS.
A Gang of retards,hoping weird hopes.
WOULD FOLD THEIR SLIMY SOUP.We could live
in Paradise if the kENNITES had half a brain between them.
You might want to study the tribe, Kennite, it can be found in the book of Genesis
and through out the Bible, up to the point where Jesus threw the money changers out of the temple.
This is not a new story, it is an ancient tail.
The Welfare Queens all live around Washington DC. They're called government employees.
The welfare queens are the banker-gangsters looting the public treasury and gambling with it on derivatives in order to supply their drug habit and their propensity for high-cost hookers.
Dup
It hasn't been considered yet but the internet will replace "representation", Washington will be known as t"The city that didn't work", and individuals will once again have a vote that counts. The internet closes the loop and we will return to what really made us cool..."everything that is important is local"
Too bad this comment is hidden in here like this because I think you are 100% correct. It hasn't sunk in yet for the vast majority but when you think about it the connectedness we have and the ability to have mass participation in very complex and abstract thought represents a sea change in the whole world of politics and governance. Individuals have the means to exercise their own sovereignty and self-determination. A mobile phone is all you need to have your voice heard!
I don't see anything to disrupt the relentless, 35-year bull market in bonds.
As long as:
- QE can continue behind the scenes, off-balance sheet.
- Debt ceilings are basically laughed at and/or ignored.
- Big players like Bill Gross make huge career errors by deciding to "short" against Uncle Gorilla.
- Inflation can be instantaneously "whipped" in a matter of days via margin hikes
- Other huge debtor nations like Japan see their currency rocket to new highs, because they are printing even faster than the U.S.
- The slightest whiff of a dollar rally or stock market weakness causes momentum players to immediately flee to the safety of the Treasury bonds.
.......................
The retail sector is at all-time, lifetime, world record highs.
44% of the Dow stocks are breaking out to new highs.
Gold is still trading at $1,500
The Dollar is only about 5% off its lifetime lows.
Just think what will happen if there is a 20% correction in stocks or gold, or even a 15% rally in the U.S. Dollar.
If that happens, the 10-year yield will plunge to 2% in a matter of weeks.
The Dollar is only about 5% off its lifetime lows.
ROFL
you could have said the same thing every year between 1913 and today....
is there a bottomless pit of hellicopter
fuel somewhere that remains undisclosed?
or is there no limit to the debt people
will be willing to take on / support?
all we have to do is eliminate the
idea of risk altogether and, by decree,
declare everyone and everything credit
worthy and the economy will come right back.
? no?
No. We are simply going to make more and more unemployed. The unemployed aren't to blame. People don't want to switch to part time work and share the load they want to stick with squeezing the maximum out of their employees and being the biggest briber and having the entire country try to save the "jobs" they "created". Governments will just kill people off and then bring them back in to fit the corporate growth model.
Monsterous entertainment conglomerates will keep jacking up movie ticket prices, interenet fees, data cap limits with I blockbuster over the limit fees. Elitism will continue to grow and it will be huge gangs of corporations producing things for each other while trying to imprison out of work people for stealing a movie or food.
Everyone will look out for their "enlightened self interest" illuminati style and pit the "useless eaters" against the "productive slaves" and create a continually cruel meat grinder prison planet.
Corporations will maintain their "reality structure" of market share and winning and doing what it "takes" and forcing everybody to live in theire reality structures. Governments will maintain their reality structure of war and fighting and gaining control of resources and forcing everybody into their reality structures.
They will feed you poison, medicine you and then talk about how much you owe them for medicine. When people try to hydroponically farm on the roof of their building or back yard they pass laws saying you can't. People will set themselves on fire start huge revolts and die because they really are good people who don't want to hurt anyone and they just can't compete with governments kill anyone without caring attitude.
Spritually they'll call this the diamond soul. But it's not really a diamond it's just a super hard I'm going to keep killing you and controlling you psychosis.
+100
It is quite interesting to witness the revelation and lamentation(s) of the Saints. This generation, like no other of all history, can look back and see scumbags like ZBIGnew World Order moron(s) for what ''they'' are, evil. ''They'' just don't like that fact. http://www.youtube.com/watch?v=oZxE8L38h6U The ''secret'' is out and not even the bastards can hide anymore. This makes things more acute of course, as in ''the need for the final clampdown is here''. Slaughter is in the wind and SkyNet's RFID is online.
http://www.youtube.com/watch?v=PfAWReBmxEs&feature=related
+^10
Cept Blockbuster no longer exists ;)
Linear thinkers never do. That's why when it ends, it will be described as a 'Panic', 'Collapse', 'Crash', 'Failure', etc...
I have to agree with Robo. Until every other debtor nation "goes Greece", the banksters here will be able to keep the ponzi going. To make money, be patient and buy after major corrections. Sell into strength. Just like what the big gorillas do.
When to watch for trouble... when the rest of the debtor nations including Japan have their forced austerity and GDP crash, bond holders will go there for safety. Then and only then does the US have the capital flight that causes their forced austerity. There -- now you have your canary in the coal mine.
Number 1, never agree with Robo. He's a paid hack (who frankly must have fun coming up with outlandishly illogical posts).
Number 2, assuming the U.S. is the last of the dominoes to fall is baseless and dangerous. The banksters don't have the power to keep the ponzi going, they just want the masses to believe that. But ponzi schemes never break down at the source - always at the periphery. Once you are clear on that, you realize that the power is distributed.
That's why the banksters are fearful and I wait quietly, making little castles out of my PMs.
Tyler, your RobotTroll shtick of posting increasingly outrageously nonsensical and hyper-pro-Establishment bullshit to goad us is getting pretty old already.
Bull Markets APPRECIATE and Bullshit Markets INFLATE...Capiche?
and Bill Gross will be mowing my lawn.
How about you go out on a limb and forecast the bull market in bonds will continue for another 35-years?
Feel free to add a one page long list of "as long as" conditions to it.
I have a question:
What is the CUSIP no. of the puts on T-bills / T-bonds that Ben Bernanke is allegedly selling to artificiallly suppress 30-year bond yields aside of buying the bonds by the boatload in the POMOs through his FRBNY underlings Brian P. Sack and Joshua L. Frost ?
User numbers only...and written in invisible ink. HA !
the tea party will raise the .gov debt... and the banks will remain above the law
.
Gross Druckemiller and anyone else who gets in their way should pack their bags for financial gulag
.
its 21st century time
Let's put it in simple man terms. If the debt ceiling is raised there will be QE3 and if not we still have a chance to save our country along with the dollar. Bernanke's hands are tied until the debt ceiling is raised and it's fun watching this meglomaniac twist in the wind. Right at this moment his character and knowledge of solving this country's problems are being called out big time. If you hate what Bernanke is doing to this country you do not want the debt ceiling raised.
He who defaults first, defaults best. Get on with it.
QE3 = Ben's sorry ass finally gets arrested.
I'm for this! I think there are folks in Washington that know this too. They don't all go to work with big shoes, red noses and ride tricycles. Maybe even some folks in the FED know this is the magic reset button. Even if we think they are all dumber than a box of rocks (not my view), they might have one of their staffers read ZH and have been hearing about this...
Hmmmm....
Stanley Druckenmiller >>> The William Dudley, The Bernak
And yet, the dollar rallies.
The problem is the "real market" is as stupid as the average American.
...Or some people don't attribute the current dollar rally to the correct cause/effect relationship...
The "real market" can't be stupid. It is an organism that has two sides that constantly seek equilibrium without consideration of time...a perpetual reconciliation of eternal conflict.
When stimulus is artificially imposed on the organism from outside one side is subordinate to the stimulus therefore denying any chance at equilibrium until the artificial catalyst is removed. Once removed, the organism will seek the mean. The longer the artificial stimulus cripples the natural market the more violent the move back to equilibrium. A true market is captured in the wisdom of Doc Holliday.
"Make no mistake. It's not revenge he's after. It's a reckoning"
Tyler, there's a couple typos in an otherwise great article.
(1) "In a must read interview, the man who took on the Bank of England in 1992 and won, says that he join [join should be joined]. . . ."
(2) "Why the efficient market would mcuh [mcuh should be much]. . . ."
“In a must read interview, the man who took on the Bank of England in 1992 and won .. “
Stanley was anything other than the point man on the pound scheme in 1992. George Soros granted his underling a level of discretion but held tightly on to critical decision making functions. In fact, George had Stanley double his position before the final plan’s execution that created acute calls for Maalox, Lomotil, and Kaopectate deliveries to your man’s bathroom.
By the way, thank you for teaching me a new word—apparatchik.
Wikipedia: "Apparatchik is a Russian colloquial term for a full-time, professional functionary of the Communist Party or government; i.e., an agent of the governmental or party "apparat" (apparatus) that held any position of bureaucratic or political responsibility, with the exception of the higher ranks of management. James Billington describes one as "a man not of grand plans, but of a hundred carefully executed details."[1] It often is considered a derogatory term.[2]"
Here's another perhaps more useful one from the old version of the USSR:
The nomenklatura (Russian: ?????????????, Russian pronunciation: [n?m??nkl??tur?]) were a small elite group within the Soviet Union and other Eastern Bloc countries who held various key administrative positions in all spheres of those countries' activity: government, industry, agriculture, education, etc., whose positions were granted only with approval by the communist party of each country or region.
http://en.wikipedia.org/wiki/Nomenklatura
Thanks tired. That pretty much describes a small elite group within the United States too except that ours have positions granted only with the approval of the [fill in the black—I say banksters].
Want a gut level feel for those words, read Solzhenitsyn, "One day in the life of Ivan Denisovich"
Of course we could all wait, do nothing and experience it here personally.
The police state commeth and that right soon.
it's the damned goobermint, i tell ya:
Mr. Druckenmiller is puzzled that so many financial commentators see the possible failure to raise the debt ceiling as more serious than the possibility that the government will accumulate too much debt. "I'm just flabbergasted..."
we shall now have some national dialogue on the wrong factors overseen by elected ass-clowns, while the "new" post-glass steagall bansters do the hidee-ho with the wealth.
they ain't stoppin now.
must be fukin nice to be too big to fail...
If Jesus is right, then the "too big to fail" are fucked in the next life.
Luke 16:19-26
19-21"There once was a rich man, expensively dressed in the latest fashions, wasting his days in conspicuous consumption. A poor man named Lazarus, covered with sores, had been dumped on his doorstep. All he lived for was to get a meal from scraps off the rich man's table. His best friends were the dogs who came and licked his sores.
22-24"Then he died, this poor man, and was taken up by the angels to the lap of Abraham. The rich man also died and was buried. In hell and in torment, he looked up and saw Abraham in the distance and Lazarus in his lap. He called out, 'Father Abraham, mercy! Have mercy! Send Lazarus to dip his finger in water to cool my tongue. I'm in agony in this fire.'
25-26"But Abraham said, 'Child, remember that in your lifetime you got the good things and Lazarus the bad things. It's not like that here. Here he's consoled and you're tormented.
they were rags of many colors. every piece was small. and i didn't have a coat. it was early in the fall. we didn't have much money. i was rich as i could be in my coat of many colors mama made for me. one is only poor if you choose to be.
nice lyrics
when mamas craft things for their little children, the children remember feeling special and wonderful
Today "poor" is defined as "not having your own algorithm".
That will change soon. "Poor" will be defined as "everyone who wasn't the first to launch "Total Chaos" the evil algorithm.
onarga - very funny.
That's not the point of the parable. You need to read it all the way to verse 31. It's about the rich man's failure to believe, and his desire to warn his family members still on earth. And Jesus says "even if someone is raised from the dead, they will not believe.."
Salvation doesn't come from one's deeds. If so, we're all in the gutter and there would be no need for a Savior.
P.S. Probably a mixed signal with Jesus and f**ked in the same sentence.
Okay, I read to verse 31. I think your interpretation is correct that the rich man's failure to believe what Moses and the Prophets taught is why he finds himself in hell. (It certainly is not the fact that he was rich since Abraham was rich too but is in paradise). However, the rich man's actions/non-actions are what demonstrate his unbelief. Why else would Jesus include them in his story if they weren't important indicators?
Remember the tax collectors that believed what Jesus taught? They changed their way of life. They stopped ripping people off. That demonstrated their belief, correct?
These days, the banksters don't believe. Their actions—enriching themselves through fraud while impoverishing everyone else—demonstrate their unbelief.
P.S. Sorry, I'm a little rough around the edges.
Paper #1, Paper #2, or ....?
Why hold either piece of paper? Just hold a real asset. Anyone holding 10 year paper at these rates is an idiot. Gold does nicely. I'd rather have some gold in 10 years than a piece of paper that pays a couple of percent a year and then some more paper in 10 years.
test
Why does a sovereign nation borrow its own currency at interest from private banks? Our entire debt based monetary system is a ponzi scheme. Can I get some feedback as to why there isn't a movement for Congress to follow the Constitution and simply issue all new money directly through the Treasury? End fractional reserve lending which is legalized counterfeiting gifted to banks only! Imagine if all the money we need for infrastructure was simply issued for this use and still we'd have allowed much fewer dollars into the markets than currently through allowing banks to create money from nothing. And don't tell me about fiat currency and inflation as the current system is proof that only our beliefs give anything value.
We do NOT need to turn from having money issued by a quasi-governmental agency to having it issued by the government itself --- that is just a different flavor of statist monetary tyranny, and fundamentally solves nothing. Political power will ALWAYS trump responsibility and doing what is right for the average man, in monetary matters most of all.
What we really need is money divorced from ALL government issuance and interference --- free-market money, in other words. The separation of money and State. Until that happens, we are always going to be subject to the monetary manipulations and depredations of government.
Another really great comment! When will individuals wake up to the fact that they are personally sovereign and own themselves and should only come together as willing and cognizant participants in mutually beneficial exchange with other self-determined individuals?
you sound like a Ron Paul supporter.
Legalise competing currencies.
:-)
Ahead to the halcyon days of coin clipping and the Medici family!
Come to think of it, I think Ron Paul was neighbors with the Medicis.
Trolls are truly annoying, but Marxist trolls like you are both annoying and painfully banal.
The profound depths of your historical, political, financial and monetary ignorance are positively breathtaking --- such complete and perfect ignorance is a rare thing indeed, and is almost awe-inspiring in a perverted kind of way.
Have you heard of the Medici family, GOP boy?
Giovanni, Cosimo the Great, Lorenzo the Magnificent, Catherine, or Alessandro?
Perhaps Pope Leo X, Pope Clement VII, or Pope Leo XI?
Or maybe Cosimo II, Ferdinando, Cosimo III, or Leopoldo?
Just ask your average working stiff to tell you how our money is created, or what a fiat currency is. You'll have your answer.....
I might lament Druckenmiller's timing but had he been forthright at an earlier juncture with his allegations he might have got whacked or something. There just might be other good businessmen out there upstanding in their integrity who will also assert this information publicly now that Druckenmiller has some skin in the game.
Currently, I'm playing a game. The game is called recorded future. Have a look.
https://www.recordedfuture.com/
The stock market computers will collapse on themselves. A new government crisis's will be created & coined as reform or social discovery. This is simply from my vantage point.
here's an alternative thought...
if the inevitable outcome is default, and the choice is now or later, would it not be more prudent for the Fed and Treasury to max out the rate of issuance while there is still 'full faith' in the credit of the United States, and use the money from those issuances to buy as many REAL assets (not paper) as possible.
I.e. since China et al still want to rely on our paper, why as Treasury secretary / Fed chairman would I not issue $100 trillion additional Benny Bux and exchange them for a. full control of Petrobras, Unocal and every oil company; b. for immediate delivery of all gold in the world.
Then once the $ crashes, and creditors come due, we just say... screw it, we're defaulting, keep the IOU papers, we have the assets.
Just a counter thought...
<junk away>
It is quite disappointing to hear an advise to stop interest payments from a professional of such level. Putting aside all default/future generations rethoric, he obviously knows that the government does not have to stop interest payments in the case the ceiling is not lifted. Current interest payments are small percentage of of current tax inflows. Moreover, stopping interest payments does not solve negative government P&L even in the near term.
I do not know what type of his book he is talking. It would be disgusting to find out if he shorted treasuries in hope of such scenario. And, obviously, such scenario can not be ruled out. Our government is capable of stupidity of even grander proportions....
bkrolik - I think you misread ...Drunkermiller said he would BUY Treasuries if they missed an interest rate payment because ultimately it meant that spending was going to be cut measurably.
IMHO not disappointing at all. Every investor that appreciates the value of "free markets" and its positive impact on the socio-economic standard of life in the US should be doing so.
Unless of course they are the leeches sucking the life blood from the host (GS, money center banks in general, AIG, GM, etc..)
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What Druckenmiller neglects to reveal is that the US is in a debt trap.
My call is for full on unsustainable recognition within 15 months.
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Well as the old expression goes, "when you have small debt, it is the persons fault and he is responsible". However when you have "billions" and "trillions" at stake it is the banks or the governments problems. Inevitably the results are the same. Insolvency and bankruptcy.
what's really passe is the view that the republicans are wanting to do the fiscally responsible thing. it's a con. they will take it to the brink of default or slightly beyond so that the public becomes worried (delay some SS checks, military pay etc) then when the people are softened in their resolve they will gain consessions on some haf-assed financial gimmicks and both sides will claim victory and raise the limit - a true win-win for all but the taxpayer.
what about the recent past would lead one to believe that our government is going to do the responsible thing - nothing will change until the treasury is wasted. but everone who matters wants this game to continue - the leech does not want to kill the host.
Click below to read why silver market manipulation will not end soon:
http://thesilvergoldhedge.blogspot.com/2011/05/market-manipulation-not-t...
My thoughts exactly-- end the bullshit ponzi and this DSK fiasco allows an opportunity to end funding for such a worthless institution.
One starts with a free market until some become stronger than others, after which they order government around.
Thus, what you have is the result of a free market and capitalism, esp. given the fact that most money supply isn't created by governments or central banks but by commercial banks and private corporations.
Yeah, because Russian treasuries have the same role in the world financial system that US treasuries do. Druck is another one of our foolish overlords.