Treasury Department

Waste and Fraud Are the Real Causes of the Deficit

I really need to stop being so pessimistic. I’m getting richer by the day. My home value is rising at a rate of 1% per month according to the National Association of Realtors. At that rate, my house will be worth $1 million in less than 10 years. Every mainstream media newspaper, magazine, and news channel is telling me the “strong” housing recovery is propelling the economy and creating millions of new jobs. Keynesian economists, Wall Street bankers, government apparatchiks and housing trade organizations are all in agreement that the wealth effect from rising home prices will be the jumpstart our economy needs to get back to the glory days of 2005. Who am I to argue with such honorable men with degrees from Ivy League schools and a track record of unquestioned accuracy as we can see in the chart below? These are the facts. But why trust facts when you can believe Baghdad Ben and the NAR? It’s always the best time to buy.

As I and many others have pointed out for years, unless you are a crony Wall Street welfare queen you can pretty much forget about any high level position in the Obama Administration.  Barack made that clear from day one when he decided to surround himself with two of the people at the core of the 2008 financial crisis, Larry Summers and Tim Geithner.  The trend is simply continuing with the current nominee for Treasury Secretary: Jack “Bailout Bonus” Lew.  The revolving door is institutionalized and at this point as reliable as a Swiss watch.

All Capitalist Systems Have Some Inequality.  We Don’t Want To Prevent All Inequality … Just Economy-Wrecking Levels

Several days ago we wrote about what we defined as the Fed's "D-Rate" - the interest rate at which the cash outflows from payments by the Fed on its Excess Reserves will surpass that cash inflows from its asset holdings, a very troubling day because as we further explained, from that point on the Fed would be "printing money just to print money." In other words, with every passing day, the Fed is getting ever closer to the point where the inflation it so very much wishes to unleash will force it to essentially request a technical bailout from Congress (and certainly will halt all future interest remittances to the Treasury), and the longer this takes, the lower the breakeven interest rate becomes, until one day it is so low the tiniest rise in rates will immediately put the Fed into the red. It now appears that Congress itself, the ultimate beneficiary of the Fed's free money policy as nearly half of all US spending is funded by the Fed's monetization of the deficit at ultra low rates, is finally catching on to what is the ultimate rock and hard place for Ben Bernanke. In a letter penned by the Chairman of the House Oversight & Government Reform Committee, Jim Jordan, says that he is "troubled by the corresponding effect that the Federal Reserve's expanding portfolio could have on current and future economic growth" and has asked the Fed what its "future plans to unwind the [$3 trillion and rising at $885 billion per month] portfolio" are.

The President's proposals are gimmicks to hide debt.

We urge readers to read the bolded section below, which comes straight from this quariter's Treasury Borrowing Advisory Committee (i.e., Primary Dealers) presentation to the Treasury Department, and explain, with a straight face, just how the Fed will ever be able to not only stop monetizing debt and injecting $85 billion of flow into the stock market, but actually sell any holdings.

“Facts do not cease to exist because they are ignored.” – Aldous Huxley

The entire system is corrupt to its core. Both political parties, regulatory agencies, Wall Street, the Federal Reserve, and mainstream media are participants in this enormous fraud. They grow more desperate and bold by the day. The lies, misinformation and propaganda being spewed on a daily basis become more outrageous and audacious. They are using the Big Lie method on a grand scale. They frantically need to lure the muppets into the stock market and the housing market to keep the game going a little longer. You can sense we are reaching a tipping point. The system they have created is mathematically unsustainable. Therefore, it will not be sustained.

It is a well-known fact that nobody in Congress ever reads, or even skims, any law, and especially not the fine print, it passes until long after it has been enacted into law. It appears the same is just as true for the biggest pillar of support for the Obama administration: America's labor unions, whose liberal vote every election is instrumental to preserving the outflow side of America's welfare state. As it turns out, it was the same labor unions who enthusiastically supported the primary accomplishment of the Obama administration in the past 4 years, Obamacare, only to realize, long after it has become reality that, surprise, their healthcare plan costs are about to go up. And, as the WSJ colorfully summarizes, they are now "turning sour."

Smarmy is gone.

As you probably know, in 2010 the US government passed one of the most arrogant, destructive, poorly conceived pieces of legislation in history, now known as the Foreign Account Tax Compliance Act (FATCA). FATCA heaps all sorts of reporting requirements on US taxpayers with foreign financial accounts - in a mind numbing 544 pages... Here’s the bright side of all this nonsense: now that the rules are finally settled, it’s now going to be much, much easier for US taxpayers to open foreign bank accounts. Over the past three years, the opacity of FATCA was too risky for banks. Today, while the final rules are cumbersome, they’re at least settled. So the banks know how to operate. I’m hearing from a number of overseas banker contacts, from Singapore to Panama to Malta, that they’re once again opening their doors to US customers.

After digesting the opinions of the shills, shysters and scam artists, I am ready to predict that I have no clue what will happen during 2013. The fog of uncertainty is engulfing the nation, making consumers hesitant to spend and businesses reluctant to hire or invest. Virtually all of the mainstream media, Wall Street banks and paid shill economists are in agreement that 2013 will see improvement in employment, housing, retail spending and, of course the only thing that matters to the ruling class, the stock market. Even among the alternative media, there seems to be a consensus that we will continue to muddle through and the day of reckoning is still a few years off. Those who are predicting improvements are either ignorant of history or are being paid to predict improvement, despite the overwhelming evidence of a worsening economic climate. The mainstream media pundits, fulfilling their assigned task of purveying feel good propaganda, use the 10% stock market gain in 2012 as proof of economic recovery. The facts prove otherwise... Every day more people are realizing the con-job being perpetuated by the owners of this country. Will the tipping point be reached in 2013? I don’t know. But the era of decisiveness and confrontation has arrived. The existing social order will be swept away. Are you prepared?

Just because there was not enough encroachment by the government into virtually every corner of private life, here is another "collaboration" that will further enmesh big brother into every aspect of private life, in this case private financial life, because as the WaPo reports, "major U.S. banks have turned to the National Security Agency for help protecting their computer systems after a barrage of assaults that have disrupted their Web sites, according to industry officials... The NSA, the world’s largest electronic spying agency, has been asked to provide technical assistance to help banks further assess their systems and to better understand the attackers’ tactics." And while we salute the great diversionary pretext that "Iranian hackers" pose a greater risk to the stability of the US financial system than, say, the ongoing monetization of US debt at a pace of $85 billion per month, which has made the Fed's DV01 rise to a mindboggling $2.75 billion, or idiot pundits who claim all American problems can be resolved with one coin, we can't help but wonder what happens when the most intrusive of US spy agencies, one which as reported last year is free "to intercept, decipher, analyze, and store" virtually every electronic communication in the entire world, now has full explicit access to all bank data, and, incidentally, every American's financial snapshot at any given moment?

If the Republicans want to shut down the government, they have a much better issue to do it over than the Debt Limit. 

And just like that the most surreal two weeks of sheer monetary idiocy is over, with the Treasury and the Fed both formally announcing the death of the trillion trollin' dollar platinum  coin idea, which was nothing but a cheap charlatan trick devised by page view-desperate media outlets to dumb down their already confused audience and distract from the fact that the US is, sadly, once again on the verge of bankruptcy.