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Guest Post: Anatomy Of A Crisis: 2011

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Submitted by Charles Hugh Smith from Of Two Minds

Anatomy of a Crisis: 2011

What's behind the disturbance in the financial Force? QE, ZIRP, the dollar peg and inflation, to name a few factors.

There is a great disturbance in the world's financial Force. Many sense it as a storm on the horizon, something not yet visible but telegraphed by a rising, swirling wind and a new electric scent in the air.

I don't claim to have a complete narrative that accounts for all the points of friction wearing down the moving parts, nor do I claim a "solution." But a few observations might help inform our awareness of the disturbance.

As many of you know, readers provide most of the intelligence on this site ("of two minds, yours and mine"). I am the student and skeptic who learns from you and tries to make sense of a few dynamics, and extend them to some sort of coherent end-state. We share the same project of encouraging critical thinking.

1. There is a rising loss of faith in the conventional (i.e. propaganda) account of the U.S. economy. Readers tell me their local coin store has no silver coinage left, as the public has been buying with a vengeance. This is significant. (Silver has long been called "the poor man's gold.")

In the conventional view, the "herd" always gets it wrong: the "retail" "small speculator" investing public buy stocks and real estate at the top just as the "smart money" is distributing/selling. This "dumb money" cycle is certainly evident in manias and bubbles.

But there are also examples of "the public" acting well in advance (perhaps a form of "crowdsourcing") of the "experts."

One of the most remarkable trends of the past decade is the steady rise of the classic hedges against inflation and financial disorder: precious metals.

While the Federal government and a veritable army of conventional economists have repeatedly assured us over the past 10 years that the economy and the dollar are both sound, gold has quintupled from under $300 an ounce to over $1,500 an ounce.

Given that official inflation measured 26% for the decade 2001 - 2011, then clearly the public isn't "buying" the "sound dollar, sound economy" story.

They're also not buying the "you can't afford not to own stocks in the New Bull market" story: the public has sold some $350 billion of domestic mutual funds in the past two years.

These are unmistakable signs that the public has lost faith in the Federal Reserve's account of the dollar, U.S. stocks and the economy.

2. The idea that quantitative easing is benign has lost credibility. Even the MSM is reporting the dismal real-world results of QE2, for example, Stimulus by Fed Is Disappointing (understatement of the year?).

Another conventional view of QE--that it isn't "injecting liquidity" because it's simply an asset swap-- The end of QE and what it means for the market--misses the point, which is that boosting bank reserves (what QE accomplishes) enables additional leveraged 20-to-1 (or more) lending. QE also keeps U.S. interest rates near-zero, which encourages a carry-trade of dollars flowing around the globe seeking higher returns and offsets to global inflation, which is certainly higher than officially recognized. It’s this flow of cash that’s driving up commodity costs.

A T-Bill sits there earning interest but cash is mobile--it can go anywhere to seek a return. A T-bill cannot. So QE is not just some benign asset swap--it has the pernicious effect of feeding a vast risk trade in stocks, emerging markets and commodities.

If that flow of new cash ceases (QE ends), then the risk trade (and Treasury bonds) both lose a key support.

3. Much of the analysis of U.S. policy is narrowly U.S.-centric. The U.S. has often ignored the international consequence of its parochial concern with domestic politics. Indeed, the U.S. has dropped 5 million tons of bombs and killed 500,000 people (as well as cost its own citizens their lives) overseas in pursuit of domestic policy ("we can't 'afford' to lose Vietnam to the Commies because that would cost me the election.")

This blindness to the consequences of domestic policy is most striking when it comes to China.

The key dynamic is the linkage of the renminbi (yuan) and the U.S. dollar.
When the dollar tanks, oil rises when priced in dollars--and thus it also rises when priced in yuan. Thus the decline of the dollar and the consequent rise in commodities has directly fueled inflation in China, which is more dependent on a per capita basis on materials than the U.S.

Yes, the yuan peg has declined from the 8.5 range down to 6.5 to the USD, but it is still firmly pegged. As the cost of materials priced in dollars soars, it feeds higher input costs in China.

China's policy-makers have exacerbated inflation by excessive money creation and lending by their own banks, but that alone is not sufficient cause for gasoline/petrol to cost as much in China as it does in the U.S. Oil is the foundation for petrochemicals, fertilizers, transport, plastics, etc., so the rise of oil driven by dollar depreciation is a driver of inflation throughout the Chinese economy.

No wonder the Chinese leadership is unhappy with the Fed's crush-the-dollar strategy.

Though the cost of soy beans imported from the U.S. remains fixed in terms of currency, the relentless rise in oil is also raising the cost of China's imports which are heavily dependent on oil, such as soy beans from the U.S.

4. China appears to be in the grip of a classic wage-price spiral inflation.
Minimum wages are leaping by 25%, prices of many food items are doubling--this self-reinforcing dynamic is clearly visible in China. That is not the case in the U.S., which is being throttled by stagflation (rising prices and stagnant wages except for the top tier).

As I have noted before, price inflation in essentials hurts the lower income citizenry much harder than the top tier, as essentials make up a much larger percentage of the household expenses. A 30% jump in the cost of gasoline means little to a household in which gasoline accounts for 2% of total net income, but it certainly hurts a household in which gas accounts for 10% of total net income.

As noted in Your Pick, Ben, But One Goes Off the Cliff, the Fed's ZIRP and QE policies have pared future policy down to a stark fork in the road: end ZIRP and QE, and send the risk trade (stocks and commodities) off the cliff, or keep pushing the dollar down and the rising cost of oil will shove the U.S. economy over the cliff.

That would also feed inflation in China, which already threatens to destabilize its economy. Correspondents within China recall that rising inflation was an important (if conveniently forgotten) dynamic in the 1989 era of dissent and disruption. The heavy-handed repression of domestic dissent and foreign reporting is evidence that the leadership in China has a keen appreciation of the connection between instability and rampant inflation.

So why is the Fed carpet-bombing the global economy? To protect the domestic economy? That makes no sense, for the Fed's policies are pushing oil up to the point where there is no way to keep the U.S. economy from tipping into recession. It isn't acting on behalf of the domestic economy, of course; it's acting on behalf of domestic banking and Wall Street.

The Fed is busily destroying the village, suposedly to save it--only it's the global village. But the Fed isn't the only player with a stake in its game, and the other players, notably China, are tipping their hand that they will have to act, and soon, to protect their own domestic economies from the Fed's destructive policies.

Additional note: I have often asked how hyperinflation would benefit the Financial Elites; blogger FOFOA kindly offered a detailed answer.

 


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Mon, 04/25/2011 - 11:39 | Link to Comment SparkyvonBellagio
SparkyvonBellagio's picture

End the FED permanently!

Send those pricks packing.

 

"It's what the rich have been doing to the poor since the beginning of time"

Mon, 04/25/2011 - 11:48 | Link to Comment TruthInSunshine
TruthInSunshine's picture

People who are aware of the danger represented by The Federal Reserve need new and powerful tools to get the sheeple to understand how they are being ass raped by The Bernank.

The problem of effective communication exists due to the relative complexity by which The Central Banksters operate and obfuscate, and due to the relatively short attention span and low interest in anything economic on the part of the average sheeple.

A placard illustrating The Bernank jamming a $5 per gallon gas pump handle or a $2.99 Green Pepper up the ass of a bent over taxpayer would do wonders in conveying the essentials.

Mon, 04/25/2011 - 12:23 | Link to Comment williambanzai7
williambanzai7's picture

Mon, 04/25/2011 - 12:33 | Link to Comment augie
augie's picture

certainly gets the point across. May want to dumb it down just a little more for, you know, EVERYONE!!

Mon, 04/25/2011 - 12:40 | Link to Comment Henry Chinaski
Henry Chinaski's picture

$5 gas nostalgia, coming soon to a gas station near you.  bitchez.

When gas broke $1/gal to there was a big scramble to fix the signs made for xx¢/gal. 

Gas stations need to get out in front of it this time. $xx.xx

Mon, 04/25/2011 - 13:31 | Link to Comment Spastica Rex
Spastica Rex's picture

Nah, just drop a zero off the dollar. Everything fixed.

Mon, 04/25/2011 - 12:44 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Thanks, WBZ. That's awesome! The "inflation enema" flush is a magical touch, and just redeems your genius.

If I could get everything I ever wanted, it would be an apostrophe followed by a "BITCHEZ!" after 'Enemas.'

If you have time, friend.

 

How much for an order of bumper stickers and maybe some 24" by 36" posters? These would be amazing to plaster everywhere. What about dubbing in a smiling, contorted, large headed The Bernank as gas station attendant, doing the jamming of the pump handle?

Edit - it's probably best as is. The incorporation of the term 'Bitchez' would scare the sheeple and be lost on the masses as a term of affection in the annals of Zero Hedge.

 

Mon, 04/25/2011 - 12:32 | Link to Comment Stranded Observer
Stranded Observer's picture

Laughing my ass off!  Well done!

Mon, 04/25/2011 - 12:33 | Link to Comment SheepDog-One
SheepDog-One's picture

LOL can I have that one?

Tue, 04/26/2011 - 01:57 | Link to Comment williambanzai7
williambanzai7's picture

You can get everything in the shop www.zazzle.com/williambanzai7 or you can print it off on your own ;-)

Mon, 04/25/2011 - 12:57 | Link to Comment thames222
thames222's picture

"Like" this post ;)  where did you find this pic?  I have yet to see $5 in California but I'm sure it will be soon.

 

www.forecastfortomorrow.com

Mon, 04/25/2011 - 15:16 | Link to Comment Minyan Vince
Minyan Vince's picture

Mon, 04/25/2011 - 16:10 | Link to Comment akak
akak's picture

I do not have the image posting rights which you posess, but in all fairness and for a truly valid statement, let us see you post the corresponding graphs of total US money supply and the US federal debt.  Not so eager to post those charts, are you?

Mon, 04/25/2011 - 23:11 | Link to Comment rocker
rocker's picture

Why didn't you go back to the 70's.   Takes on a whole different vibe.  Then compare it to Gold on the same chart.

Silver is still cheap.     And don't forget to overlay Oil on the same chart.  

Mon, 04/25/2011 - 17:14 | Link to Comment Soul Train
Soul Train's picture

Question : who recalls the spin that the US government provided for the end of silver currency in '64?

I remember the event well, but can't seem to remember exactly how they broke the news to the sheople?

Mon, 04/25/2011 - 23:11 | Link to Comment rocker
rocker's picture

Ancient Silver Coins have existed since Caesar and the Roman Empire. Silver still exist. The U.S. Empire is in waiting.

How many can figure out which one survives.  Hint: U.S. status:  "We are Japan now".  This is the End my Friend.   

Mon, 04/25/2011 - 11:38 | Link to Comment Thorlyx
Thorlyx's picture

He who will not economize will have to agonize.

Confucius

Mon, 04/25/2011 - 11:41 | Link to Comment lolmao500
lolmao500's picture

Heard CNBC say ``Buy silver`` on air... Time to sell!

Mon, 04/25/2011 - 11:55 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

I missed that.  I would wait for more BUY SILVER NOW! ads before I got rid of all of mine.  

Of course with silvers big run-up lately, a switch into gold from silver might be a good idea, I am going to do just that soon.  Some silver.

Mon, 04/25/2011 - 13:00 | Link to Comment thames222
thames222's picture

It's almost a little late but do it now if you're going to...your gold is going to increase in the next five or so, don't switch--diversify!

 

www.forecastfortomorrow.com

Mon, 04/25/2011 - 12:14 | Link to Comment Manbarepig
Manbarepig's picture

Yes, but was it preceeded by the statement "I don't understand why people..."  ?

Mon, 04/25/2011 - 12:50 | Link to Comment SheepDog-One
SheepDog-One's picture

That was just a sentence fragment, the entire sentence from Burnett was 'Geithner tells me only IDIOTS want to -buy silver-'.

Mon, 04/25/2011 - 16:20 | Link to Comment SkySavage
SkySavage's picture

If there is another financial crisis, silver will crash, a la 2008. Now that CNBC is pumping metals, the countdown clock has offically started ticking. Perhaps it is checkmate for the fed this Wednesday?

Mon, 04/25/2011 - 16:28 | Link to Comment akak
akak's picture

If there is another financial crisis, silver will crash, a la 2008.

Why do you assume that?

Yes, that does seem to be the spoken and unspoken assumption of almost everyone --- which is why I believe that it is NOT going to happen.  All I see in this assumption are a multitude of generals preparing to fight the last war --- and we all know how well THAT usually works out.  "Maginot Line", anyone?

Mon, 04/25/2011 - 16:59 | Link to Comment Soul Train
Soul Train's picture

Akak, in the very short term, one could postulate that on an equity market crash, there will be some investors who need the cash for numerous reasons. And then hysteria would cause others just to cash out while the price drops.

Long term: silver is on the up and up, together with other commodities.

The Fed money cartel is in the corner. How will they get themselves out??? God bless gold and silver.

Mon, 04/25/2011 - 11:41 | Link to Comment augie
augie's picture

HAH. Don't believe everything you read she...i mean people. Just look at what our friends from CBS are telling us. All these facts are false but people still think they're true!

http://chicago.cbslocal.com/photo-galleries/2011/04/22/dont-believe-ever...

 

Wink*

Mon, 04/25/2011 - 11:45 | Link to Comment Johnny Lawrence
Johnny Lawrence's picture

I don't understand why the MSM (and most others for that matter) keeps saying QE2 decreased interest rates.  It did the exact opposite.

Mon, 04/25/2011 - 12:39 | Link to Comment YC2
YC2's picture

I think this is important to note, and I wouldnt doubt the point was lost on the Fed.  They are smart, they may just be a bit myopic and talk down to the public as a tool.

However, this would be info Im not sure they would gamble on.  They arent traders for sure.

Or they could have seen it the other way, rates went up because the bid they offered was less than expected.

Either way, interesting times..

Mon, 04/25/2011 - 12:58 | Link to Comment A Lunatic
A Lunatic's picture

And this is a good thing according to them? It seems to me that artificially low interest rates contributed heavily to the regularly scheduled fleecing of the Middle class.

Mon, 04/25/2011 - 14:22 | Link to Comment YC2
YC2's picture

Yeah, the interest rate is the one place where supposed "capitalists" dont trust the market.  So we are constantly malinvesting or underinvesting based on people who supposedly know better than the market, and control the currency, setting rates.  And this is just a simple assessment of it.  The most emcompassing view is just that it is necessary to maintain the ponzi.

 

I watched atlas shrugged part 1 with the gf this weekend.  Hard to believe she was pals4eva with central planners like Greenspan.  She is such an absolutist, I imagine there was quite the elephant in the room that had to be talked around.

Mon, 04/25/2011 - 15:19 | Link to Comment A Lunatic
A Lunatic's picture

And as you may know, Greenspan was one of the biggest proponents of the gold standard ever............until he got the FED job. Hmmmmmmmm..........something about power corrupts and absolute power..........

Mon, 04/25/2011 - 11:43 | Link to Comment TruthInSunshine
TruthInSunshine's picture

The Bernank's 'virtuous circle' has turned into a 'vicious circle jerk', with the TBTF ringing the circle, and taxpayers in the center.

The Bernank & Crew are treasonous bastards if there were ever such people in history.

Treat accordingly.

 

The Ben Bernank says "I am Shiva, destroyer of worlds."

Mon, 04/25/2011 - 11:46 | Link to Comment Cassandra Syndrome
Cassandra Syndrome's picture

This is the best website on the net.

Mon, 04/25/2011 - 12:31 | Link to Comment falak pema
falak pema's picture

apart from all others? aka WC!

Mon, 04/25/2011 - 16:55 | Link to Comment Soul Train
Soul Train's picture

It is the best website on the net, and so far we have the best readers and posters too. Hope we can keep it that way.

It will be fun watching life, as the Federal Reserve self destructs. The tyranny has gone on too long.

Will someone tell me how the Fed money cartel is going to get themselves out of the corner.

Long term - silver is going ever higher. Never know about the short term.

ZeroHedge is the place to be watching it though! No other media in the world does a better job.

Keep up the good work ZH and readers.

Mon, 04/25/2011 - 17:56 | Link to Comment Neo-zero
Neo-zero's picture

Long term - silver is going ever higher. Never know about the short term.

 

True dat!  I've been reading about the historical silver/gold ratio and the highest I've heard of was a 17/1 in the 1800's.  Lets say it only gets to 20/1 and gold doesn't move a dollar from this point on, can you say 75$ silver I' know you can.  Question is will we get a pull back or pause to provide some kinda buying point.  I'm thinking not a chance as the Chinese start unwinding their positions.

Mon, 04/25/2011 - 18:53 | Link to Comment Neo-zero
Neo-zero's picture

Long term - silver is going ever higher. Never know about the short term.

 

True dat!  I've been reading about the historical silver/gold ratio and the highest I've heard of was a 17/1 in the 1800's.  Lets say it only gets to 20/1 and gold doesn't move a dollar from this point on, can you say 75$ silver I' know you can.  Question is will we get a pull back or pause to provide some kinda buying point.  I'm thinking not a chance as the Chinese start unwinding their positions.

Mon, 04/25/2011 - 11:49 | Link to Comment anony
anony's picture

Aside from the negative social effects rising prices have on lower stagnant incomes, it seems right and proper in the natural world that, 1) if one has done the minimum level of striving (whether by choice or because of physical and mental limitations) to earn an income, 2) that that income SHOULD be consumed 100% in providing oneself with that needed to survive: food, drink, clothing, shelter, and TIVO.

Surplus is what is supposed to remain AFTER the basics are taken care of.  Since most of the proletariat do the minimum level to survive, perhaps even less when time goofed off is considered, then heaven forbid that theBernank is right: Food and Energy is where the entire income of the masses should be spent, the effects of rising prices on those items the benchmark for Cost of Living. Not Living and saving.

 

Mon, 04/25/2011 - 11:50 | Link to Comment lolmao500
lolmao500's picture

I really hope Ben does QE3. The US is screwed anyway, better destroy it completly the hyperinflation way.

 

But since that won't help the elite... that's not what they gonna do. They gonna do a deflation depression so debtors are debt slaves.

 

So... what should we own for a deflation depression? Not gold or silver, I can tell ya that.

Mon, 04/25/2011 - 11:51 | Link to Comment SparkyvonBellagio
SparkyvonBellagio's picture

I bet the poor are a lot tougher than the rich.

It'll be WAR.

A CLASS WAR.

Guess who wins that one?

Mon, 04/25/2011 - 12:09 | Link to Comment grunk
grunk's picture

Insects.

Mon, 04/25/2011 - 11:54 | Link to Comment Timmay
Timmay's picture

Corporate Bonds.

Mon, 04/25/2011 - 12:00 | Link to Comment mach777
mach777's picture

FOFOA argues that a hyperinflationary scenario benefits the "elite" more than a dragged out deflationary depression.

http://fofoa.blogspot.com/2011/04/deflation-or-hyperinflation.html

He who gets to spend first, spends best.

Mon, 04/25/2011 - 13:05 | Link to Comment A Lunatic
A Lunatic's picture

I think that all depends on what new social policies one is attempting to instill amongst the masses. Well fed people are hard to corral.

Mon, 04/25/2011 - 12:06 | Link to Comment MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

 They gonna do a deflation depression so debtors are debt slaves.

You might want to look more closely at your assumptions about this relationship.

Mon, 04/25/2011 - 12:48 | Link to Comment SheepDog-One
SheepDog-One's picture

I'd agree, turn silver and gold profits into protection and food. You can eat it.

Mon, 04/25/2011 - 13:15 | Link to Comment malek
malek's picture

Another one who doesn't get it, that if you state "They gonna do a deflation depression" you actually believe we will have a (planned, orderly) return to sound money.
Good luck with that hope! You will dearly need it.

Mon, 04/25/2011 - 11:53 | Link to Comment russwinter
russwinter's picture

 

Corporations and Plutocrats Given a Tax Holiday as US Heads for Fiscal Trainwreck

http://www.wallstreetexaminer.com/blogs/winter/?p=3868

 

Mon, 04/25/2011 - 12:03 | Link to Comment Printfaster
Printfaster's picture

Clearly you do not understand the impact of taxation.

Taxes are used to discourage activity,for example taxes on liquor, and tobacco.

So if you want to discourage private investment, private economic activity, tax corporations.

In order to distribute jobs more fairly, the government has set up payroll taxation to discourage poeople from working.

Wherever you see taxes, you see discouragement.  What do you want to discourage?

Mon, 04/25/2011 - 12:34 | Link to Comment russwinter
russwinter's picture

Taxes on corporations are the lowest in modern history, and your investment theory isn't working.  That's because taxes this low just encourage gaming and looting. 

Mon, 04/25/2011 - 13:30 | Link to Comment MachoMan
MachoMan's picture

Ok.  So if the government has increased revenue, then it will all be spent prudently and without influence?  How is it you plan to attract capital in a world economy where you are the most expensive country to operate in?  Do we need capital investment given our predominantly service based economy?  This stuff is pretty basic.

You want to know what encourages gaming and looting?  Cheap credit combined with an overactive and easily persuaded legislature.

Mon, 04/25/2011 - 14:01 | Link to Comment russwinter
russwinter's picture

These are straw men arguments, that have little to do with the main points of my article.  To run a balanced government, taxes should be increased to about 16-17% of GDP (now 14%), and expenditures reduced to 20-21% (now 26%). Nothing to controversial about that in my book. 

Mon, 04/25/2011 - 15:53 | Link to Comment MachoMan
MachoMan's picture

errr...  16-17%<20-21%...  maybe I'm missing something.  When government expenditures affect GDP, I have to wonder if referencing GDP is that helpful when attempting to balance our finances...  how GDP is calculated (and by whom) aside.  What happens when GDP continues to fall off a cliff, but yet our existing debt remains?  Of what fruitful purpose is balancing a budget when the country is insolvent?  To kick the can further?

PS, humans have yet to achieve a "balanced" government...  so, I'm just a little skeptical of your myopic proposal.  You can decide to focus solely on having a "balanced" budget, but miss the boat on, frankly, more important issues...  such as pre-existing debts and moral hazard...  picking winners and losers...  the like.

Tue, 04/26/2011 - 07:18 | Link to Comment BigJim
BigJim's picture

Wow. 6 junks for pointing out the obvious.

Corporations shouldn't be taxed at all.

If you ask 100 people if the think a 'big' corporation that made profits of 10 Billion dollars should be taxed at a higher rate than a 'small' corporation that made profits of 10 million dollars, 99 of them will say, yes, of course.

If you then point out that the 'big' corporation may have a million shareholders, meaning they're getting $10,000 each, whereas the 'small' corporation may have 2 shareholders, each getting 5 million dollars, they look a bit confused.

Don't tax the corporations. Eliminate all the tax loopholes, and tax the shareholders.

Mon, 04/25/2011 - 11:59 | Link to Comment Printfaster
Printfaster's picture

At the end of the day, you can have a deflationary depression, but there is no money to pay the debt that the federal government is generating, and has generated.

There are only two ways out:  hyperinflation/monetization or treasury debt repudiation.  What do the elites want?  Well Gross is betting on repudiation.  Given the politics of China, what I could see is that all short treasury debt gets converted to 30 and 50 year bonds, at the current rate.  Kicks the can down the road for all.

 

Mon, 04/25/2011 - 12:51 | Link to Comment bothsidesnow
bothsidesnow's picture

You forgot one reverse repo with all the reserves Ben has given the banks. Ben and gubbmint bail the banks out and now the banks bail Ben and the gubbmint out a movie coing to a theater near you with previews to be shown Wed afternoon April 27, 2011.

Mon, 04/25/2011 - 15:03 | Link to Comment tired1
tired1's picture

Repudiate both China and Fed debt? I cant see the gov not honoring the Fed.

How about start a war with China (a small one in Afganistan) while keeping the Fed debt going.

Mon, 04/25/2011 - 12:03 | Link to Comment Idiot Savant
Idiot Savant's picture

But the Fed isn't the only player with a stake in its game, and the other players, notably China, are tipping their hand that they will have to act, and soon, to protect their own domestic economies from the Fed's destructive policies.

China has tipped their hand that they're going to exacerbate the problem by selling Treasuries, thus causing more inflation? Really?

I think this is a game of chicken. Ben says un-peg or we'll keep printing. China says quit printing or we'll dump US paper.

How does China win in this game?

Mon, 04/25/2011 - 12:21 | Link to Comment SparkyvonBellagio
SparkyvonBellagio's picture

CHINA is in it for the long haul. 

50-100-500-1000 years at a time.

 

USA and the WEST is in it for 50-100-500-1000 hours before they expect a result.

 

 

 

Mon, 04/25/2011 - 12:38 | Link to Comment falak pema
falak pema's picture

the long haul is the same for all. Nobody plans beyond ONE generation in a meaningful way. As their own life span goes no further than the next generation!

Mon, 04/25/2011 - 12:29 | Link to Comment sethstorm
sethstorm's picture

They don't.

Mon, 04/25/2011 - 14:49 | Link to Comment SilverBaron
SilverBaron's picture

Or maybe they do, because they have an unarmed populace.  No matter how bad things get there they can just gun down all opposition.  The U.S. on the other hand...

Hence the push for disarming the U.S. population.  (small arms treaty, assault rifle ban, etc.) 

Mon, 04/25/2011 - 12:34 | Link to Comment css1971
css1971's picture

They unpeg and allow the yuan to appreciate to limit inflation and develop a domestic consumer, and spend their USD holdings buy commodities and strategic businesses. Over a 5 year period.

Ben stops printing, the Chinese dollars come home => QE3 and Chinese imports drop. Ben starts winding in the dollars via reverse POMO.

 

Mon, 04/25/2011 - 12:59 | Link to Comment bothsidesnow
bothsidesnow's picture

I believe number 2 is about to happen - Ben starts winding the dollars in via reverse POMO. Banks have ample reserves to purchase treasuries and another signal was the expansion of the reverse POMO parties from the Primary Dealers to a broad array of financial institutions.

Effective January 31, 2011, the New York Fed has accepted the following money market funds as reverse repurchase transaction counterparties. This is in addition to the primary dealers and previously approved reverse repurchase transaction counterparties.

http://www.newyorkfed.org/markets/expanded_counterparties.html

They can spread the pain around now.

 

Mon, 04/25/2011 - 13:39 | Link to Comment css1971
css1971's picture

Interesting, I got junked because?  It solves the problem?

  • China is made to stand on it's own feet. Hell, they get to spend the dollars they have accumulated.
  • American inflation is controlled, the chinese "nuclear option" is neutralised.
  • No hyper inflation or deflation; the can just gets kicked another decade down the road. Your common or garden normal inflation.

If this is actually what happens, it's genius & Ben is worth every penny. (Assuming it wasn't the Chinese idea.)

Mon, 04/25/2011 - 13:56 | Link to Comment Idiot Savant
Idiot Savant's picture

Sadly, I think a lot of ZHers want some type of collapse or calamity, hence the junks.

 

I hope you're correct though. While we don't have a perfect system, I've grown accustomed to unlimited food, fuel, energy, etc.. I'm in no hurry for any suffering. Kicking the can for another decade is perfectly fine with me.

Mon, 04/25/2011 - 14:24 | Link to Comment bothsidesnow
bothsidesnow's picture

+1 A lot of them can't wait to wave their shiny silver dollars and their glocks at the rest of us who didn't buy silver at $5. 

 

Mon, 04/25/2011 - 16:16 | Link to Comment akak
akak's picture

Take your disingenuous PM-bashing trolling and your bitter envy and shove it up your ass.  I have seen more than enough of your absurd and intellectually insulting deflationary fearmongering and implicitly pro-bankster propagandizing to recognize yet another insidious spreader of misinformation, disinformation and lies.

Mon, 04/25/2011 - 16:21 | Link to Comment akak
akak's picture

Take your disingenuous PM-bashing trolling and your bitter envy and shove it up your ass.  I have seen more than enough of your absurd and intellectually insulting deflationary fearmongering and implicitly pro-bankster propagandizing to recognize yet another insidious spreader of misinformation, disinformation and lies.

Mon, 04/25/2011 - 14:46 | Link to Comment css1971
css1971's picture

Sorry, in this scenario,  the USD largely loses it's reserve status.

China stops accumulating dollars & treasuries, which means

  • US Gov has to reduce spending
  • US consumer (you) has to start earning money and not binging on credit

because you no longer get to export inflation to the rest of the world.

The can gets kicked, but Interest rates & inflation are higher. No unlimited food & energy, you're now competing with Chinese people as the RMB appreciates.

Gold & silver remain inflation hedges.

Mon, 04/25/2011 - 15:21 | Link to Comment A Lunatic
A Lunatic's picture

........with declining wages and a lower standard of living as icing on the cake. See, you can have your cake and eat it too.

Mon, 04/25/2011 - 14:26 | Link to Comment bothsidesnow
bothsidesnow's picture

I get junked for the same reason they can't have a solution becuase it busts their one sided position.

Mon, 04/25/2011 - 15:00 | Link to Comment victor82
victor82's picture

For the last 100 years, China has been through the Independence Movement, the initial split in Sun's Nationalist Front between the KMT led by Chiang and the much smaller Communists led by an obscure young firebrand named Mao. They then had Manchuria lopped off by Japanese imperialists, followed by famine and warlordism.

The Japanese went on a near-genocidal rampage beginning in 1937 and China never looked back. Chiang's government lost most of its face when it failed to mount a struggle to oppose Japan's occupation of Manchuria. It's fecklessness in the face of Japan's armies made it's legitimacy even more questionable. The KMT survived WWII in name only. The only surprise about Mao's conquest of China after WWII was that it took so long.

The Old Man went crazy after fighting the Americans to a draw in Korea. The Great Leap Forward led to the untimely deaths of Thirty Million Chinese, including Mao's greatest Marshal, Peng Deheui, who was responsible for embarrassing MacArthur at the Chongchon River in 1950. Mao followed up his bloody purges with the Cultural Revolution which led to the deaths of several million more innocent people.

China did not stabilize until long after Mao passed into history.

Thank you very much, but I'm going to bet on a nation run by adults, those people whose ancestors had to endure this kind of terror and came through it to build modern China. 

We had a choice, and we elected petulant Baby Boomers to lead us. What did WE elect to do? Elect people like Bush and Obama, poodles of the Banksters who cooperated in the hollowing out of the very sinews of our manufacturing plant.

China wins this game. It's one we shouldn't even play.

Mon, 04/25/2011 - 12:08 | Link to Comment michigan independant
michigan independant's picture

New federal law will require many area school districts, like Hudsonville and Jenison, to raise their lunch prices nearer the amount of government subsidy for low-income students.

Here’s how it works:

Hudsonville and Jenison charge lunch prices of $2, $2.25, $2.50 and $2.75 at various campuses. That’s an average price of $2.37.

The feds want schools to charge an average of $2.46, which is the amount of federal reimbursement for low-income students, $2.72 per meal, minus the amount of reimbursement for full-pay meals, 26 cents

Because Hudsonville and Jenison charge less than $2.46, they will have to increase their average price by 2 percent plus the rate of inflation.

There you have the current Official FED rate mandate to Americans. From the mouth of babes. Plug it into MIT

Mon, 04/25/2011 - 12:04 | Link to Comment Rainman
Rainman's picture

I'm beginning to sense that the MSM is waking from their hopey-changey slumber. NYT says QE2 has been a " disappointment ". Now WaPo wades through the sewage of the GM and AIG bailouts......topics we've pounded to death here on ZH for a year !!

http://www.washingtonpost.com/opinions/the-big-sell-out/2011/04/22/AFOrPudE_story.html?hpid=z5

Mon, 04/25/2011 - 12:26 | Link to Comment Henry Chinaski
Henry Chinaski's picture

Yes, a notable change in tone from MSM over the weekend.  S&P downgrade, the budget and debt limit debates, PM rally, statements from officials and bold talk from one-eyed fat men...  Something is afoot. 

Mon, 04/25/2011 - 13:31 | Link to Comment Sunshine n Lollipops
Sunshine n Lollipops's picture

Hey, it's not like they suddenly 'caught on' or decided to actually start reporting facts. It's just the next page in the script. The MSM exists for the dissemination of propaganda. Period.

Mon, 04/25/2011 - 14:35 | Link to Comment Rogerwilco
Rogerwilco's picture

A change in tone from the MSM? Nothing that a couple of billion in reelection campaign advertising buys can't fix. And don't forget China -- they now have what amounts to veto rights over Hollywood productions.

The MSM is a sad dog, leashed and muzzled.

Mon, 04/25/2011 - 12:07 | Link to Comment flattrader
flattrader's picture

Yawn.

CHS yelling at the rain again.

We have read this same essay from him regurgitated in different forms for moths now.

The lack of originality is stunning.

Mon, 04/25/2011 - 12:10 | Link to Comment European American
European American's picture

"War is our business, and business is good"

 

 

Mon, 04/25/2011 - 12:10 | Link to Comment AldoHux_IV
AldoHux_IV's picture

End the fed, take down the centrally planned genocidal maniacs, and eliminate the global world elite-- it's the only way to end the slavery.

Mon, 04/25/2011 - 12:40 | Link to Comment falak pema
falak pema's picture

you sound like the Savage! didn't end well!

Mon, 04/25/2011 - 12:14 | Link to Comment lieutenantjohnchard
lieutenantjohnchard's picture

we're repeatedly told that the dumb money public is buying silver. then we're shown a chart of metal holders and find that barely anybody has silver and gold. so how can we call the public dumb when a) we're told the public has no money b) widespread silver holding is negligible.

i also love the altruistic posters at zh who tell us that we ought to sell our metals before it's too late. then they tell us they gotta leave the site to go polish their porsche as if that is supposed to show us how wise and wealthy they are. what a crock.

Mon, 04/25/2011 - 12:17 | Link to Comment 10kby2k
10kby2k's picture

Bonds up (?) (sic) again today?  2.09% 5 year?  Force all cash into risk assets? But, home are down? wtf? Why even have a Fed news confrence? It'll all be double talk. Where the fuck is some straight talk. Why do I have to play their game? Dare me to bet on the lengths of their insanity?

0% short term rates during stagflationary era? 

How do you explain the Fed and wall street to a child? How do you explain diabolical perversion?

Mon, 04/25/2011 - 13:13 | Link to Comment A Lunatic
A Lunatic's picture

How do you explain the Fed and wall street to a child?

Easy. Let them work their asses off all summer for you as you "invest" the majority of their wages in order to reap massive returns that they may retire at the ripe old age of 14. Then when they want their money simply tell them to fuck off.

Mon, 04/25/2011 - 17:28 | Link to Comment andybev01
andybev01's picture

Hmmm; that was pretty lucid for a lunatic...

Mon, 04/25/2011 - 12:17 | Link to Comment Henry Chinaski
Henry Chinaski's picture

A T-Bill sits there earning interest but cash is mobile--it can go anywhere to seek a return. A T-bill cannot. So QE is not just some benign asset swap--it has the pernicious effect of feeding a vast risk trade in stocks, emerging markets and commodities.... If that flow of new cash ceases (QE ends), then the risk trade (and Treasury bonds) both lose a key support.

Ask yourself, when the risk trade and Treasuries lose a key support, who is left holding the bag?

 

In FIN 101, I was taught the The Three Rules.

  1. A dollar today is worth more than a dollar tomorrow.
  2. All financial decisions are marginal decisions.
  3. Cash is king.

Good luck trading or investing when the first rule no longer applies.

Mon, 04/25/2011 - 12:28 | Link to Comment Tramp Stamper
Tramp Stamper's picture

The first rule does no longer apply

Mon, 04/25/2011 - 17:28 | Link to Comment johnnynaps
johnnynaps's picture

How does the first rule not apply? Have you seen the dollar trend recently?

Mon, 04/25/2011 - 13:50 | Link to Comment Magnix
Magnix's picture

1.) Cash is worthless.

2.) Silver/Gold are the Kings.

Mon, 04/25/2011 - 12:17 | Link to Comment CelticWarrior72
CelticWarrior72's picture

Silver is definitely getting frothy.  I sold 1/3 of my position today for a 200% gain.  I'll let the rest ride from here.

Mon, 04/25/2011 - 12:29 | Link to Comment 66Sexy
66Sexy's picture

sooo. now what?

 

what will you do now that you have a declining liability instead of a rising asset?

A liability costs money to hold. If the dollar continues to drop, it becomes a liability because you have to act or it costs you money to hold dollars.

Silver is still rising. The rise before the china annoucement is key. We are approaching a new dollar paradigm that is called 'revaluation through devaluation'.

Mon, 04/25/2011 - 12:32 | Link to Comment Henry Chinaski
Henry Chinaski's picture

Buy gold?

BTW Warrior, nice play to have a "free" pile of silver.

Mon, 04/25/2011 - 12:38 | Link to Comment CelticWarrior72
CelticWarrior72's picture

I like hard assets at the right price - metals, soft commodoties, real estate, etc.  I'm beginning to like platinum for its price relative to gold.  Considering that my mortgage is denominated in dollars, I consider any of my cash holdings to be a hedge against that debt.  It's a win-win really.  And, I've been around a while.  I've seen frothy before a few times.  falling in love with a trade is a sure fire way to disaster.

Mon, 04/25/2011 - 13:20 | Link to Comment malek
malek's picture

Huh? The best hedge for debt would be paying it off.
I hold a bit platinum myself to diversify my PMs, but I don't believe it will move much now, especially compared to gold and silver. Seems to me the price of platinum is mainly correlated to auto production (catalytic converters).

Mon, 04/25/2011 - 13:09 | Link to Comment Jonas Parker
Jonas Parker's picture

Great move Dude! Silver is up $.67 as I type this, and the dollar is down .081. You're as logical as my late mother's stock broker (the only one broker was my mother).

Mon, 04/25/2011 - 12:21 | Link to Comment 66Sexy
66Sexy's picture

Gold and silver are the 'RAID' for the plague of locusts known as the Federal Reserve.

Mon, 04/25/2011 - 12:43 | Link to Comment SheepDog-One
SheepDog-One's picture

Swap silver for firearms and ammo, and a decent stockpile of food.

Mon, 04/25/2011 - 12:58 | Link to Comment tomster0126
tomster0126's picture

Don't forget to buy seeds!  any arable land that you can swoop up now will be invaluable in the future.  and of course stockpile your gasoline just in case :)

 

www.forecastfortomorrow.com

Mon, 04/25/2011 - 15:35 | Link to Comment Great Dane
Great Dane's picture

Ya know, I believe that arable land will be like assault rifles, easier to find than precious metals in the STHF Scenario.  IF things get so bad that I have to start farming, then boy it's going to be a brave new world indeed.  (p.s.) all these cowboys with brand new unused rifles will probably be first to fall and will be gun 'donaters' to more experienced people anyway.

Mon, 04/25/2011 - 15:37 | Link to Comment A Lunatic
A Lunatic's picture

Or they will have traded them for food and medicine for Timmy under the cloak of darkness and anonymity thereby retaining their status as armchair Patriots on their many unsecured blogs, chat rooms, and Internet forums.

Mon, 04/25/2011 - 15:47 | Link to Comment Slipmeanother
Slipmeanother's picture

There is always some one with a bigger gun. Keep the silver and buy the biggest guy with the biggest gun

Mon, 04/25/2011 - 17:07 | Link to Comment Soul Train
Soul Train's picture

Actually for the first time in my life, stocked up on large sacks of rice, oats, and beans. If nothing else, fishfood.

Americans need to evaluate how life would change once riots like seen today in Greece, and the Middle East hit the American shores.

Watch what happens to silver (the poor man's gold) then.

Mon, 04/25/2011 - 12:25 | Link to Comment sethstorm
sethstorm's picture

3. Much of the analysis of U.S. policy is narrowly U.S.-centric. The U.S. has often ignored the international consequence of its parochial concern with domestic politics. Indeed, the U.S. has dropped 5 million tons of bombs and killed 500,000 people (as well as cost its own citizens their lives) overseas in pursuit of domestic policy ("we can't 'afford' to lose Vietnam to the Commies because that would cost me the election.")

The US is not obligated to care about the rest of the world from a non-US perspective.  Perhaps selling out the US wasn't so good of an idea for those who support that idea. 

 

So why is the Fed carpet-bombing the global economy? To protect the domestic economy? That makes no sense, for the Fed's policies are pushing oil up to the point where there is no way to keep the U.S. economy from tipping into recession. It isn't acting on behalf of the domestic economy, of course; it's acting on behalf of domestic banking and Wall Street.

Deal with the oil problem until it goes back down, even if it takes a loophole-free, entire supply chain version of Nixon's policy.  Handle the Fed-sourced problems separately.

Tue, 04/26/2011 - 07:33 | Link to Comment BigJim
BigJim's picture

The US is not obligated to care about the rest of the world from a non-US perspective.

The US may not have an obligation to 'care' about the rest of the world, but that is quite different from the US not having an obligation not to go around killing large numbers of people.

Mon, 04/25/2011 - 12:41 | Link to Comment carbonmutant
carbonmutant's picture

FED discussing how to spin a delay in QE3.

"This is a test. The FED is conducting a test of the Quantitave Easing Program. This is only a test."

Mon, 04/25/2011 - 12:42 | Link to Comment SheepDog-One
SheepDog-One's picture

If this were an actual emergency, your FED Chairsatan and Pretend President will give you instructions to bend over and kiss your ass goodbye.

Mon, 04/25/2011 - 12:51 | Link to Comment carbonmutant
carbonmutant's picture

You wish...lol

Mon, 04/25/2011 - 13:01 | Link to Comment TruthInSunshine
TruthInSunshine's picture

**Also, please note that the FRN Fiatskis in your wallet or purse at such time will no longer be of any value, won't be legal tender as you've come to understood that phrase, can NOT be used as a flotation advice, and are certainly inedible. Thank you for flying Rothschildian Lizard Air. Have a Waterloo Day!**

Mon, 04/25/2011 - 12:41 | Link to Comment sschu
sschu's picture

The international economic forces are telling the Fed to stop with the QE/liquidity flood.  This is happening directly by China's statement about how much debt they want to hold and indirectly via MENA and other disruptions.

The problem has moved into the political realm, solutions are being demanded from politicians.  They are no more able to solve the crisis than the Fed/financial structure, the problem is not "solvable" in the sense people want it solved. 

The people are not prepared for the pain required to "fix" our problems.  Once the politicians abrogate, the the crisis becomes Public, and you will be asked/told/required to do things you cannot yet comprehend.  The phases of the crisis go something like this:

Financial Crisis

Sovereign Crisis

Political Crisis ---- where we are now

Public Crisis --- where we are heading

sschu    

 

Mon, 04/25/2011 - 12:45 | Link to Comment SheepDog-One
SheepDog-One's picture

Solutions are being demanded and they have none. The can to kick down the road is now just a tiny scrap of tin.

Mon, 04/25/2011 - 12:46 | Link to Comment kumquatsunite
kumquatsunite's picture

Readers tell me their local coin store has no silver coinage left, as the public has been buying with a vengeance.

from above article

____

Now that's a pretty odd statement since my local dealer has silver coins of various denominations and from various countries and bars of all sorts and shapes covering his desks which I can see by squiggling my eyes slightly. Another dealer told me that he is having people come from all over to sell their silver, so no shortage at this dealer either. Silver is for sale all over the net, so why is this writer trying to perpetuate a silver shortage? hmmm

Second, this writer also says, "But there are also examples of "the public" acting well in advance (perhaps a form of "crowdsourcing") of the "experts." 

Now maybe ya'll ain't heard, but the crowd is a crowd of idjats. They spend money on pet rocks and have tattoos in places you can see and places you can't see. The crowd no longer knows how to cook a dinner that includes vegetables and a salad and that isn't labeled "mc" something. The crowd has been exchanging body fluids with a vengeance and then using the results of that behavior, aka "mini-sloths" to blackmail the productive and steal private property. The crowd is known to eat their own and has been watching an awful lot of zombie and vampire movies the last few years. Can you say "role modeling"? (hee hee hee, or look there's one now, what cha gonna do? what cha gonna do when they come for you?!)

As to the writers note that "No wonder the Chinese leadership is unhappy with the Fed's crush-the-dollar strategy."

Well, duh. The Chinese, as they have tried before (see: Mao's Great Famine by Frank Dikkoteer; a book which should win the Nobel Prize, and IMHO, one of the greatest books written in the last one-hundred years. All you need to know about economic theory, what works and what doesn't, explained in phenomenal and absolute, and beautiful prose by Mr. Dikotter. It's an odd little factoid about human beings, and all "thinking" animals, as it were. My fur son, for instance, responds better when offered his favorite tasty treat. My non-fur sons also respond better when offered tasty treats. What up with that (as the kids say)?!

Well, a fundamental aspect of human behavior is risk/reward. Risk meaning work most often and not the jump-off-the-cliff kinda risk. So when you work, and the government steals what you should be rewarded with to give it to thems that sit on their hinnies on the couch where their hinnies get bigger and bigger and bigger and they exchange more and more and more body fluids and have more and more and more mini-sloths and appear on Jerry Springer and Steve Wilkos looking for that little tidbit of info: Who is the father of my child? (OMG, Have we hit the bottom of the gutter yet? And if not, what Will it take to get there so we can start climbing out? Please, Baby Jesus, I'm a just asking!)

And now that Easter is over, it may be worthwhile to consider that while the Bible and people like Franklin Graham (Love that guy!) entreat us to help the poor, we are not supposed to reward those who are smarter than us because they are gaming the system. In other words they get to sit on the couch and watch Jackass 3 (You are aware that Steve O is now 37 and still making a living by working in the "get hit in the crouch, smear pooh everywhere, and apparently believing that there is no end to the complete, utter, and bottomless desire of the "public" for "pubic" and "anal" as the object of insertification and assault.

Johnny Knoxville is now forty and with Jackass 3.5 coming out and his second child due this fall (Fall of 2011), one might say it is time to consider growing up. As difficult as it may be for these paragons of pooh to consider what their influence upon our children might be, Knoxville might wish to consider that little concept called "role modeling." Certainly in a strange world, once known as the "norm", parents made the rules and made the children follow them. (This is why my own children have no tattoos. There's a little thing called the front door and they were informed that "any tattoos" equaled "no coming through the front door." They then weighed the idea of food on plates, tasty and delicious, soft couch to sit on, and good company with no beer cans or chip packages on the floor. hmm....

Course, the real problem that no one wants to talk about is that we have been receiving cheap chinese goods, which are cheap chinese goods, because there is currently no labor costs in anything we purchase. If we had some of those nice factories that require the ole "up at dawn, work hard, come home, eat dinner, watch the news, go to bed, repeat" lifecycle, then the Jackass boys would be punching a clock and eating peanut butter sandwiches pulled forth from the ole classic black workman's lunch box. Just saying.

So the idea that "The Fed is busily destroying the village, suposedly to save it--only it's the global village." is just bizarre. There is a huge list of people to blame and the "Fed" and Mr. Bernanke aren't anywheres near the top of the list. Instead let's start with President Johnson and his Great Society that sought to give to those who have no appreciation or understanding of the care and feeding of valuable resources; those who simply squander all they are given, which is why there must be a work/reward cycle for almost everyone; otherwise is just lottery winnings that as we all know lead to craziness and a return to the mean aka the trailer park.

After Johnson, of course, we moved into the Clinton years where welfare was renamed but no less an act of redistribution to the "poor" and an act of theft against the productive. It was somewhere around here that companies and corporations started feeling the pinches of fees and taxes that were nothing short of redistribution, a tax upon their productivity which sent them looking for ways to manage costs and lo and behold...ta duh!...China appears on the horizong with 1.3 billion people who need jobs. How great is that?

Then the liberals having gotten their hands on the check book said, "House for all!" And we were off to the races of the housing bubble.

Now, we are returning to square one. We are gonna have to build some factories, end welfare, end immigration (nothing is destroying our country faster or more thoroughly than giving the country to those who have no loyalty or love for this country; those to whom it is nothing more than an opportunity to scam and fleece that which they can take today; this is the third world way.)

So unless you take back your country and end immigration and end welfare it matters not what Ben Bernanke and the Fed do. Unless we understand that at one time we were "helping" the poor, but that now the "poor" have learned to eat us and all we can produce and then demand MORE, because after all they are "entitled to it" and have been taught well how to collapse the system, and unless you say "NO" we are done for stick a fork in us it is over!

Yep, you gotta wonder, do we want a country for our children and our grandchildren, or did our fathers and grandfathers die so the liberals can "diversity" us into oblivion? Just asking.

Mon, 04/25/2011 - 13:07 | Link to Comment Bitchin Bear
Bitchin Bear's picture

Great post Kumquat - especially about kids and tatoos - all I ever said was that as long as you are dependent on my financial aid you will not hav a tatoo.  Halfway through college they realized that visible tatoos would only guarantee minimum wage jobs so they quit asking.

Mon, 04/25/2011 - 13:47 | Link to Comment blunderdog
blunderdog's picture

All that's really needed is a livable wage to return to the USA for truly unskilled labor.

Until that happens, there's no hope.  No recovery, no reconstruction, no end to welfare, nothing. 

You give the least able Americans some way to survive, or else you have to wage war on them to keep them in line, and that costs resources you'd really rather spend productively.

Mon, 04/25/2011 - 14:13 | Link to Comment michigan independant
michigan independant's picture

Yea we wonder, but clearly a few still understand this. When you mention a few decades they clearly are fixated to another norm. It will never end until it does since around here under the bus is sport as in like that how they roll. We notice bills with thousands of pages from the pushers and any one with reality in mind knows the consequences of water mellon heads we suffer to rent dissipated aceptances as another condition to survive there so called smart way. The aspect is green outside but red inside for the minnow's out there. Meanwhile there are 4 layers of educated lunatics running the show above the commen man who read books and remember talorism " The individual is lost as part of the machine that serves a collective (managerial) "interest." wrapped in a marvelous suit proclaiming how hard it is for them. I will ask for the definition of moderation but another Corporate survey will save the day. To many grapes to crush for we would rather have idiots who follow the program than a few who know the consequences. As you can see I am not a Jack Welsh fan. For simplicity they blew it since Eisenhower, and point at another to this day in this division of labor to game the Taxpayer.

A time will come as you seem well to know who will be judged first. Then I would wish them to understand the seal in the forehead since clearly they missed the boat for a spell as we say. Nothing is new under the Sun, but business has entered into a new predicated cycle if you like it or not. Its not pretty and other than what I see the watermellon's have never really helped but ruin many souls in there so called march. Older rules apply but we know a few will muddle by. I know the Office is a burden but slowly filling the trenches is just a bad as filling them quickly. Sad but vision is always the problem to ideologues. We try to get enough reason to prevail but it is a losing proposition in the short term to long term issues from the mellons who do not care how fast the glass is broken or the ditches are filled unless they are payed a buck day until the Men come home. So moderation and getting structural issues are old news since as you correctly noted with, After Johnson, of course, we moved into the Clinton years. Yea thrift and work was mentioned from the founders also with we hang together or we hang separately. Still evil must be assailed and yea that's still a problem since Cain's mark.

Tue, 04/26/2011 - 07:46 | Link to Comment BigJim
BigJim's picture

We are gonna have to build some factories, end welfare, end immigration (nothing is destroying our country faster or more thoroughly than giving the country to those who have no loyalty or love for this country; those to whom it is nothing more than an opportunity to scam and fleece that which they can take today; this is the third world way.)

If you end welfare, then the only people who will immigrate to the US are those who are willing to work. End of problem.

You seem to forget that all your ancestors (I'm assuming here you're not an American Indian, sorry, Native American, sorry, First Nations People person) were immigrants.

The main problem is the idleness that our majoritarian democracy enables via redistributive taxation, not immigration.

Of course, the enormous deadweight costs of our regulatory and tax systems don't exactly help our international competitiveness either.

Mon, 04/25/2011 - 12:51 | Link to Comment carbonmutant
carbonmutant's picture

What if the opposing party doesn't want the can?

Would they just put up a straw candidate?

Mon, 04/25/2011 - 12:56 | Link to Comment aerial view
aerial view's picture

nice anatomy lesson CHS. I agree there are multiple "games of chicken" being played here. One theory is that China by steadily moving away from dollars could precipitate a decline in the dollar at a FASTER RATE than a decline in it's own currency if other countries follow suit (benefits China). The dollar has maintained it's reserve status and allowed the U.S. to borrow indefinitely mostly because of it's creditability that at some time in the future, it will pay back it's debt. This view is changing rapidly and unless the rest of the world powers are convinced that Washington is serious about debt control, they will now ACTIVELY pursue other options.

Mon, 04/25/2011 - 12:55 | Link to Comment tomster0126
tomster0126's picture

The Fed will be known 50 years from now as the downfall of our nation...our collapse is inevitable, and people still have no idea how to save themselves or help prevent it.

 

www.forecastfortomorrow.com

Mon, 04/25/2011 - 13:28 | Link to Comment A Lunatic
A Lunatic's picture

At least most of us will be dead by then. See, a bright side to everything.

Mon, 04/25/2011 - 13:00 | Link to Comment SilverDoctors
Mon, 04/25/2011 - 13:06 | Link to Comment JR
JR's picture

Did that eye on top the unfinished pyramid on the dollar bill just blink?  Or has it just spotted its replacement from the financial power elite, waiting in the wings – the SDR?  Because, the political thresholds that need to be crossed are being crossed if this planet is to have Soros-style universal harmony and economic stability.

Now that the IMF has set 2016 for the date ”when the ‘Age of America’ will end and the U.S. economy will be overtaken by that of China," will the evil dollar eventually melt with euros and yen into a single currency?

Know that the IMF and the Fed are but the same crowd just wearing different hats, both established using exactly the same method to create money out of nothing. The IMF merely makes pronouncements in advance to test the waters for the Fed/Rothschild/Rockefeller/Soros agenda, preparing Americas two-legged sheep for total global political and financial control, using the technique of gradualism.

The IMF/Federal Reserve/World Bank are connected systems raping the country and destroying the economy – right before our eyes. First, they create chaos and then rush in to control it to accomplish an agenda.

The goal of the IMF (now headed by Socialist Dominique Strauss-Kahn) when established by prominent world socialists in 1944 at the Bretton Woods United Nations Monetary and Financial Conference was creation of a world currency (the SDR), a world central bank, and a mechanism to control the economies of all nations.

Conspiracy theory?  Consider the increasing authority in the voice of the IMF and consider this early warning:.

In order for these things to happen, wrote G. Edward Griffin in 1994, the United States would of necessity have to surrender its dominant position.  In fact, it would have to be reduced to just one part of the collective whole.... Furthermore, the World Bank (now headed by Goldman Sachs/Robert Zoellick) was seen as a vehicle for moving capital from the United States and other industrialized nations to the underdeveloped nations, the very ones over which Marxists have always had the greatest control...

It has all come to pass.

What all the wise men promised has not happened, and what all the damned fools predicted has come to pass.(Nixon)

Mon, 04/25/2011 - 13:28 | Link to Comment nah
nah's picture

money IS cheap... peak oil is the beginning of the end

Mon, 04/25/2011 - 13:35 | Link to Comment Ying-Yang
Ying-Yang's picture

Thank you Charles Hugh Smith...

Your clairity of expression is appreciated. I will give your article to friends and family and ask them to contribute to your efforts.

Godspeed my friend, hope to see you on the other side.

 

Mon, 04/25/2011 - 13:53 | Link to Comment sellstop
sellstop's picture

I wonder why Bernank is having that press conference?

Do you suppose he has something new to say?

It is kind of strange that he would have a press conference if he had nothing new to say.

Do you suppose he will hint that he is extending QE.

Or maybe he will hint that it is ending.

Are you buying PMs today? In anticipation of more good news....

gh

Mon, 04/25/2011 - 15:42 | Link to Comment 10kby2k
10kby2k's picture

The purpose of the press confrence is to support the claim that the Fed is forth-right and accountable. Just another layer of bull shit that you can't sift through.

Mon, 04/25/2011 - 14:51 | Link to Comment Oquities
Oquities's picture

imagine waking up next Monday with the following announcement - "all US govt agency debt shall now be denominated at 1/2 its face value.  Treasury issues shall be denominated at 75% of current face value.  All outstanding treasury and agency debt shall immediately have their maturities extended as follows:  for 1-5 year, 1 year shall be added, for 5-10 yr, 2 years shall be added, and for 10 year +, 2 yrs shall be added for each 5 years or partial period.  The preceding applies to all foreign held debt securities and cash.  All those domestically owned shall retain their current status.

 

Mon, 04/25/2011 - 15:19 | Link to Comment hardcleareye
hardcleareye's picture

Now there's a thought!

Mon, 04/25/2011 - 16:08 | Link to Comment Broomer
Broomer's picture

Guess who won't be able to import a drop of oil faster than you can say "default" if this happens.

Mon, 04/25/2011 - 23:33 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Guess what happens to those sovereigns with the largest oil fields all over the globe?

They get "threatened" and realize (again) that being under the protection of the U.S. is good for their odds of survival and longevity.

Mon, 04/25/2011 - 15:01 | Link to Comment css1971
css1971's picture

Doesn't all this seem a bit... Stage managed to you?

 

The China thing I mean.

 

What's happening is the stage managed transition from the unipolar, American USD dominated world to a multi polar; China, EU, American world. China will not dump their reserves. The US will not collapse into hyper inflation nor depression.

http://www.zerohedge.com/article/guest-post-anatomy-crisis-2011#comment-...

Mon, 04/25/2011 - 16:01 | Link to Comment 10kby2k
10kby2k's picture

AP "The Fed will be issuing $15 trillion 0.25% 100 year bonds with the option of issuing more each year to balance the budget and fund entitlements. These bonds will be swapped with funds held in United States citizen's retirement accounts dollar for dollar and may not legally be sold on any secondary market. At age 66 up to 3% of total holdings yearly can be swapped for government issued debit cards pre-programmed to approve purchases of necessities only. Excess balance on debit cards will be returned to the treasury. Each individual will be required by law to continue to make contributions to their retirement account in amounts dictated by age and income. All assets currently in retirement accounts are frozen to allow for transfer".

*persons with AGI > $5 million are exempt

Mon, 04/25/2011 - 16:17 | Link to Comment SkySavage
SkySavage's picture

If there is another financial crisis, silver will crash, a la 2008.  Now that CNBC is pumping metals, the countdown clock has offically started ticking.  Perhaps it is checkmate for the fed this Wednesday?

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