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Why China Is Dumping The Dollar - And Why You Should Read Up on the Weimar Republic
As ZH posted today, China is systematically dumping the dollar (and beginning to set up other agreements). CNBC assures everyone, however, that things are fine. Don't read those anonymous financial blogs.
China has a long way to go in turning itself into more of a consumption based economy, so the dumping of USD has to be rather gradual (as to not rock the boat too much, the U.S. still needs to be supplied the funds to purchase Chinese goods, and also most trades are settled in USD for now), but it is happening.
One major reason for this action by China is due to the fact that the United States Government has loaded up on so much debt that it's not possibly sustainable - and the Federal Reserve knows that unless they want to see the house of cards the Keynesians have built come crashing down, they have no choice but to completely monetize the debt. As the dollar continues to be devalued (more in a second), the more yuan China has to print in order to buy dollars to keep their fx target. So not only is China on the hook to pay higher commodity prices (priced in dollars), they're stuck with creating more domestic inflation as well - which is something they don't have time to deal with at the moment, as their housing market is on the verge of collapsing.
Today ZH also pointed out that Greece has 107 Billion Euro in hidden liabilities that oops, they forgot to disclose to anyone. Which made me think, hey, how about the unfunded & if not hidden, largely swept under the rug liabilities the United States has.
Alas, the Treasury doesn't use GAAP accounting when they put out their debt figures, they use cash accounting. This means that all of the social programs we have in place (medicare, pensions, social security, etc) are left out of the debt calculation. China is not stupid, they realize that not only are we going to be 100% of GDP soon on our reported debt, we're going to be well over 100% of GDP on total debt if we are being honest & including our unfunded liabilities. Over $80 Trillion in debt, or over 500% of GDP, accordng to Shadow Stats John Williams.
Here is a chart showing our Gross Debt to GDP, along with Total Debt to GDP if we were being honest (via John Williams, Shadow Stats)
That's pretty isn't it? So what options does that leave the Federal Reserve if they want to continue the global ponzi? You guessed it, monetize the debt, all of it. And as the Fed buys over 100% of the net treasury offerings, the Dollar begins to lose even more purchasing power. This is what puts China in a tough spot, for reasons mentioned above.
And Yes, Monetize the Fed Will:
So, as you can see this is the house of cards we're dealing with right now. China is not being fooled, and they will inevitably leave the dollar behind at some point in the future. Which means less buyers for US Debt, which means more money printing by the fed, and dollar devaluation - you see where we're going here. As this cycle picks up steam, we can expect more inflation than we're already seeing (be it "core" calculated by the Government, or "real" calculated by Shadow Stats).
Here is a nice chart showing how happy we can be that the A. The Federal Reserve was put in place to facilitate this ponzi, and B. That we went off the Gold standard
Pretty soon we can start using money that looks like this -- I reserve the right to be the Battleship.
And finally, the Federal Reserve would like to let the Congress, and the American public know, that no matter what Zero Hedge says about them, they will "not monetize the debt"!
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Enjoy your welfare, leech.
And that .9 cents (9 mils) is a bitch. I'm already not too adept at small numbers, just round it off/up.
a solution to our abysmal mathematics scores compared to the world!
How much has a box of Mac-n-cheese gone up in the past 12 months? Anyone???
Around here... Box storebrand Mac/cheese - Mar11 $1.69 - Mar12 $2.59 = +$0.90 or an increase of 53%... Ain't that core inflation a bitch...
The Fed is like a girlfriend I once had - a big shopper. She'd come home with her booty and show me how much she saved on the $300 she just spent. 30% off on this one. Clearance on this one. 50% off on this one... I told her, "Honey, we got to get you out to those stores more often. You're making us nothing but money."
Not sure China's debt/GDP ratio would be much below the US's, taking into account contigent liabilities (bad loans in asset management corporations, & TBTF banks)...
Does this mean the DOW is going to 531,000,000?
At least!!
Problem is, that will also be the price of a hamburger.
...or a pay toilet to put it later...
So we should include the future cost of SS & Medicare, but not the payment stream that covers those costs?
That's a recipe for a "scary" plot, but I am not sure it is relevant analysis. GAAP obligations are debt incurred for PAST benefits, and/or to gain PRESENT assets. GM will purchase billions in raw materials in the next few decades, and will need to to stay in business, but does not count those costs as debt now.
Until recently, SS & Medicare were running surpluses, and are currently running just about revenue-neutral (if we got rid of the unwise payroll tax cuts). Minor changes to SS would bring it back into balance (e.g., extend the tax past $110K income OR increase retirement age in recognition of longer lives OR cut benefits slightly). Medicare, for 2.9% of payrolls, covers the most expensive part of America's healthcare costs: those age 65 and over. It's a GREAT program.
Want to know what segment of govt spending, if it continues on it's growth path, will bankrupt America first? Military spending. We spend more on our military than the rest of the world combined. $1050 billion/year, if one adds in the Dept of Veterans Affairs, Dept of "Homeland" Security, NSA, military parts of the CIA/State Dept/Atomic Energy Commision, etc.. The majority of your income taxes goes to military spending.
Tell yourself whatever you need to support your political dogma, but remember- A Ponzi is a ponzi.
http://www.concordcoalition.org/issues/facing-facts/what-medicare-surplus
Why not count EVERY possible future spending the govt might do, then, when calculating our current debt. I guess I don't understand your objection. You're accusing me of oversimplifying, but not saying how.
You did say "up until recently", right?
GM can 'decide' how to spend or not spend.
Governemntal programs such as medicare and social security are 'set' obligations.
Learn the difference.
"11.54AM"
I see Mom has finally told our unemployed, 35yr-old, TeaBagger leech that it's time to get out of bed, hung over or not.
So, my question to you is, if you're going to account for SS & Medicare payments OUT in your analysis, but not the payroll taxes IN - why not do the same thing for EVERY government expenditure? Count ALL the money that government will spend in the foreseable future on the military, highways, the courts, etc., as a debt - but ignore the fact that there will be taxes coming in. That way, you could come up with a REALLY huge scary number, that you could then post on the Internet. Then all you TeaBagger idiots can scream, and run around in circles like chickens with their heads cut off, call Obama a socialist, and buy more guns.
Sound like a plan? Great - so now you've got something to do today. Don't forget Mom said make your bed first.
TeaBagger leech is it?
I don't recall hearing of any rapes, murders, thefts, assaults or babies being left in shitty diapers at ANY Tea Party event. I don't recall "teabaggers" wailing and gnashing their teeth that government should step in and pay accumulated college debt for such wonderful and useful courses such as jounalism, gender equality, sports medicine and anthropology.
I don't recall Hollywood millionaires showing up at tea parties and fomenting class warfare against every other millionaire in the country but them, then flying home in their private jet, proving once and for all what absolute fucking hypocrites they are. I don't recall teabaggers destroying private property and trespassing. I don't recall any litter left behind at any tea party event.
And most of all, I don't recall any "teabagger" ever asking anyone else to pay for their shit, just trying to stop spending the treasury into oblivion and to stop the encroachment of government at all levels into more & more parts of our lives.
Fucking parasite.
Amen Brother
Douching ourselves with cliches again, are we?
Unreasoning fear will make people do that (see "1960s Freedom Riders" or "Third Reich"). How about coming up with even ONE fact to contradict the actual topic of discussion. Show us you're capable of a logical construct. Absent that we have to assume that the only territory you're "intellectually" comfortable with is hurling cliche insults.
Let me guess: 24x7 Rush Limpbaugh listener? Brainwashed much?
You dish out cliched and nonsensical ad hominems one after another and then have the gall to complain about cliches?
You're a class act, no-class that is. Your entire persona is a cliche.
I believe the term "teabagger" is a cliche.
Fighting for the last drop of a dried up tit, are you? You're the walking talking cliche here spud.
I see you brought up ObamaCare (Affordable Care Act)...have your premiums gone down? Didn't think so.
If you could get that ring out of your nose that they lead you around by and take off the blinders so you can see better, you might learn a few things and actually feel better about yourself for doing so.
Which topic did you have in mind...Government Motors?
Capable of addressing the original topic in even the vaguest sense?
We already know you're capable of regurgitating cliches. "Brawndo's got electrolytes". Got it. But are you capable of stepping beyond the 15 cliches that Rush chants over and over, and addressing the actual topic of the thread?
You set up a ridiculous strawman and ask me to comment on it?...and you're serious?...lol.
The fact of the matter is, your man Obama came in with the national debt around 10 trillion and it's now sitting around 16 trillion (not counting future unfunded liabilities). Of every dollar that the government spends forty cents is borrowed.
What's to comment on?
He's a reckless boob who doesn't need a veto pen because Reid sits on anything of import over in the senate. We haven't had a budget in over a thousand days.
That may be the way you conduct your household fiscal affairs but most rational people don't.
Yes, I would think staying on topic in a discussion is pretty much a requirement to getting at the truth.
Or - you can just keep chanting the top 10 Rush Limpbaugh cliches.
You introduced "TeaBagger leech" into the conversation here, Olberman clone.
SSI is in fact, a ponzi.
It's running on intra-governmental debt obligations alone, as the money everyone pays in goes into the general fund with an IOU put in it's place. And we know the government is flat ass broke so they can't replace what they've spent without debt issuance.
Apparently you missed where Geithner said last August that without a debt ceiling raise we would begin to selectively default and O'Barry himself said "he could not guarantee that granny would get her check" in that event...meaning (unless they were lying) it's not a cash flow operation at all, as it needs more debt issuance to sustain itself.
So which is it? Did they lie again or is it running as a cash flow operation as you say?
It is much the same for Medicare, whose trustees have once again been compelled (by law) to report that it's funding levels have exceeded the 45% threshold...all O'Barry & Reid can do is wait until the higher taxes kick in under the "Affordable Care Act" (what a fucking laugher) next year...borne again, by those "rich people" in the 200k-250k households, to reduce the deficit of what is spent.
Not millionaires...not billionaires...the 200k set...small business owners and middle to upper class.
"Expenditures from the HI trust fund have exceeded income each year since 2008, with the fund deficit reaching $32.3 billion in 2010. As a result of the provisions of the Affordable Care Act and the assumed economic recovery, however, HI income is projected to grow faster than expenditures through 2018 under the intermediate assumptions. Over the next 10 years, HI expenditure growth is estimated to average 4.9 percent per year, while HI income growth is estimated to average 6.0 percent per year. This trend would reduce the size of the annual deficits significantly but not eliminate them. In 2011, total income to the HI trust fund is estimated to again fall short of expenditures by more than $30 billion, primarily due to depressed levels of economic activity. Trust fund deficits are projected to continue for all future years in the absence of further corrective legislation, although at substantially reduced levels compared to the deficits projected prior to the ACA. Redemption of trust fund assets will still be needed to pay expenditures in full and on time until the trust fund is exhausted in 2024.
http://www.cms.gov/ReportsTrustFunds/downloads/tr2011.pdf
Because once again, all of it goes into general revenue and is spent with an IOU put in it's place, a ponzi. The "assets" they are talking about are IOU's.
You are asking our kids to pay for us on something they will never benefit from in the future. And you should also note government expenditures as a percent of GDP go up, giving cover to Pelosi's stupid macro theories of more government spending equaling more societal prosperity...as it must also be true that if we spent 100% on the military we would be the most prosperous on the planet.
We are, very much, broke...try and get over yourself.
http://www.sanders.senate.gov
Now, when you're done reading it, there are an additional 16 trillion dollars not being added into the equation. This doesn't include the FED balance sheet. While there isn't an immediate demand for these debts, the People are responsible for them, none the less.
Further, you refuse to make any argument, preferring to throw insults. Truth? There are no truths, just variations on a theme.
Yes, warfare and the military industrial complex are a BIG problem, but that is the payoff the rich require for social spending and the increase in taxation. Remember, the wealthy don't like higher taxes, therefore, they need a carrot to signoff on the social spending that allows fascism to survive. That carrot is the profits from military production.
If you want to eliminate military spending- eliminate government.
Teabagger leech? You watch a lot of CNN? I believe the "teabaggers" were those folks with jobs who were protesting govt. excess and infringement on constitutional rights. The same folks who gathered en masse - peacefully, and left the protest site cleaner then when they arrived.
Mom's house is an excellent place to live at 35 while collecting govt benefits and complaining about the "1%" before heading off to the city park to live in shit and rape clueless little hippie girls while scratching fleas off your filthy ass and bitching that the "homeless" are eating the food from your communal kitchen.
Pulp, you are a tool. A classic useful idiot.
I can understand you retreating from the original matter you brought up - in fact you've completely ignored it. Your's was a particularly weak position. May we take it that you concede the point?
As far as your new discussion point, the supposedly-"peaceful" TeaBaggers, clearly you weren't around any of the Affordable Care Act town hall meetings. Watch the goon in the blue shirt here, screaming that he can punch people because THEY'RE "attacking America".
http://www.youtube.com/watch?v=zTXBOgPCh9w
There is a time stamp in the upper right corner. Check it out.
I have not retreated on anything. Your original post was saying SS and Medicare were in the green until recently. I provided a link showing that this is not true. The link is from 2001 showing the only way to show a surplus was to change the accounting standards. That was eleven years ago! SS and Medicare are ponzi schemes.
Your video shows union goons causing trouble with someone. I guess you are trying to say they were Tea Party people the goons were harassing? What is your point? Many people showed up at tea party events, claiming to be members and carrying racist and offensive signs for the express purpose of making the Tea Party look bad. They were exposed whenever possible by Tea Party members at the time. While you are on youtube why don't you look that up? On your video the woman states she was attacked by the guy in the blue shirt. The guys wearing the blue shirts were from SEIU. Union goons. What is your point?
Leech-boy:
The original topic was whether we:
...should include the future cost of SS & Medicare, but not the payment stream that covers those costs?
That's a recipe for a "scary" plot, but I am not sure it is relevant analysis. GAAP obligations are debt incurred for PAST benefits, and/or to gain PRESENT assets. GM will purchase billions in raw materials in the next few decades, and will need to to stay in business, but does not count those costs as debt now.
You have abandoned your objection to that. Wise move on your part.
The rest is you just screeching with your fingers jammed in your ears. I suspect I'm not the first to mention that to you.
If you look at the video more closely, you'll note there is more than one person wearing a blue shirt. (What a shocker!). The guy who is assaulting people, including women and the guys in the blue SEIU shirts, is the blue-shirted one WHO IS IN HANDCUFFS AT THE END OF THE VIDEO. (In caps, because it seems like you tend to need a little help with the obvious.) He's also the one explaining that he punched the black guy, because the black guy "was attacking America!".
Not obvious to you on the video? OK, here's another, with a TeaBagger breaking up a peaceful meeting, calling Elizabeth Warren a "socialist whore".
http://www.youtube.com/watch?v=uFAtkY2giOs
You moved on from the first point, to a second - that the TeaBaggers are reasonable, orderly, great Americans. But I think we've disposed of that second point as well, haven't we?
You are very irritating and not nearly as smart as you think you are.
Did you read the link I posted? You're talking about accounting gimmicks when the whole program is flawed and full of fraud and corruption. While you are here check out -The Biggest Debt Write-Down In Human History- at the top of the page. Pay special attention to the section entitled "a hole in the bucket".
Your video shows a slice of an event not the whole. All I saw was union goons screaming and causing trouble.
Elizabeth Warren? I'm sure you are a fan. She is a socialist whore. How would you categorize her?
Socialism, statism, govt intervention - whatever, they are problems not solutions. You will never open your eyes to that. Too bad.
I just watched your second video. 30 views so far. I guess I was 31. Did you film this? How do you know that guy had anything to do with the Tea Party?
Correct.
Besides union goons, we also had LaRouche moonbats to out as well.
Up Twinkles to you...lol.
I liked your first thoughtful, clear post. But I had to vote you down on the second one due to your lapse into insults for your opponent. Not cool.
I get that. But these guys invented nastiness as a political tool, back with Lee Atwater. Their current philosophical leaders, Karl Rove and Rush Limpbaugh, consist of little else.
There's no point in casting pearls before swine. I say we close "the nastiness gap".
Possibly the most disingenuous and deceitful comment I've come across, I didn't think anyone could be foolish enough to attempt a "you started it" agrument about something that has been occuring without interruption since before written history began.
The left astonishes me with sheer pettiness yet again.
"I say we close "the nastiness gap""
Fine. I hope the nastiness gap's closing crushes your thick but empty skull.
Atwater work with Alinski?
Right you are!!! Like companies have to include in their statements the payment stream that covers the costs of their debt, pensions, and other obligations, right?
until recently millions of boomers were not retiring. your riewview mirror doesn't work well for driving.
While there's no arguing that military spending is off the charts, the fact is that not one penny of your income taxes goes to support the military industrial complex. 100% of income taxes goes to service the debt and support the IRS and its ancillary enforcement agencies. See Grace Commission Report 1984. SS is unsustainable at these levels and the age will be raised to 75 soon enough. That's because social security was a scam from the beginning. Setting the retirement age at 65 when life expectancy was 59 was no accident as this part of the great ponzi was a loser from the start for all Americans who paid "voluntary" premiums for their SS insurance.
The Grace Report was a fantastic thing. WR Grace nailed it then and it is ever so true today!
"$1050 billion/year"
http://www.alternet.org/world/150086/$1.2_trillion%3A_the_real_u.s._national_security_budget_no_one_wants_you_to_know_about/?page=3
wow. fucking logic. i was wondering when that would show up.
I remember telling people in '08 the fed is messing with 'value' and it rarely ends well.....well, I'm the village idiot since there has been no collapse. Great comments, perspective and reminders about timing.
Correction : Its not the Keynesians who built the house of cards; its the Friedmanian monetarists; since BW revocation and Reaganomics days. But I agree the neo Keynesians now say given where we are, only strong Keynesian type measures can take us out of here.
They are wrong; first the debt has to be written off in PRIVATE sector and those Oligarchy shills hoarding their fiat pumps in off shore locations made to bring it back into nation state economy. Strong government in first world can stop that scam. Then the private sector write down; no more socialisation of THEIR debt on nation's books, then once the books are marked to market, we can talk of prudent application of Keynesian type growth but with a clean sheet.
Priorities are all wrong because the Oligarchy still sings its own lying song of can kicking and socialising debt on government books. That is criminal and it needs to be said and acted on. The problem is political not a debate of economic models and economic scalpels. First get the politics of governement honest and transparent. That simple in theory...
but the "Zeitgeist" at the moment is more on suspecting hidden conspiracies of oligarchs instead of focusing on their visible blatant corruption of the institutions.
and the whole issue of the super-leverage of the average citizen is not debatable, a political taboo, so discussing the social super-leverage is somewhat painful, for most.
Be rest assured they will print.
And while your gold sits safe under your protection you can drink a nip of ardbeg.
the
uigeadailits unlike any whiskey i've ever tasted...
Big Duke - Serious question.
Do you take lao dong?
I ask because I make my own.
I agree....ctrl+P. I don't see any other way around it for the Keynsians. Is productivity (and technological progress) increasing fast enough to off-set the debt/fiat bubble? I don't think so, not by a long shot.