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Guest Post: Here's The Setup For The Con Of The Decade

Tyler Durden's picture




 

Submitted by Charles Hugh Smith from Of Two Minds

Here's the Setup for the Con of the Decade

The Con of the Decade, which I described last July, is being set up nicely.

I described The Con of the Decade last July (2010). The Con makes me a heretic in the cult religion of Hyperinflation.
I consider myself an agnostic about the destruction of the U.S. dollar and hyperinflation (basically the same thing), but my idea that hyperinflation is fundamantally a political process makes me a heretic. I skimmed a few of the dozens of comments posted on Rick's Picks and Zero Hedge after they posted one of my expositions on this dynamic, and didn't see even one comment in favor of this perspective.

The Con is being set up right now, and the outlines are clearly visible. The Con works like this:

1. The Financial Elites/Oligarchy raked in billions in private profit from the orgy of leverage, credit expansion, fraud, embezzlement and misrepresentation of risk that resulted in the Housing Bubble.

2. The losses were transferred to the public (Federal government, i.e. The central State) or its proxy, the Federal Reserve (i.e. the central bank), via bailouts, backstops, guarantees, the Fed's purchase of taxic assets, and an open window for the financiers to borrow billions at zero interest (ZIRP) for further speculations.

3. The Treasury now borrows $1.6 trillion every year, fully 11% of the nation's GDP, as the Central State has replaced private demand and credit expansion with its own borrowing and spending.

4. Non-U.S. central banks have largely ceased to support this unprecedented scale of borrowing, so the Federal Reserve now buys most of the Treasury's issuance of debt via QE2 (quantitative easing, the direct purchase of $600 billion in Treasury bonds).

5. Unlike Japan, the U.S. cannot self-fund its own government borrowing: while U.S. investors, banks and insurance companies do own a significant chunk of Treasuries, the U.S. savings rate (capital accumulation) is still abysmally low, around 4%, which is half the historical average savings rate.

This is the result of the Keynesian Cult's One Big Idea, which is to pull demand forward and encourage borrowing and spending now by any means necessary, and thus sacrifice capital formation/saving.

So the basic outline of the Con is that private losses from the financialization of the U.S. economy were shifted to the public. Now to keep the Status Quo and Financial Plutocracy from imploding, the public is on the hook for $1.6 trillion in additional borrowing every year until Doomsday (around 2021 or so).

Having secured the backing of the Central Bank and Central State, the Plutocracy's only problem now is that it needs a risk-free source of high-yield income. Yes, it has a trillion dollars or so sitting in bank reserves, collecting interest from the Federal Reserve; this is certainly risk-free, but the Fed's Zero Interest Rate Policy (ZIRP) keeps the rate of return absurdly low.

Here's where we see the Con taking shape. The ideal setup for risk-free returns is to own Treasurys that pay a high yield. The way to get higher interest rates is to first make the Treasury market supremely dependent on a central bank or single buyer: Done. That buyer is the Federal Reserve.

Next, have that buyer stop buying. Suddenly, interest rates start moving up. If you don't believe this is possible, or part of a larger project, then please explain why PIMCO sold all its Treasuries. Duh--because interest rates are set to rise, and not by a little bit or for a brief span, but by a lot and for years.

That means holders of long-term Treasuries (and other debt) will be cremated as rates rise. (Holders of TIPS will do OK, unless the government fraudulently sets the rate of inflation well below reality. Hmm, isn't that exactly what's it's already doing?)

Once long-term rates have leaped up, then start accumulating the high-yield bonds. Why would rates jump? Supply and demand: as the demand for low-yield Treasuries dries up, the supply keeps rising: every month, the Treasury has to auction tens of billions of dollars of bonds, or even hundreds of billions of dollars. There is no Plan B, the bonds must be sold, and if there are no buyers, then the yield has to rise.

Once rates have been engineered much higher, the Financial Oligarchy accumulates the high yielding bonds.

Here's where "austerity" comes in. Once rates are so high that they're choking the real economy, then voices arise demanding the Federal government stop borrowing and spending so much. Austerity (forced or otherwise) soon reduces the supply of bonds hitting the market and so rates decline, boosting the value of the high-yield debt.

To service the cost of all this Federal borrowing, taxes are raised on what's left of the productive members of society.

To add insult to injury, it will become "patriotic" to "buy bonds."

OK, let's check the setup:

1. Treasury market now dependent on one buyer: check.

2. That buyer stops buying, pushing rates higher: no QE3. Check.

3. "Austerity" is now seen as inevitable--but not just yet: check.

What the true believers of hyperinflation and the destruction of the dollar cannot accept is that debt is an asset to the owner of that debt. In focusing solely on the advantages of inflation to borrowers, they ignore the critical fact that inflation quickly destroys the value of the asset that debt represents to the owner. And debt is a primary asset to pension funds, insurance companies, banks, and indeed the entire financial sector.

So in claiming high inflation is guaranteed, adherents are claiming that the entire financial sector will accept being wiped out, just so Mr. and Mrs. Taxpayer won't have to pay interest on the ballooning government debt.

That's exactly backward: the entire point is for Mr. and Mrs. Taxpayer to pay high yields on Treasury debt, owned by the Financial sector's Oligarchs. The Con is to stripmine the public coffers, then impose higher rates and "austerity", buy the debt with the cash plundered from the public, and then sit back and enjoy risk-free returns as taxes are raised on the remaining tax donkeys. Inexpensive Bread and Circuses (SNAP food stamps and the political theater of the two parties staging a partisan "fight to the death") will keep the peasantry entertained and complicit.

As I concluded in the first foray into the Con:

In essence, the financial Elites would own the revenue stream of the Federal government and its taxpayers. Neat con, and the marks will never understand how "saving our financial system" led to their servitude to the very interests they bailed out.

The circle is now complete: in "saving our financial system," the public borrowed trillions and transferred the money to private Power Elites, who then buy the public debt with the money swindled out of the taxpayer. Then the taxpayers transfer more wealth every year to the Power Elites/Plutocracy in the form of interest on the Treasury debt. The Power Elites will own the debt that was taken on to bail them out of bad private bets: this is the culmination of privatized gains, socialized risk.

In effect, it's a Third World/colonial scam on a gigantic scale: plunder the public treasury, then buy the debt which was borrowed and transferred to your pockets. You are buying the country with money you borrowed from its taxpayers. No despot could do better.

This is the ultimate endgame of the financialization of the U.S. economy and the concentration of wealth and thus political power in the hands of those who skimmed the immense gains from that financialization.

 

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Fri, 04/15/2011 - 11:15 | 1172499 Quinvarius
Quinvarius's picture

The best laid plans of mice and men...

Fri, 04/15/2011 - 11:21 | 1172526 Oracle of Kypseli
Oracle of Kypseli's picture

Look out for an interest rate hike this weekend, if not today. Gold and silver breakout will not go unchecked.

Fri, 04/15/2011 - 11:22 | 1172534 the not so migh...
the not so mighty maximiza's picture

If they raise rates the goverment is even more screwed because just the interest on debt will be at insane levels. 

Fri, 04/15/2011 - 11:40 | 1172613 WaterWings
WaterWings's picture

OTM: "Here's how they'll bake the cake..."

tnsmm: "I think you forgot to put in the flour."

---

Charles, you have an otherwise very intriguing idea.

Fri, 04/15/2011 - 11:56 | 1172670 66Sexy
66Sexy's picture

i like the idea of accumulating dollars and buying up collapsed commodities once rates hit peaks... thats what all PM investors must be prepared for; the dollar is the PM hedge.

A fiat-float until an eventual doubling of net worth.

check.

Fri, 04/15/2011 - 12:20 | 1172817 mayhem_korner
mayhem_korner's picture

the dollar is the PM hedge.

Go back into the closet, count to ten, come out and try again.  'tard.

Fri, 04/15/2011 - 12:40 | 1172920 ElvisDog
ElvisDog's picture

I wouldn't be too hard on 66sexy. TPTB may very well try to crash commodities, and they may succeed for a little while. If they do try, I suspect the success of the intervention will be less than they hoped for and of less duration too.

Fri, 04/15/2011 - 14:15 | 1173354 SRV - ES339
SRV - ES339's picture

GS tried Monday... worked 'til Tuesday (but the bond auction results were great... the true goal).

Fri, 04/15/2011 - 14:52 | 1173502 rocker
rocker's picture

Lloyd Blankfein and his band of thieves, (Neel Kashkari and Paulson), must be put in Jail.  He lied to congress. Put him in jail.

Close them down. Take away bank status. Take away their software to manipulate markets.

Americans would at least have a chance.  Until then.  They control all.  The FED, the Treasury, the commodity exchange, forex and whatever President is in office.     Until then We Are Japan.   

Fri, 04/15/2011 - 15:56 | 1173804 forexskin
forexskin's picture

What the true believers of hyperinflation and the destruction of the dollar cannot accept is that debt is an asset to the owner of that debt

debt asset holders, meet the bloodless stone.


Fri, 04/15/2011 - 16:18 | 1173914 rocker
rocker's picture

+10   The Morque and Shitty Bank own alot of it.  Problem is, when you rob so much money from the debtors. You get defaults.

Mon, 04/18/2011 - 07:13 | 1179505 zyphryx
zyphryx's picture

Hear! Hear! What good is debt if you can't collect?

Fri, 04/15/2011 - 12:47 | 1172936 tmosley
tmosley's picture

I wouldn't be so harsh.  If the folks in charge had any competence, they might well do what the author thinks they will do.  Higher interest rates would save the economy, if the politicos had the will to default.

Gold and silver will NOT do poorly in such a scenario.  Indeed, with Treasuries no a longer safe haven asset, gold will likely explode as it resumes its role as such.  

The thing is, big evil insiders will profit from ANY situation, if they understand it.  I'm not so sure that they do.  If they did, they would have huge stacks of gold and silver coin in their safes.  There is no need for the author's scenario to play out for insiders to profit, either in real terms, if they understand what is happening, or in nominal, paper terms, if they don't.

The point is that the ship of state has hit an iceberg.  The normal manner of disembarking is to get into the small boats that double as life boats, so you aren't going to be left behind if you go ahead and grab some seats.  If the ship should somehow limp into port, fine, you would need your gold anyways so you can move into the next currency system without a penalty.  If it doesn't make it, then you survive while everyone else drowns.

Fri, 04/15/2011 - 14:28 | 1173416 Bob Sponge
Bob Sponge's picture

Charles Hugh Smith needs to explain how the 2021 Dooms Day he predicts will effect the rich elite executing the con he lays out. The Dooms Day would either be hyperinflation due to creating dollars to fund the gov't or austerity so severe that the US is in severe disarray. In either Dooms Day scenario, I would not want to be holding treasuries.

Fri, 04/15/2011 - 15:01 | 1173534 tmosley
tmosley's picture

Right, but you might want to buy them after the rates explode as a result of doomsday, assuming no dollar inflation (due to magic of some sort or another).

Seems pretty wild to me, but not impossible.

Fri, 04/15/2011 - 18:38 | 1174549 Amish Hacker
Amish Hacker's picture

Not impossible, but the whole plan seems to hinge on buying at the exact top in interest rates. If TPTB purchase early, before interest rates have finished going up, they'll take losses, too. It's not enough just to wait for rates to go up, you have to wait until they have stopped going up.

Fri, 04/15/2011 - 15:27 | 1173637 Weaseldog
Weaseldog's picture

When you own the cow, the milk, the churn, and laborers, the butter is all yours.

Fri, 04/15/2011 - 14:19 | 1173373 rjabele
rjabele's picture

whose the 'tard

in the expression  $/t-oz  the dollar is the numerator and the troy oz is the denominator - by definition they are always and everywhere in an inverse relationship. When one goes up the other goes down.

how can that not be a hedge?

The USD is the absolute PM hedge.

rj

 

 

 

Fri, 04/15/2011 - 19:35 | 1174704 mayhem_korner
mayhem_korner's picture

You've just enlightened us that rjabele translates "simple one" in your native tongue.  Your "absolute hedge" works great so long as there is only $ and oz in the world.  Kinda like when we pretend in econ 101 that only guns and butter can be produced. 

So help us understand how you capture the arb today given that the $ and silver both rose, but the $ fell in terms of crude and silver rose against crude?  Check your answer against your theory.

Fri, 04/15/2011 - 13:04 | 1172988 SheepDog-One
SheepDog-One's picture

'Dollar is the PM hedge'...I dont even know what thats supposed to mean.

Fri, 04/15/2011 - 13:33 | 1173119 malikai
malikai's picture

It's like Celente says: 80% PM/20% currency, or so. I think he likes his currency split USD/CAD. It makes sense for a hedge. I think I'd rather have puts on my physical PMs, though.

Fri, 04/15/2011 - 13:45 | 1173223 mayhem_korner
mayhem_korner's picture

Hedge against what?  Hold fiat to hedge against a drop in fiat-denominated asset?  Think it through and you'll realize what you're saying is hedge fiat with fiat (and claim victory if you time it right). 

You're mixing value store with fiat-denominated profit.  I'm with Sheepdog, it doesn't make any sense.

Fri, 04/15/2011 - 14:21 | 1173292 malikai
malikai's picture

.

Fri, 04/15/2011 - 14:47 | 1173464 hedgeless_horseman
hedgeless_horseman's picture

Hedging and diversification guarantee mediocrity at best, which is fine if you are already old and/or rich.

Fri, 04/15/2011 - 16:57 | 1173848 SME MOFO
SME MOFO's picture

 

diversification is for cowards but

me likes a nice hedge to clear away the correlation underbrush and so daddy can sleep at night when a position is so big his eyes bleed from the pressure

Sat, 04/16/2011 - 09:46 | 1175652 FEDbuster
FEDbuster's picture

I hedge my precious metals, with alternative precious metals (brass and lead). 

With only 45% of Americans working (the other 55% too young, unemployed or retired) and only a portion of those working paying any taxes, I don't see income tax revenue being the savior for the deficit (or interest payment) problem.  The next big thing will be a VAT in the US.  They will skim a little off of each transaction (including Internet sales) at each level of transfer.  Those on fixed income or the government dole will continue to see their purchasing power go down as inflation and taxes eat up more of their income.  We currently pay almost 10% sales tax here in AZ, property taxes have remained constant despite a 50% drop in real estate values (taxes pegged at the peak in 2006).  The government's "needs" will continue to grow, as the citizen's "means" continue to drop. 

I still think WW3 or a manufactured pandemic (designed to inflict casulties on the 60+ population) will be their last ditch effort to "fix" things.  The author's 2021 doomsday date is optimistic, I think we will see something much sooner. 

Martin Armstrong (now a free man!) has written an interesting article titled "Nothing is Certain but Death, Taxes and the Other Side of Inflation" please take the time to read it.

http://www.martinarmstrong.org/files/Other%20Side%20of%20Inflation%20Mar...

History always repeats itself, in new and innovative ways.  Fiat money ALWAYS fails.

Fri, 04/15/2011 - 14:00 | 1173304 malikai
malikai's picture

Not neccessarily. If QE ends and PMs either get cut down or they come down as a result of extreme rates, puts serve two purposes. 1. They allow you to retain nominal value. 2. They allow you to BTFD even more. 3. They may also help some people sleep better at night.

Dry powder enables similar results, but without the cost/upside of buying puts.

Fri, 04/15/2011 - 14:03 | 1173315 mayhem_korner
mayhem_korner's picture

I agree with the puts.  I was making reference to the soft-skull comment earlier in the thread about hedging PM with dollars. 

So you can lower your scythe, Jethro...

Fri, 04/15/2011 - 14:30 | 1173417 malikai
malikai's picture

I'll lower my scythe when I'm done with the harvest. :)

Fri, 04/15/2011 - 17:23 | 1174216 redguard
redguard's picture

Huh, the dark lord of the scythians. I wonder if that's who Blankfien was referring, certainly wasn't Jesus.

Fri, 04/15/2011 - 17:55 | 1174393 IQ 145
IQ 145's picture

 "The dark lord of the scythians"---monty python puns. funny.

Sat, 04/16/2011 - 15:37 | 1176325 Bicycle Repairman
Bicycle Repairman's picture

Nominal rates will go up, but real rates remain negative as inflation goes up.  Commodities and PMs continue up.

Fri, 04/15/2011 - 11:53 | 1172669 Bananamerican
Bananamerican's picture

yup, AND author seems to leave out/ignore one little thang...the Pain of the people. 

I doubt we'd get to where his scenario leads before things began to burn

Fri, 04/15/2011 - 12:05 | 1172725 Chuck Walla
Chuck Walla's picture

They elected Obama without a shred of evidence he could the job. I don't think this looks all that hard.

Fri, 04/15/2011 - 12:37 | 1172897 Pegasus Muse
Pegasus Muse's picture

TPTB selected and backed Obama precisely because they knew he couldn't do the job.  That was the point.

Fri, 04/15/2011 - 12:51 | 1172948 Ned Zeppelin
Ned Zeppelin's picture

What makes you so sure Obama is not performing precisely as his TPTB backers were hopeful he would?

Fri, 04/15/2011 - 13:23 | 1173067 Chuck Walla
Chuck Walla's picture

Its not that Obama is not doing the job he was hired to do by TPTB, its that the people were so easily led to actually allow him to take the job. On the other hand, McCain, the Progressive Lite, I think was the backstop option if someone had actually been able to wise up the chumps. John would have made a much better Manchurian.

Fri, 04/15/2011 - 13:30 | 1173125 jomama
jomama's picture

i wouldn't say so much 'easily led', but more like desperate.  
throw in a dash of color and you've got the masses cow tied.

Fri, 04/15/2011 - 13:49 | 1173243 sgt_doom
sgt_doom's picture

"What makes you so sure Obama is not performing precisely as his TPTB backers were hopeful he would?"

Exactly, Ned, exactly so.

How any fool today could possible not understand that anyone from the University of Chicago law or econ faculty would behave otherwise is beyond all credulity.

Did they expect Antonin Scalia, the last high-profile guy from U. of C. Law, to be a liberal, for god's sakes?

Catch a clue, non-thinking types out there!

Fri, 04/15/2011 - 15:28 | 1173649 Weaseldog
Weaseldog's picture

He's doing exactly the job that the bankers elected him to do.

He's also performing his duties with great competence.

 

You just think he's screwing up, because you think he should be doing a completely different job, and working for completely different people.

Fri, 04/15/2011 - 14:27 | 1173404 geotrader
geotrader's picture

What job?  Act like a puppet?  He's doing quite well.

Fri, 04/15/2011 - 14:53 | 1173508 DeadFinks
DeadFinks's picture

All it takes to make his mouth move is two teleprompters.

Fri, 04/15/2011 - 15:12 | 1173586 GeorgeHayduke
GeorgeHayduke's picture

Not to defend Obama and those that voted for him, but the other, more conservative crowd, elected Bush the lesser...twice...knowing he was a worthless failure and only good as a country-clubbing frat boy. But hey, he talked tough and that counts for something with the Jingo crowd.

Face it, the Prez's job is to carry out the wishes of the upper 3-5% (maybe just 1%). End of story. All the rest is fluff to appease the peasants and keep them from rioting.

 

Fri, 04/15/2011 - 15:30 | 1173660 Weaseldog
Weaseldog's picture

Remember, half of the American people are communist traitors that want to eat your children.

 

Now turn left and cough while the bankers steal your wallet.

Fri, 04/15/2011 - 16:11 | 1173885 SME MOFO
SME MOFO's picture

+ 57,700 scrubbed felons

Fri, 04/15/2011 - 12:06 | 1172726 Chuck Walla
Chuck Walla's picture

Debt is the money of slaves.

Fri, 04/15/2011 - 13:28 | 1173101 FIAT_FixItAgainTony
FIAT_FixItAgainTony's picture

agreed chuck, and i prefer to be the gentleman who uses silver!

Fri, 04/15/2011 - 14:26 | 1173405 Cinfultreat
Cinfultreat's picture

Debt is a foolish mans riches

Fri, 04/15/2011 - 11:57 | 1172698 66Sexy
66Sexy's picture

one thing to be considered.

 

the government doesnt control interest rates; the fed does. the fed is a private, for profit institution.

rates could be raised on the notion of "saving" the purchasing power of the dollar.

Fri, 04/15/2011 - 12:10 | 1172755 Argonaught
Argonaught's picture

dp

Fri, 04/15/2011 - 12:11 | 1172763 Argonaught
Argonaught's picture

Only true to a point.  Sure my crap savings account is Fed funds rate less some made up usurious %, but the cost of capital of any significant size is usually based rates only marginally influenced by Fed Funds rates (Treasury rates).  So, treasury investors have more control over the relevant interest rates than the FED.  Oh wait.  The FED is the largest T-bond investor?  We're fucked.

Fri, 04/15/2011 - 12:08 | 1172746 vast-dom
vast-dom's picture

but the gov't is not screwed because it's already screwed and so it goes....it will bide time and reverse-engireer as per above most excellent post.

Fri, 04/15/2011 - 11:28 | 1172556 Quinvarius
Quinvarius's picture

I don't think an interest rate hike would do anything to gold and silver for more than a week or so.  An interest rate hike would drain money out of the stock and bond markets.  The dollar is still adjusting to over printing.  I would bet an interest rate hike would set off a larger gold rally.  There is no where else to go.

Fri, 04/15/2011 - 13:15 | 1173029 Spitzer
Spitzer's picture

Thats right

Gold continued to rise through the rate hikes in the mid 2000's and through the 80's

Fri, 04/15/2011 - 13:23 | 1173083 Chuck Walla
Chuck Walla's picture

To get PM's to notice, it would have to be a significant raise in rates. Who is going to do that? And without it, then PM's are safe.

Fri, 04/15/2011 - 16:17 | 1173899 SME MOFO
SME MOFO's picture

no where else to go for the gold and silver investors

http://www.youtube.com/watch?v=HiIZLDeMOg0

 

Fri, 04/15/2011 - 11:35 | 1172589 lunaticfringe
lunaticfringe's picture

They cannot hike rates. They have screwed the pooch. This is dead end city and we all know it.

Fri, 04/15/2011 - 12:04 | 1172735 PY-129-20
PY-129-20's picture

Look Ouagadougou is already in flames! Soldiers are pillaging the capital. The President is  fleeing.

Fri, 04/15/2011 - 12:33 | 1172883 Stuck on Zero
Stuck on Zero's picture

They will raise rates.  The rates will go to 18% - 25% if necessary.  Remember, interested doesn't get paid right away.  What it will do is drag huge sums from the public and foreign investors to the Treasury.  It will drop PMs like lead shot.  Housing will completely crash.  The insiders will transfer their assets to the PMs and real assets.  The government will claim that Iran has dropped $500 trillion in bearer bonds on the market and renege everything.  A new dollar will be issued. 

BTFD.

Tue, 04/19/2011 - 11:57 | 1184211 rich_wicks
rich_wicks's picture

National debt is 14 trillion dollars.

The largest Federal tax revenue we've ever had was in 2006, at 2.4 trillion dollars.

18% of 14 = 2.52.

 

I know you'll never read this, I just wanted to record this so I can say "see, I saw the government was about to collapse" a few years from now - assuming we still have electricity.

Fri, 04/15/2011 - 14:10 | 1173334 Stuck on Zero
Stuck on Zero's picture

They will raise rates.  The rates will go to 18% - 25% if necessary.  Remember, interest doesn't get paid right away.  What it will do is drag huge sums from the public and foreign investors to the Treasury.  It will drop PMs like lead shot.  Housing will completely crash.  The insiders will transfer their assets to the PMs and real assets.  The government will claim that Iran has dropped $500 trillion in bearer bonds on the market and renege everything.  A new dollar will be issued. 

BTFD.

Fri, 04/15/2011 - 14:27 | 1173410 three chord sloth
three chord sloth's picture

I agree... they screwed up big time. And they know it.

I think that's what is driving the Power Elites. They are not so much looting America as they are cashing out.

The grand experiment in the elite-run, social/economic/politically engineered nation-state has proven to be unstable and unsustainable. Now the folks who ran it and benefitted from it have realized they cannot control it any longer... their creation is ripping itself apart from the unrealistic expectations and internal contradictions they themselves introduced. So they're gonna take the money and run.

Fri, 04/15/2011 - 15:34 | 1173676 Weaseldog
Weaseldog's picture

Sure they can raise them. After all, they can borrow money to make the payments.

 

The step that is coming is to put all of the State and local governments into default, and sieze their assets. Once they take over various services, they can start jacking rates, and eliminating expensive maintenance.

 

Remember the people that are looting the USA, live in expansive palaces in other countries. The don't know you or care about you. If you suffer and die, they'll never notice.

Fri, 04/15/2011 - 11:44 | 1172631 Ray1968
Ray1968's picture

Expect margin hikes on gold and silver very soon.......

Fri, 04/15/2011 - 11:49 | 1172662 SheepDog-One
SheepDog-One's picture

Every time they do, theres maybe a 1% pullback, then shoots to new highs. Theyre more 'damned if they do' at this point.

Fri, 04/15/2011 - 11:55 | 1172674 pendragon
pendragon's picture

yes imminent. we will definitely have a correction in silver next week with or without margin hike though. mkt is too overbought on any metric

Fri, 04/15/2011 - 12:15 | 1172789 Spastica Rex
Spastica Rex's picture

Bookmarked to check back next week.

Fri, 04/15/2011 - 12:16 | 1172793 earnulf
earnulf's picture

I don't believe that Silver is overbought, despite the recent uptick for a variety of reasons.   These include historic ratio (which we are moving back towards), mineral dispersion ratio, increasing demand in a large part of the Far Eastern BRIC contingency, continued goverment misrepresentation of the economy and general lack of PM knowledge among the populace.   There may be a slight pullback (up to $3), but the premiums on the general outlets are still running 10-15% over spot for physical.    Any margin hike will have a half life less than the last one and a percentage drop less than the last one (although the amount may be higher in dollar terms because the price has gone up)

Fri, 04/15/2011 - 20:15 | 1174794 Treeplanter
Treeplanter's picture

Silver supply is getting critical.  It has a huge upside potential.  Shorting is psyops to scare the clueless.

Fri, 04/15/2011 - 12:19 | 1172814 tiger7905
tiger7905's picture

Great quote from Rick Rule
“the dollar is the world’s reserve currency so it’s the fiat currency that everybody is reserving special wrath for”

http://goldandsilverlinings.com/?p=660

Fri, 04/15/2011 - 11:28 | 1172550 Sudden Debt
Sudden Debt's picture

Plan? These guys just fuck it up as they go along. And the oliargy profits along the way, but believe me, there is no roadmap.

Fri, 04/15/2011 - 11:28 | 1172565 SheepDog-One
SheepDog-One's picture

I think at this point theyre just outright fraud and manipulation today so they can try the fraud and manipulate everything again tomorrow, fingers crossed that everyone just sits and accepts their new poverty and destitution day after day, and the FED collects the tax receipts? Well not from me. They have no real plan. 

Fri, 04/15/2011 - 13:36 | 1173162 stewie
stewie's picture

Really?  

And that 's why they're poor and you're rich?

Fri, 04/15/2011 - 15:44 | 1173714 tickhound
tickhound's picture

Exactly... All right on schedule and by design.

Fri, 04/15/2011 - 11:43 | 1172636 writingsonthewall
writingsonthewall's picture

The eternal dilemma - are they robber geniuses - or clowns with gowns?

 

I really can't decide - but does it matter? - the result is going to be the same.

 

Maybe they think that they can raise rates a little to stop the Dollar crashing but without collapsing the economy.

To pull that off is like threading a rope through a needle whilst standing on the wing of a flying 747! Dan Dare might be able to pull it off - but we have Ben Bernanke - we don't really have a chance....

Fri, 04/15/2011 - 12:04 | 1172724 Sudden Debt
Sudden Debt's picture

If they had a plan, you would be able to figure it out an counter it.
No plan means the swing either way and they aren't predictable.
You can't do shit against it. It like fighting dope in the streets.

Fri, 04/15/2011 - 12:22 | 1172829 rocker
rocker's picture

If they put Lord Blackass in Jail and close down Goldman Sachs we might be one, (1), step closer to a honesy market.

Until the thieves know where the most money is and take it.  That's what the squid does. They are thieves.

They admitted it to the world when they said, our software was stolen and in the wrong hands some can manipulate the markets.   Hello, that's what they do everyday.  Manipulate the markets.  They are thieves.   

Lloyd Blankfein and Neel Kashkari lied in front of congress. Just like Martha Stewart, they belong in Jail.

Fri, 04/15/2011 - 12:09 | 1172768 Shameful
Shameful's picture

It's simple, scoreboard! Like in sports, you want to see if a team is good, scoreboard. A bad team doesn't win every game with a crushing victory.

And don't assume the dollar is holy and must be saved. They will burn it in a second for profits. It's not like other nations haven't rotated through currencies. If it's good enough for other 3rd world countries, then it's good enough for the US.

Fri, 04/15/2011 - 14:29 | 1173407 Bubbles the cat (not verified)
Bubbles the cat's picture

Only the weather can save us. The way I figure it, we need a good dump of snow around July/August.

Fri, 04/15/2011 - 17:57 | 1174404 malek
malek's picture

That summarizes it neatly!

+1

Fri, 04/15/2011 - 11:47 | 1172651 dark pools of soros
dark pools of soros's picture

you forget that the few people running this scam do not talk to the press..  all their puppets are suppose to be dopes

Fri, 04/15/2011 - 11:38 | 1172605 Boston
Boston's picture

Except that rates have already spiked since October 2010.  So if this is true, then the plan has been in effect since last fall.

I agree with Gundlach; now could be the time to accumulate Treasuries, in anticipation of the post QE2 rally:

http://video.cnbc.com/gallery/?video=3000016107

Fri, 04/15/2011 - 18:01 | 1174411 malek
malek's picture

you ran out of <satiric> tags?

Fri, 04/15/2011 - 12:03 | 1172728 Blues Traveler
Blues Traveler's picture

Oblunder starring as Lenny

Fri, 04/15/2011 - 13:30 | 1173039 Popo
Popo's picture

Charles, 

You may be a heretic here on ZH, but that 'con' as you call it is a very old game.  

As Thomas Jefferson said: 

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered."

Anyone paying particular attention to the order of operations which Jefferson warned about will see a striking relevance to your "con of the decade":  

"FIRST by inflation.  THEN by deflation".

That's the game.  Right there.   Jefferson knew it and so do the elites today.

 

Fri, 04/15/2011 - 14:47 | 1173481 faustian bargain
faustian bargain's picture

The main problem is, it's not even bank"s" plural, it's just one bank, which the people are legally required to use as their currency issuer. There's no accountability, no competition, no fear of retribution; they're well-insulated from market effects. The Fed is given carte blanche, and the government (and financial elites) wants it that way. Fiat currency requires centralized authoritarian control.

It has little to do with whether the central bank is nominally public or private. It has to do with the fact that they enjoy total government-enforced monopoly on the control of currency. Nationalize the Fed and we get nothing significantly different from what we've already got.

Fri, 04/15/2011 - 13:44 | 1173199 narnia
narnia's picture

What we are seeing is not a conscious conspiracy to destroy the dollar, destabilize the world & transfer wealth.  These folks are heavily invested intellectually in the preservation of the system.  The destruction of the dollar, destabilization of the world & transfer of temporary fiat is the play out of a terribly flawed central banking system with a preference to preserve well connected, heavy political contributing buddies vs. joe the plumber.  

The conspiracy reads better, but that would necessarily mean something I know not to be the case- that any group of people could pull this off.  The notion that 12 people in a room can process the information from millions of transactions and manipulate the currency in such a way to set interest rates for rational processing of prices in free markets is as possible as throwing a dart two miles and hitting bullseye.  Therein lies the cause.  All other explanations are self-rationalizing of the inevitable consequences. 

Fri, 04/15/2011 - 16:28 | 1173955 SME MOFO
SME MOFO's picture

its amazing what they can do with computers nowadays, i heard that people can carry tiny phones in their pockets too

Sat, 04/16/2011 - 12:33 | 1175940 narnia
narnia's picture

I must have missed that iphone ap which calculates all current, potential & future plans to calibrate and implement a perfect price fixed interest rate.   

Fri, 04/15/2011 - 23:25 | 1175230 RockyRacoon
RockyRacoon's picture

I tend to agree with you because the "plan" has to be implemented by someone.  There are levers to pull and dials to calibrate.   If the Wall Street playerz continue with the IBGYBG (I'll be gone, you'll be gone...) mentality then there is no way the oligarchs and high priests of social engineering can make their grand plan bear fruit.   The human element is always the fly in the ointment of New World Orders.

Fri, 04/15/2011 - 13:50 | 1173248 Creed
Creed's picture

Once long-term rates have leaped up, then start accumulating the high-yield bonds.

 

 

Sometime around 2008 a new law was made that limits treasury purchases by Americans to 5k per year. I assume certain classes are exempt.

If I recall correctly.

I always wondered why that was; I assumed at some point T's would become desireable.

 

Thoughts?

Fri, 04/15/2011 - 14:16 | 1173372 illyia
illyia's picture

I had forgotten.

My thought: Another piece of the puzzle.

Like the changes to bankrupcy and credit card laws in 2005...

Fri, 04/15/2011 - 15:03 | 1173536 Howard_Beale
Howard_Beale's picture

That was for savings bonds, not Treasuries. You can buy as many Treasuries as you want.

Fri, 04/15/2011 - 13:57 | 1173285 illyia
illyia's picture

The best laid plans of mice and men...

Ah, yes... the best laid plans can be thrown thither by one little word: DEFAULT.

As in: I AM NOT GOING TO PAY.

Not to my (the once upon a time) nation; not to those my the fraudulent leaders contracted with; not to Europe or China. I did not sign up for any of this... and I won't play.

Treason has been committed.

If you have no person debt, and work only to maintain your person without currency transfer... then how can you be made to pay?

Fri, 04/15/2011 - 14:14 | 1173293 illyia
illyia's picture

A head tax... ...

Fri, 04/15/2011 - 15:13 | 1173589 11b40
11b40's picture

Would that head tax be for giving or for receiving?  Just curious.

Fri, 04/15/2011 - 14:15 | 1173301 illyia
illyia's picture

Hence Universal Obamacare...

Sheeesh...

Fri, 04/15/2011 - 14:10 | 1173327 zenith191
zenith191's picture

What the true believers of hyperinflation and the destruction of the dollar cannot accept is that debt is an asset to the owner of that debt. In focusing solely on the advantages of inflation to borrowers, they ignore the critical fact that inflation quickly destroys the value of the asset that debt represents to the owner. And debt is a primary asset to pension funds, insurance companies, banks, and indeed the entire financial sector.

Yeah one little problem with that premise. If you squeeze the people who owe you that debt too hard and they default then you will get nothing back. Your debt asset goes immediately to zilch. The idea with inflation is to relieve enough pain that your debtor can continue servicing the debt but not high enough to kill the goose that laid the golden egg.

 

Fri, 04/15/2011 - 15:44 | 1173727 HomemadeLasagna
HomemadeLasagna's picture

Right.  If there is only one buyer of Treasuries as posited, and that buyer stops buying, the result isn't higher rates.  Its a failed auction.  You may see those higher rates, but not for long.  If your only buyer of debt stops buying, that's the path to default.  The flaw in this theory is not taking it to the next logical step, which is the loss of confidence in the currency that such a proposed scenario leads to.  That gets you to hyperinflation.  The above may be a step along the way, but it hardly seems like a counter to hyperinflation.

Fri, 04/15/2011 - 18:12 | 1174451 XitSam
XitSam's picture

Agreed. Risk of default is not negligible.

Fri, 04/15/2011 - 18:03 | 1174422 malek
malek's picture

Exactly.

Fri, 04/15/2011 - 14:46 | 1173480 redpill
redpill's picture

So helicopter Ben is going to do a complete 180-degree turn, abandon the last 4 years of monetary policy, abandon his "inflation target" and suddenly embrace deflation warmly?  Sorry I just don't find it plausible.

Fri, 04/15/2011 - 22:45 | 1175164 jjreal
jjreal's picture

Simply brilliant, heretics are either totally wrong or totally right :))

Fri, 04/15/2011 - 11:17 | 1172506 MK ultra
MK ultra's picture

It's all clear to me now. The U.S. will become a nation of economic slaves.

Damned glad I blew it out in the 80's and 90's. Will have something to tell the young ones about.

Fri, 04/15/2011 - 11:24 | 1172535 Oracle of Kypseli
Oracle of Kypseli's picture

We already are. Unless the banksters go to prison there will be no salvation. 

Fri, 04/15/2011 - 11:28 | 1172564 Sudden Debt
Sudden Debt's picture

States sell prisons to banks to pay for their debt.
Bankers own the prisons.

So what good does it do to send them to their own prisons?

Fri, 04/15/2011 - 14:15 | 1173357 KinorSensase
KinorSensase's picture

yep.  our entire political/social/legal system is just as fucked as the economic system.  Learn to swim.

Fri, 04/15/2011 - 11:48 | 1172563 Oh regional Indian
Oh regional Indian's picture

Just a short litle change from will become to has become and you are on the money Sir.

The US (and actually the rest of the world with it, this is sheeple we're speaking of) are already debt slaves. Those that are not are being sucked into the vortex faster than you can say Credit Card.

Here in India, the debt enslavement machine is in full swing. People were kept quality product hungry for decades, while watching TV that showed opulent western lifestyle.

Then, starting in 1990 and accelerating in 5 year increments, everything was loosened up, import regulations and tarrifs, credit availability, foreign TV channels (big one, created the aspirationalist economy), shit service, call center jobs, fast forward to McD's delivery jobs, cheaper credit, no money down.... same track but at warp speed. in 10 years, they have 50% of a population for whom takign a loan was anathema to everyone wants it. Farmers got the short end, loans for seeds (terminator, GMO shit from cargill  and monsanto), loans for tractors they did not need and could not repay after one bad season....

classic, horrifying, heart-less....and unfolding at warp-speed even as I type.

ORI

http://aadivaahan.wordpress.com/2011/04/15/the-death-of-empathy/

Fri, 04/15/2011 - 12:03 | 1172722 Irwin Fletcher
Irwin Fletcher's picture

ORI, formerly in the US education system, I'm not sure about now, this process was called the 'transition to a service-based economy'. Teachers/professors looked at you real funny if you suggested that the acceleration of this process by inefficient government policies should be questioned. Similar story with GMO crops right now, but I thought India was one of the remaining hold out countries? Has something happened in the year or so since this article?

http://www.nakedcapitalism.com/2010/02/india-defies-monsanto-says-no-to-...

Fri, 04/15/2011 - 12:21 | 1172815 Oh regional Indian
Oh regional Indian's picture

Irwin, the GMO story un-folded under th etable here so to speak. Pay someone a little sumtheeng and you can do whatever. Clinical trials is one such "growth" industry in India right now.

They started out with BT cotton, a major cash crop in many parts here. Ruined many a farmer (farmer suicides are off the charts). And monsanto sold their terminator seeds and round-up ready seeds. They made a big hue and cry about Brinjal (that would be eggplant in the US) but that was all for public consumption. Such an unregulated and unregulatable market here, they just did their stuff.

So yes, we are quite GMO'd, sad to say.

ORI

Fri, 04/15/2011 - 12:41 | 1172912 Irwin Fletcher
Irwin Fletcher's picture

Thanks ORI, even though that's not what I'd hoped to hear. Maybe it's inevitable. Democratic processes and activism are capable of creating well-intentioned laws, but perhaps there is just no mechanism for enforcing them and punishing offenders. Maybe as long as there is opportunity to profit, those charged with enforcement will either share in these profits or encounter a worse fate.

Fri, 04/15/2011 - 13:58 | 1173283 slewie the pi-rat
slewie the pi-rat's picture

hey fletch!  ORI has a site, which he advertiZes here about 100X/week, where he plays Great Mother to almost anyone.  lately, he doesn't seem to be able to keep the venues straight and has been talkin like a man with a paper asshole all over this site.

that said, i consider him a pretty damned good guy and a friend, to boot!

Fri, 04/15/2011 - 15:48 | 1173734 anonnn
anonnn's picture

re: insanity

A debate on "How deliberate manipulation of inflation/deflation for personal gain is not insanity" would be interesting.

Likewise, with such topics as "How unfairness, privilege, fraud, omission of vital data, Corporations-are-persons and Royalty lines [Emperors-Kings-Queens] can be justified markers of insanity".

Fri, 04/15/2011 - 22:59 | 1175192 jjreal
jjreal's picture

Well, the USofA has always been a nation of slaves, since it's founding... the rest of the world is not much different, maybe less extreme. Original slaves were "owned" and worked for "free" but the "owner" had to use his own income to give them shelter, food, clothing, healthcare, also to their families ... now the slaves are "free" but the "ex-owners" pay them miserably and don't have to worry about housing them, feeding them, clothing them or their families, less headaches - just saying, it's more or less the same in the end... bread and circus, please give us more !!!

As a very wise old physicist/economist says (you know who I am referring to): human nature changes very slowly, if at all.

 

 

Sat, 04/16/2011 - 14:40 | 1176209 dark pools of soros
dark pools of soros's picture

The Story of Your Enslavement

http://www.youtube.com/watch?v=Xbp6umQT58A

Fri, 04/15/2011 - 11:18 | 1172507 hedgeless_horseman
hedgeless_horseman's picture

Buy low, sell high works for treasuries, too?  Nothing new here. 

That said, buying in late to a yield rally is easier said than done. It requires either a crystal ball or brass balls. 

Fri, 04/15/2011 - 11:18 | 1172509 X. Kurt OSis
X. Kurt OSis's picture

Yep.  One big transfer payment in the form of an IOU from the sheep to the banks with regular debt service through no real wage growth and a negative real interest rate. 

What's your point?  This has been going on for decades. 

 

Fri, 04/15/2011 - 11:25 | 1172552 W.M. Worry
W.M. Worry's picture

They have been rehearsing it for decades. Now they're taking the show on the road.....

Fri, 04/15/2011 - 11:17 | 1172512 Hedgetard55
Hedgetard55's picture

Con of the Century is in the White House right now.

Fri, 04/15/2011 - 11:34 | 1172596 lunaticfringe
lunaticfringe's picture

+100

Fri, 04/15/2011 - 11:38 | 1172611 X. Kurt OSis
X. Kurt OSis's picture

Nah.  The prez is just as much a sucker in this as everyone else.  He's the dummy in the room that stands up after the pitch and goes "This is a great deal!  Where do we send our check!"  You need an influential mark to get the rest of the sheep to capitulate. 

The marks thus far?  Clinton, Bush II, Obama.  The next one will be worse.  The next guy may well be physically red from all of the kool aid.

 

Fri, 04/15/2011 - 11:58 | 1172672 X. Kurt OSis
X. Kurt OSis's picture

Not that I care, but I'm curious as to what motivates people to junk posts.  The theme for ZH is anonymity.  Why not just post a reason or objection?  We are all hiding behind as least the perception of anonymity... to silently junk when you are already posting anonymously just doesn't make sense to me. 

I get it if you don't feel like writing a response, so lazy or lack of interest in fully responding to something would work for me as explanation.  Again, not that I really care, just curious.

Politics seems like an obvious topic for people to junk no matter what you say.  For what its worth, I don't really have a political view.  All politicians should jump off the same bridge, imo.

Fri, 04/15/2011 - 13:31 | 1173131 pan-the-ist
pan-the-ist's picture

Junk.

Fri, 04/15/2011 - 14:16 | 1173363 slewie the pi-rat
slewie the pi-rat's picture

lol!  pan-the ist + avatar = fabulous & wonderful, too!  must admit don't regognize the portrait but it could be a pol philos. or writer whom i admire, already.  i don't junk XKurt0 and have preferred to blog to him if i think 1 or 2 thoughts might apply.  plus, he's even cogent and has nailed more than one thingy on zH, at times.  perhaps.  personally, i value XK0 in that he's put a little Juice into the strings, from time to time.  i think.

Sat, 04/16/2011 - 07:40 | 1175542 pan-the-ist
pan-the-ist's picture

That's Spinoza.  Pantheism is his baby.

Fri, 04/15/2011 - 23:38 | 1175256 RockyRacoon
RockyRacoon's picture

... I'm curious as to what motivates people to junk posts.

I've concluded that it's jealousy.  Most folks being a product of the current educational system can't compose a proper sentence so they begrudge your ability to do so.  In the same sense, they are unable to assemble a cogent thought, so that, too, raises their impulse to strike back.   What this site needs is a thumbs-up button.   In conclusion, wear your junks with pride.

Fri, 04/15/2011 - 12:14 | 1172781 JW n FL
JW n FL's picture

*** "The next guy may well be physically red from all of the kool aid." ***

 

Get your KoolAide!! Your Banker Lobby Dollars!!! Getum while they are hawt off the press... wet ink dollars from the 0% Fed Window!!! Come on whos next? step up and get your cut of the Lobby Dollars!

Fri, 04/15/2011 - 13:33 | 1173130 Chuck Walla
Chuck Walla's picture

Truly, I think Obama is a narcissistic sucker who believed the hype he was told by Soros and his operatives. when they are all in a room, Obama is the only one who doesn't know who the chump is.

Fri, 04/15/2011 - 13:43 | 1173208 tarsubil
tarsubil's picture

This is one of the funnier posts on ZH the last couple days.

Fri, 04/15/2011 - 11:44 | 1172641 InconvenientCou...
InconvenientCounterParty's picture

I compliment you on your ignorance of the past.

You will make a fine soldier.

 

 

Fri, 04/15/2011 - 12:02 | 1172715 samsara
samsara's picture

heh heh,   Just what I was thinking.

Fri, 04/15/2011 - 12:13 | 1172785 Irwin Fletcher
Irwin Fletcher's picture

No love for the Hedgetard?

Fri, 04/15/2011 - 13:36 | 1173148 Vendetta
Vendetta's picture

"Single acts of tyranny may be ascribed to the accidental opinion of  a day.  But a series of oppressions, begun at a distinguished period, and pursued unalterably through every change of ministers, too plainly proves a deliberate systematic plan of reducing us to slavery." - Thomas Jefferson

 

Ever since Aug. 15, 1971


Fri, 04/15/2011 - 14:59 | 1173519 faustian bargain
faustian bargain's picture

Damn that TJ was a smart man. I think he was probably the intellectual high point of the US political history. All downhill from him.

Fri, 04/15/2011 - 11:53 | 1172666 101 years and c...
101 years and counting's picture

it took a decade to set up the con of the century.  they even killed 3,000 people on Sept 11, 2001 to get the ball rolling.

Fri, 04/15/2011 - 11:19 | 1172513 slaughterer
slaughterer's picture

Nice typo: "the Fed's purchase of taxic assets"  "Taxic"  We got the toxic with our taxes.

Fri, 04/15/2011 - 11:22 | 1172530 bingaling
bingaling's picture

I thought the author was from Boston .

Fri, 04/15/2011 - 11:21 | 1172518 KidHorn
KidHorn's picture

Fri, 04/15/2011 - 11:20 | 1172519 Rastadamus
Rastadamus's picture

Fuckin bitchez!

Fri, 04/15/2011 - 11:41 | 1172520 hack3434
hack3434's picture

Right...as if Atlas won't shrug. Those that have the means will just pack up and leave.

Fri, 04/15/2011 - 12:26 | 1172845 JW n FL
JW n FL's picture

Maybe if People got a clue? then "We the People" could take back our Country from the "Banker Lobby Dollar Whores"!

 

The fact that the Populace is spoon Fed shit from.. CNBC, MSNBC, NBC and the Corporately Owned Like!! Means that the Facts of how "We the People" are really fucked will Never, EVER! hit main stream..

and then...

Most, like the Union Workers! they dont give a fuck about how people are getting fucked.. they just want thier cushy jobs with pensions back..

The Country is FILLED! with Lazy Fucking People who dont care about aything except danzig wiff da starz and judge judy. The Majority here doesnt want change they want spoon fed!

As for leaving.. well! if the Majority wants to be blissfully ignorant about how they are being robbed blind! if the majority is ok with the Constitution being shit on.. what else is there to do?

Watch America turn into the largest 3rd World Police State with a socio-economic divide which no amount of good faith or hard work can ever span.

The damage being done will hit a point of no return, that is to say that the idiots who are owned (Government) by the Corporate Souless Quarterly Bonus Mind Set thru Lobby Dollars will undermine themselves and the Country to the point of there being no way to get back.

You can Not un-pickle a cucumber!

It is a sad thing to watch.

and to be clear the majority of broke fucking idiots who dont have a clue or the ability to comprehend will be the ones voting in the next round of scumbags to power, Not You or me! we dont have the votes to effect change!

Pump up the flouride in the water supply! keep believing the tax breaks will effect you one day.. dream the dream! any help offered to our fellow Country men / women is Commie behavior! let them fucker starve and suffer!

Someone? Please grab the Flag and turn the lights out on your way out!

Fri, 04/15/2011 - 12:49 | 1172946 zaknick
zaknick's picture

Ha! Them leave this juicy meal ticket? Atlas Shrugged....what a sick joke. Bankster propaganda!

For the antidote to Ayn Rand see Murray Rothbard (for you brainwashed enough not to see right through her).

Fri, 04/15/2011 - 14:35 | 1173433 SRV - ES339
SRV - ES339's picture

Actually a great read, and a noble philosophy... seriously, as much as I disagree with it. Of course it breaks down completely in real life (John Galt exists only in Ayn's imagination)... we get Lloyd, Jamie, Ben, Tiny Tim... and even more fraud and corruption than government could even imagine, let alone execute.

Fri, 04/15/2011 - 15:05 | 1173546 faustian bargain
faustian bargain's picture

This juicy meal ticket is just about sucked bone dry.

If AS were bankster propaganda, the heroes would have been bankers. The one thing Rand seems to have seriously underestimated is the absoluteness of the corrupting influence of fiat currency. Beyond that, though, she pretty much nailed the whole fascist downward spiral, when government and private industry start making backroom deals.

Fri, 04/15/2011 - 11:23 | 1172522 Quintus
Quintus's picture

This will work spectacularly until they try and extract $100 of interest payments for every $90 of wealth the economy generates.  Actually, things will tip over well before that, but you get the point.

As Greece amply demonstrates, you cannot choke the real economy with additional interest payments beyond a certain point.  Then everyone gives up, realising that the task is impossible and the interest just goes unpaid.  Your 'Elites' will be left holding a bunch of defaulted paper secured against an economy that is unable to honour it.

 

Black Economy Bitchez!

Fri, 04/15/2011 - 11:28 | 1172555 Oracle of Kypseli
Oracle of Kypseli's picture

The Greek politician bastards are about to cut disability payments, instead of giving haircuts to the French banksters.

Fri, 04/15/2011 - 12:15 | 1172798 Geoff-UK
Geoff-UK's picture

Because disability payment recipients can't bribe politicians with as much money as French banksters. 

Fri, 04/15/2011 - 11:28 | 1172566 Whats that smell
Whats that smell's picture

No, they will make you and I pay. Remember the "Elites" call the shots.

Fri, 04/15/2011 - 11:34 | 1172584 Quintus
Quintus's picture

No, they really don't when it comes right down to it.  Let's see how the ECB gets on 'Making the Greeks pay' shall we?

Fri, 04/15/2011 - 11:50 | 1172665 RichyRoo
RichyRoo's picture

Greek bonds are used as colateral for leveraged ECB loans, and central banks dont care about haircuts, theyll just adjust the colateral terms to cover the banks for the haircut.

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