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Guest Post: A Primer on Central Bank Suicide
Last night, in the comments of my post on AIG's Foreign Regulatory Capital portfolio, "mikla," a Zero Hedge commenter quipped:
Now, banks are starting to teeter-on-the-edge, and the counter-parties are getting nervous they won't be paid. Everyone knows leverage is FAR beyond the 12:1 international agreement (for all the international banks). Counter-parties are starting to lean on AIG to kick in the cash to cover the minimum 8% capitalization (e.g., "margin call").
They are so screwed. The money does not exist, will never exist, and there is no scenario by which it will ever exist. For various reasons, you can't even print this amount of money (though central banks everywhere will try).
This prompted the question "...I'd love to have an elaboration of your comment: 'For various reasons, you can't even print this amount of money (though central banks everywhere will try).'" mikla's reply, one of the more elegant descriptions of the problem we've seen, is deserving of reposting here:
Short version: It's complicated, but it's similar to the current argument of "inflation or deflation?" Smart people can disagree (there are legitimate arguments on both sides), but in the short term, at least one of them will be wrong.
I'm in the camp believing in short-term deflation, followed by hyper-inflationary sovereign default (worldwide).
In short: Central banks will inflate when that's to their advantage, and deflate when that's to their advantage. They are currently attempting to inflate (at absolutely astounding rates) with some level of success (but not great success).
I assert that this is temporary because you can only "inflate your balance sheet" as long as you can service your debt. The US Treasury can borrow infinite money as long as they pay 0% interest. However, after borrowing infinite money, as soon as the interest rate goes to 1% (which it eventually will), then your "monthly minimum payment" on your credit card becomes more money than your GDP that month. In that case, you're screwed (you can't pay your monthly minimum, and everything stops immediately -- ala Iceland).
[Note: Most government debt is fixed coupon debt so this isn't a perfect analogy, but: 1. There is enough collateral impact that interest rate spikes are brutal anyhow. 2. The "roll-risk" of refinancing short-term maturities is high in this environment. 40% of all treasuries mature within one year at this point, and this number is growing -Marla]
But, what if I just print that money? The current system doesn't work that way: The US Treasury issues a bond, which must pay interest, to trigger the "manufacture" of more money. The US Government *cannot* print more money without putting the US taxpayer on the hook -- hence the debt service issue. So, the US Treasury can't create more money for "free".
But, the Fed can just print more money for "free"? Yes, they can, but they can't give it to the US Treasury without the US Treasury issuing a bond (again, putting the US taxpayer on the hook, triggering the debt service issue). The problem is that the Fed can't just pay the US Treasury's bills directly (although they are trying, by buying all the US Treasury auctions in 2009).
Further, even though the Fed is trying to de-value dollars as much as it can today (indeed, most central banks are trying to de-value their currencies), it realizes that currently, people will actually *use* dollars for stuff. There's a point at which people will just call "bullshit", and not take dollars anymore. The Fed knows this -- and the Fed won't let that happen (they will have just killed themselves, because they have no purpose in life except to control the monopoly called the "dollar"). So, while the Fed buys everything in the US Treasury auctions, even knowing it will never be paid back by the US taxpayer (it's mathematically impossible), the Fed will stop doing that the moment it realizes that the next bond purchase will make the dollar worth zero. The Fed will try to save itself by permitting the US Government to have a failed auction, and to even to sovereign default.
So, when the Fed sees that the dollar is about to be worth *nothing* because they've printed too much, they will back-off and restrict dollar supply, so they can continue to control the dollar monopoly. (Otherwise, the dollar monopoly won't be worth anything any more, because nobody will accept them for any purpose -- thereby making the Fed "dead", ala hyperinflationary currency collapse.)
The excitement comes as we all watch the Fed dance up-to-the-brink of the cliff, but then back away from the edge. Can they back away from the edge in time?
I'm saying "yes" in the short term (we'll see a deflationary depression), but then everything will go to sh*t and it won't matter (dollars will be worthless because the old system will be gone in a hyperinflationary collapse).
But, this is speculating on "brinkmanship", and we don't see the end of the Roman Empire very often. There are actually meetings being held about how to bring it down -- and you and I are not in the room (there are quite a few options for how to trigger the end-game).
On the bright side, Planet Earth has never before seen Central Banks like they exist today, and their suicide is very exciting to watch....
Indeed!
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Can I get my comment about questioning Israel re-posted on the big board? =]
There was drama on this? Did you get into trouble for saying negative things about gold or Isreal?
I'm sure it was probably gold.
The first rule of zerohedge is... pump every three cent rise in Gold like there's no tomorrow.
LOL, come on, when something is being shorted by Central banks, and giant Wall St firms, its price being suppressed in every way known to man (and maybe even some ways unknown to man) and it still goes up, thats gotta tell you sumthin!
Unless you don't believe gold prices are being suppressed, and the stock market is not being propped up.
In which case, I would suggest examining what your starting assumptions are, and work from there.
Gold at 1205.00. Time to write three novels and a coffee table book on the subject!
Gold follows the dollar. Our government WANTS a weak dollar, which INCREASES the price of gold.
A weak dollar enables more debt, as well as will stimulate American exports, which are both desirable in the current economic climate.
The people who say that the Fed wants a weak dollar, but wants to keep gold low are talking out of both sides of their mouth, I think. You can't really have both, because both achieve different objectives.
The views expressed here about both gold and central bank suicide
are oversimplified by assuming the banksters know whats next as
much as we do. Which is wrong- they have written that script.
There is a game plan being followed which
will make the banksters (much) richer and everyone else (much,
much, much) poorer. Its that simple. Gold doesn't matter
in the matrix. If it did, they will confiscate it as they once did.
But wont be necessary this time around. Guns&ammo, tools,
arable land, the know how to use it, booze etc will do you
much more good than gold. Forget gold- they (thugs- gov or
not) will take it from you with or without your life.
Short term deflationary depression, then I dont know if we
would care what. I have a question for all gold bugs out there:
Why would the IMF sell gold when it could have borrowed
freshly printed dollars using its gold as collateral ?
We all know the dollar will be worth less tomorrow- right ?
Why only sucker central banks are buying it ?
Just a stupid question I'm sure but how do you go back to a psydo-gold standard when there is no gold?
Why would the central banks short gold?
Perhaps we should consider which currency(ies) they are shorting it in?
All they have to do is pull liquidity, tank the markets (equities AND commodities), cover their shorts, and presto: More money vacuumed from J6P.
I maintain that the only 'safe' position is 1/2 gold, 1/2 cash. It would be nice to know which one we should hold 100% in, but there it is.
I can't find it on this map:
http://www.lewrockwell.com/blog/lewrw/archives/43575.html
I think it's the one to the left with the stripes...
k'na
Fantastic article. Lets just hope we don't get trillions in IMF / BIS 'carbon-banking' after the suicide of the existing system.
That's illegal.
No it isn't. If you are owed money you have to accept legal tender, but you don't have to enter into an agreement for legal tender. The shopowner just switches to barter, for example or people swap houses instead of taking cash.
I stand corrected.
The refusal to conduct exchange in legal tender, if not openly illegal, is still marginally hostile towards the government in the sense that you are refusing to accept forms of payment that are the only means of paying taxes. (as far as I know...and this argument excludes the fact that it is of course the legal tender for debt, which is the lifeblood of our economy and financial system, which the government has decreed too big to fail) The point I was trying to make is that a general boycott of dollars would be a no-confidence vote on the government, and not just the central bank.
Having said that, I give this issue much thought and cannot say I am confident of this conclusion. There are ways to out on other side of this debacle with a functioning US government and a non-existent fed, which would be ideal, but it is an incredibly hard goal to achieve.
Really? Chinese and middle eastern exporters are obligated by law to send over oil and other goods in return for paper they know to be worthless?
I don't think so.
There is also the fact that the US has the most powerful military in the world and key stategic alliances. There is also the occupation of Iraq which can serve as a springboard for invasion against any of those other exporters that dare refuse the dollar.
Do no kid yourself, these people are not stupid. The prevention of dollar boycott is most likely their main goal since it is the essense of the American Empire. Most, if not all, of the steps taken by this oligarchy in the past and the future have this goal in mind. Or something much more sinister.
TD,
What you're describing are "political considerations," a wonderful way of saying the law says this/that but the political leaders can chose to ignore the law, change the law, go to war, false flag attack, whatever. "Make me" in the vernacular of a 5 year old.
The citizens have jury nullification and the leaders have "fuck you, the law doesn't apply to me." Mexican standoff! I was about to take my ball and go home but they stole that (ball and home) from me as well.
They can refuse to trade with you, that's all. But if they entered the trade then they are obliged to accept the form of payment specified.
Any law requires enforcement. Any law that is unenforcable no longer remains law. If less than 50 percent of the people do not willingingly follow a law it's deemed unenforceable.
Law dynamics 101
As the world grows increasingly short dollar, the Fed will be increasingly incented to bluff with perhaps a 25 bps rate hike or something like the announcement yesterday to conduct reverse repo operations. The problem with bluffing is that the Fed will have to sacrifice the equity market and all the hard work of pumping will be for naught, other than to allow worthless companies to issue equity to the dim witted 401K shills
Okay... One major issue... and quite a bit of what is being said is right, except...........
The Fed isn't purchasing Treasuries and right now the yields are lower than ever. The reason being is that the banks are buying Treasuries because they treasuries maturing off the books at higher valuations than par (meaning the excess reserves disappear at maturity) and they have to keep capital ratios intact for the FASB changes taking place january 1st. Negative T-bill yields means that the demand for short term treasuries are out there and out there in force. We have had 2 weeks of a negative 1mo/3mo roll with a steadily decreasing debt. In the meantime we have zero duration assets (read gold) flying through the roof since their prices only react at very low interest rates and then jump quickly.
Also, keep an eye on the currency (outside the Fed, Treasury & banks) to debt ratio, we're at all time lows of 7.22% with historical averages at 10% approximately... what this means is everyone is out of the dollar and all this "money printing" is actually exogenous credit.
Read "Interest and Prices" by Knut Wicksell
With regards to printing money I have a question (note this is coming from a non-financial industry person). Can the Fed not purchase assets in the market with money it just prints, thereby trying to price-fix? The Fed-treasury action seems to be well defined but the "authorization" it used to buy Frannie debt seems like a roundabout way to prop markets. From what I understand the Fed can only purchase securities that are backed by the US government but technically GSE debt has no such guarantee. Therefore I am suggesting they can break the law (I mean continue to break the law) by buying stuff, like real-estate or businesses etc to just keep propping the markets it wants to target.
You are correct, these purchases (and the Fed's purchase of other open-market securities to manipulate the market) are not legal according to their charter.
Further, these purchases were not permitted by the charter because it's the *exact same thing* as "snapping one's fingers" and seizing real assets -- stocks, bonds, real properties, etc. (The Fed need only "snap-fingers" to create dollars that they instantly convert to real assets.)
The Fed is operating outside the bounds of its charter, but it doesn't care because there is no punishment for operating outside the charter ... they can do whatever they want, with no penalites for violating their charter, because their charter doesn't call for any. (No fines, no prison, no nothing.)
Of course, if Congress doesn't like that, then Congress can disband the Fed, or modify the charter (which the Fed will ignore anyway). However, Congress is composed of financial morons with no backbone, and they are clueless about the problem and how to solve it (so the Fed knows it can continue to act with impudence).
Exactly.
The real power in this country lay with "We the People". However, as long as the people don't exercise their power, it's as if they have none at all. The longer this goes on, the bolder the criminals will become.
Power only exists if it's used. The banking cartel knows this and they're experts at using power, regardless of whether it was given to them or they seized it. Do not underestimate how far these people will go because clearly they have shown they know how to play brinkmanship.
Desperate men will do desperate things. Who is more desperate, "We the People" or those who currently have the power and wish to maintain and expand it?
I've been shouting this from the mountain tops for 3 months - this is a takeover.
When you can make money out of thin air and exchange it for ownership of hard assets, you can acquire the wealth of a nation.
For example, kicking people out of their homes and having a bank lien take over ownership of the home and land when the bank created a loan out of thin air. This is a MAJOR property ownership/rights issue. Who should own the home under these circumstances (bankrupt home owner & bankrupt bank)? Who should have the rights or should it be shared until a final sale (split proceeds)?
BANKS WILLINGLY WROTE ANY AND ALL LOANS KNOWING THEY WOULD BE BACKSTOPPED (THE FED WORKS TO MAXIMIZE BANK PROFIT - SHAREHOLDER PROFIT) WHEN HOME OWNERS WOULD INEVITABLY DEFAULT THEY COULD THEN HARVEST THE REAL ASSETS FOR ALL THE EFFORT OF THEIR DIGITAL LOAN CREATION. WOULD YOU TRADE AIR FOR HOMES? THIS NEEDS FRONT PAGE ATTENTION.
Sounds very much like tantric sex for the central bankers. How close to a complete collapse can Bernanke edge before he finally busts his economic nut all over the serfs? [shudder...]
In short: All profit from the FED is remitted back to Treasury.
Long version from http://home.hiwaay.net/~becraft/FRS-myth.htm#hd11
WHERE DO THE PROFITS GO?
A great deal of concern is often expressed with respect to the profits earned by the Federal Reserve System. These profits are a direct result of its power to create money -- and the power to create money is derived from the government. Many people argue that the earnings, then, should belong to the government rather than go to the Fed. The system is off-budget and a self-financing entity not subject to congressional appropriations. But in fact, the Federal Reserve's earnings from money creation do enter into the government's receipts.
The gross earnings from the system's operations first are dedicated to its operating costs. In addition, the regional Federal Reserve Banks maintain capital; they retain enough earnings to have on hand a "surplus" equal to the paid-in subscriptions of their member-owners. As explained above, the Federal Reserve Banks also pay the dividend to their member banks.
What remains is all paid over into the Treasury. Over its history, the Fed has paid to the Treasury approximately 95% of its earnings. These payments to the treasury are currently running about $25 billion a year. Given the fact that the Treasury, if it created money directly, would incur costs in its administration, the revenue and cost effects of having the Federal Reserve issue are about the same as having the Treasury do so.
In addition, the price of Federal Reserve Bank stock is fixed at $100 per share. It neither appreciates nor depreciates in value. That means that any growth in the capital of the Federal Reserve Banks does not belong to the Banks "owners," but to the Government which would get the accumulated value of retained earnings if the system were ever dissolved.
To the extent that Fed retains earnings for the purpose of maintaining its capital at a specifies proportion of its liabilities, there is no adverse effect on the governments receipts and outlays. Holding earnings means they are invested in Treasury securities, with the interest on the securities remitted to the Treasury. If the Fed did not retain the earnings, the funds would have passed to the Treasury, which would not issue that amount of securities, and thereby save an identical amount of interest. The formal procedure makes no difference to reality, just to which ledger-book column the numbers are placed in.
While these details may be true, they are irrelevant.
In reality, "profits" (and now-a-days, "losses") by the Fed don't matter.
The assertion is that the Fed is performing monetary policy by printing money - lots of it - to devalue the dollar (and to attempt to keep the spinning plates in the air). There is a cost, and they cannot print infinitely nor indefinately. At that point, at their sole discretion, they will change monetary policy to strengthen the dollar to (try to) keep from failing as an institution.
Further, the Fed actually doesn't care whether it makes a "profit" or a "loss". As a monopoly, they have a privileged position to manipulate markets, posture, and "skim" riches as long as they can maintain their existence (that's where you make the real money).
Thank you so much for these comments, mikla. Not only do you "get it" in relation to the Fed endgame, you have explained much more eloquently that I ever could.
The Fed will do whatever it takes to give the illusion that the dollar is worth something (even though its not)-- becuase it preserves the Fed as a viable institution. If the dollar fails, the Fed fails. Why wouldn't the Fed sacrifice equity and bond prices in favor of sacing themselves? Brilliant insight, indeed.
I guess the real question at this point becomes: When will the Fed change monetary policy at their sole discretion to save themselves?
I responded to this comment as an "Anon" (my mistake), but I just wanted you to know, mikla, that your comments here are very much appreciated. Wow, this is great stuff!
Hmmm...I think you still haven't addressed the above objection. The point is that your argument about the cost of debt service overwhelming the Treasury is moot with respect to bonds held by the Fed, since the coupon on those bonds is effectively 0%. This isn't about the Fed as an institution, it's about the ability of the government to continue its spending spree.
It has been said that the Fed is really just a sub-department of Treasury; it and the IRS form the "yin and yang" of montary and fiscal policy; after all, they were created at about the same time.
The real backing of the dollar is the US military; just ask the Iraqis.
I concede that point -- the current "cost of borrowing" is nominally 0% at the moment.
Yes, this would suggest that the Fed/Treasury can continue their spending at the moment. However:
It's difficult to discuss timing, because we're not in control. For example, I think "short-term" we're in a deflationary depression, but that "short-term" may be as little as two years duration, or as long as 10+ years (though I don't think so for us, even though Japan is working on 20+ years).
The essence of my assertion is that the "cost" of producing debt is not zero, even though nominally you and I can agree that at the moment we can pretend (or even agree) that the interest rate is zero. However, as Marla pointed out, 40% of this US Treasury debt is rolling over annually (and that number is growing), and it will *not* stay at zero (whether or not we believe it is really zero right now). That roll-over, in addition to the planned $3.5 Trillion issuance in 2010 causes these finances to behave more like a variable-rate credit card, and less like a 30-year fixed-rate bond.
On this planet, who really believes that there is zero risk, thus commanding a 0% return on your money, for the privilege of loaning your cash to the US Government for 30 years?
That's what a 0% return means, and no, it's not real.
"Given the fact that the Treasury, if it created money directly, would incur costs in its administration, the revenue and cost effects of having the Federal Reserve issue are about the same as having the Treasury do so."
This is complete nonsense, and it is only relevant because it is framed in terms of the Federal Resrve game. If the Treasury issued the currency instead of the Fed, total US debt could be paid off without interest, because we are a sovereign nation. This was attempted by JFK issuing interest free notes through the Treasury which made the Federal Reserve an irrelevancy and many think was the real motive for the assassination.
Also, controlling any nation's ability to pay off its debt through its own currency is the principal reason that no nation should want a one-world currency: it means the loss of national sovereignity. See Iceland.
To find the profit you have to look at the Fed as a whole, including the member banks. That is where you will find the profits .
As an aside, thank you for the challenging notes posted by MS, very well informed on the workings of the Fed, its predicaments and government deficit financing. This is most unusual and raises the quality of the analysis accordingly.
I think one scenario you are perhaps dismissing too quickly is the path where the Fed manages to stay on course between deflation and hyperinflation. This is I believe the scenario the Fed is working on/aiming for. If the Fed manages to achieve that (and it has for 6 months already, against all odds) for a while, it will then have mild to high inflation on its side to erode the debts, private and public.
The (credible) inflation generator is the falling dollar (affecting the essentials for the bottom rung consumers) and rising asset prices (impacting luxuries for the high net worths). With time and enough inflation erosion, the debt becomes serviceable.
The end result is considerably lower living standards for the lower rungs (95%) of society, but I am sure that will be a small price to pay to save the wealth of people on a mission from God. Praise the new middle ages!
For Bernanke, successfully navigating along this path is fraught with black swans of such size that would make Dubai look like an ant fart: UK meltdown, Europe meltdown, Japan meltdown, Russia meltdown, China melt-up or meltdown (two options, aren't they lucky), etc, not mentioning a possible uncontrolled dollar meltdown which I think is easily avoidable with the assistance of all the major central banks worldwide.
This desired outcome is uncertain but not improbable.
W
I agree with you that this is (or was) most likely the current "plan" -- to inflate debts away like they've been doing (as you say, ..."for 6 months already, against all odds").
However, this is frought with risk. It's really hard to walk that razor's edge, and IMHO, the scale makes it impossible: While private pensions are typically not adjusted for inflation, Government pensions are, so this won't do anything to solve that problem. You can't "inflate California's debt away" to a manageable level. The current derivatives market is measured in the Quadrillions -- yes, a thousand trillion, and no, this doesn't balance to a "net-zero" exposure, and this is against a back-drop of planetary GDP of only some $50-60 trillion (the leverage is absolutely out-of-this-world). You can't solve Medicare and Social Security by inflating, although if you squint really hard, you can pretend it takes a stab at Social Security (but not Medicare, which is about the provision of future services at the newly inflated level).
And, the Fed inflating the dollar will not help Europe's leverage, which is even worse, with even worse demographics, and which happens to be a smoking crater (but it's in no one's interest to say so, which is why we all look away).
I think it's likely they didn't initially realize what kind of a poison pill they swallowed in buying a $Trillion in toxic mortgage backed securities. Or, it's possible there's actually a concerted effort to bring the system down: We are at the conclusion of a ponzi, we had a good run, and the most fun and the most money is made by starting a new ponzi.
If the Fed is granted a new franchise for a new currency, then they will have every incentive to bankrupt everything in existence -- because they will be the only ones able to promise capitalization and stability. Now *that* is a serious money making opportunity.
"Ground floor" opportunity, you might say.
Couldn't agree more with what you say. But as you said yourself, it is a question of _survival_: absolutely everything will be done to stick to that line, no matter what. It makes that outcome possible in my opinion, despite the odds.
I think all of this is naive. Interest earned on the debt is paid by tax receipts and distributed to the owners of the Federal Reserve; those who bought 200,000 shares in 1914. The rest are digits in a computer for the current year's deficit and waiting for next year's budget and of course the interest applied to the new funding. What doesn't get paid off is the ongoing deficit, but you make payment to the owners when you pay taxes.
Anyone know why te yield on the two year just fell 40 percent? I'm a noob, but that seems significant especially in light of the reckless fiscal policies.
Hyperinflation seems pretty easy to control at this point. Raise interest rates a couple percent now and banks implode, gold dives, and dollar strengthens. I'm not seeing how this "hyperinflationary currency collapse" is going to occur unless they sit on 0% interest rates forever.
Thoughts??
Raise interest rates a couple percent now and banks implode, gold dives, and dollar strengthens.
Economy implodes and takes tax revenues with it; higher interest rates make Treasury roll much more costly in an environment of falling revenues. Demand for government spending for social welfare ramps up.
Thoughts?
Raising interest rates is the ultimate way to attract attention to your auction. The moment the USA really needs funding it will raise rates. That will dry up resources from other country auctions which will in turn raise rates even higher. The (other) hyper-inflationary spiral... But we won't get there, I think. There's a limit where higher rates won't attract funding due to risk of default, and there's a long list of countries before you get to the USA.
The fed will be able to raise rates when the other major way of increasing the money supply gain footing: fractional reserve banking and leverage. This depends on the american consumer. If this conditioning for making people stop saving completely and instead choose to go into debt takes hold, then leverage can increase among the whole economy. So basically the choice is whether people ever choose to save or if they decide to 'take advatage' of the low rates: 3 month zero interest at best buy on Bruce's article comes to mind, inflation which discourages people to save (dollars that is), pretty much everything the government and the fed is doing right now is to encourage people to make the choice to go further into debt.
The indicators to watch for whether the ever impressionable consumer will make the choice that will allow the fed to raise rates are
the savings rate: http://www.bea.gov/BRIEFRM/SAVING.HTM
and the money multiplier: http://research.stlouisfed.org/fred2/series/MULT
All the money needed for a hyperinflationary collapse is already out there on the books of foreign central banks. As soon as one runs for the exit, it's game over man, game over.
Can you point us to any references or links about these meetings? OP seems to think she's in the know, so why not spill it?
(I agree with your points by the way).
Anyone see the Real Estate meeting email floating around the internet about real estate over the next couple of years? Not pretty
http://www.freerepublic.com/focus/f-bloggers/2394991/posts
Very informative.. Thank you ZH
Printing money is printing money. It doesn't matter if you are printing on a computerized bank statement or a Federal Reserve Note.
As long as the Fed keeps buying government bonds at a price below the rate of inflation, (or lends to the banks so they can lend to government) the government is paying nothing to borrow.
There are meetings being held about how to bring it down--
My observation is how the options being discussed in those meetings will actually play out since no plan survives the first contact intact. I am among the skeptics that wonder if those that have created and loosed this monster have the capacity or will to attempt to corral it knowing that their efforts may well end in failure. One thing is nearly certain. Those that created this structure did not foresee all of the elements that came or are coming into play during these early stages of the unwinding. Either that or tremendous losses of all sorts of capital with the attendant desire to exert ever greater control of the evolving situation are welcome developments. Regardless, the level of unease leading to the desire to attempt to quantify and qualify the level of event risk, especially in debt and related markets and associated businesses must be in many ways driving the time line on these discussions. So, once again terrain, time and capacity constrains freedom of maneuver.
"I am among the skeptics that wonder if those that have created and loosed this monster have the capacity or will to attempt to corral it knowing that their efforts may well end in failure. . . . Either that or tremendous losses of all sorts of capital with the attendant desire to exert ever greater control of the evolving situation are welcome developments."
JMO, Miles, I believe that the true power structure/men behind the curtain will not only have the will to corral it (if that is their plan, which I doubt) they fully welcome the current situation. I believe the second sentence quoted from your passage sums up their position. Greater control is a welcome development. Destroy, divide, conquer. Again, JMO
I am not so sure of that one. There is considerable evidence pointing to alternatives.
I wonder if the explosion of the derivatives bubble will be blamed on terrorism...with a view to disrupting money supply....or should I take off my tin foil hat? :)
http://online.wsj.com/article/SB125850773065753011.html
"I am worried about some terrorist group [with] the capability to destroy the U.S. money supply," Mr. McConnell said. The impact of such an attack would be "an order of magnitude greater" than the Sept. 11 terrorist attacks, he said.
What????
Destroy the US money supply? Did you ever try and hit a moving target with a Boeing 757?
But, seriously, as if the NSA does not have enough funding already. Who perpetuated the myth that are most protected system are hard-lined to the internet? Be it, private or Government. Please somebody give me an example.
Thanks,
Mark Beck
Crud, I first read this as "Central BankER Suicide".
The Fed will think of genius ways to print money if that occurs, that do not require the Treasury to issue a bond.
Count on it.
We have one get out of jail free card and we are using it now. imho