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Peter Schiff Bashes "Feeble And Fictitious" Budget Deal

Tyler Durden's picture




 

David Stockman's exclamation at the "betrayal" realized within the latest so-called "festerng fiscal" budget deal is taken a step further with Peter Schiff's head-shaking diatribe on Congress' inability to show that it is truly "capable of tackling our chronic and dangerous debt problems." So America blissfully sails on, ignoring the obvious fiscal, monetary, and financial shoals that lay ahead in plain sight. I believe that will continue this dangerous course until powers outside the United States finally force the issue by refusing to expand their holding of U.S. debt. That will finally bring on the debt and currency crisis that we have created by our current cowardice.


Submitted by Peter Schiff via Euro Pacific Capital,

They Bravely Chickened Out

Earlier this week Congress tried to show that it is capable of tackling our chronic and dangerous debt problems. Despite the great fanfare I believe they have accomplished almost nothing. Supporters say that the budget truce created by Republican Representative Paul Ryan and Democratic Senator Patty Murray will provide the economy with badly needed certainty. But I think the only surety this feeble and fictitious deal offers is that Washington will never make any real moves to change the trajectory of our finances, and that future solutions will be forced on us by calamity rather than agreement.

There can be little doubt that the deal resulted from a decision by Republicans, who may be still traumatized by the public relations drubbing they took with the government shutdown, to make the 2014 and 2016 elections a simple referendum on Obamacare. Given the ongoing failures of the President's signature health care plan, and the likelihood that new problems and outrages will come to light in the near future, the Republicans have decided to clear the field of any obstacles that could distract voters from their anger with Obama and his defenders in Congress. The GOP smells a political winner and all other issues can wait. It is no accident the Republican press conference on the budget deal was dominated by prepared remarks focusing on the ills of Obamacare. 

Although he had crafted his reputation as a hard nosed deficit hawk, Paul Ryan claimed that the agreement advances core Republican principles of deficit reduction and tax containment. While technically true, the claim is substantively hollow. In my opinion the more honest Republicans are arguing that the Party is simply making a tactical retreat in order to make a major charge in the years ahead. They argue that Republicans will need majorities in both houses in 2014, and the White House in 2016, in order to pass meaningful reforms in taxing and spending. This has convinced them to prioritize short term politics over long term goals. I believe that this strategy is wishful thinking at best. It magnifies both the GOP's electoral prospects (especially after alienating the energetic wing of their party) and their willingness to make politically difficult decisions if they were to gain majority power (recent Bush Administration history should provide ample evidence of the party's true colors). Their strategy suggests that Republicans (just like the Democrats) have just two priorities: hold onto their own jobs, and to make their own party a majority so as to increase their currency among lobbyists and donors. This is politics at its most meaningless.  I believe public approval ratings for Congress have fallen to single digit levels not because of the heightened partisanship, but because of blatant cowardice and dishonesty. Their dereliction of responsibility will not translate to respect or popularity. Real fiscal conservatives should continue to focus on the dangers that we continue to face and look to constructive solutions. Honesty, consistency and courage are the only real options. 

In the meantime we are given yet another opportunity to bask in Washington's naked cynicism. Congress proposes cuts in the future while eliminating cuts in the present that it promised to make in the past! The Congressional Budget Office (which many believe is too optimistic) projects that over the next 10 years the Federal government will create $6.38 trillion in new publicly held debt (intra-governmental debt is excluded from the projections). This week's deal is projected to trim just $22 billion over that time frame, or just 3 tenths of 1 percent of this growth. This rounding error is not even as good as that. The $22 billion in savings comes from replacing $63 billion in automatic "sequestration" cuts that were slated to occur over the next two years, with $85 billion in cuts spread over 10 years. As we have seen on countless occasions, long term policies rarely occur as planned, since future legislators consistently prioritize their own political needs over the promises made by predecessors.

The lack of new taxes, which is the deal's other apparent virtue, is merely a semantic achievement. The bill includes billions of dollars in new Federal airline passenger "user fees" (the exact difference between a "fee" and a "tax" may be just as hard to define as the difference between Obamacare "taxes" and a "penalties" that required a Supreme Court case to decide). But just like a tax, these fees will take more money directly from consumer's wallets. The bigger issue is the trillions that the government will likely take indirectly through debt and inflation.

The good news for Washington watchers is that this deal could finally bring to an end the redundant "can-kicking" exercises that have frustrated the Beltway over the last few years. Going forward all the major players have agreed to pretend that the can just doesn't exist. In making this leap they are similar to Wall Street investors who ignore the economy's obvious dependence on the Federal Reserve's Quantitative Easing program as well as the dangers that will result from any draw down of the Fed's $4 trillion balance sheet.

The recent slew of employment and GDP reports have convinced the vast majority of market watchers that the Fed will begin tapering its $85 billion per month bond purchases either later this month or possibly by March of 2014. Many also expect that the program will be fully wound down by the end of next year. However, that has not caused any widespread concerns that the current record prices of U.S. markets are in danger. Additionally, given the Fed's current centrality in the market for both Treasury and Mortgage bonds, I believe the market has failed to adequately allow for severe spikes in interest rates if the Fed were to reduce its purchasing activities. With little fanfare yields on the 10 year and 30 year Treasury bonds are already approaching multi-year highs. Few are sparing thoughts for yield spikes that could result if the Fed were to slow, or stop, its buying binge.

So America blissfully sails on, ignoring the obvious fiscal, monetary, and financial shoals that lay ahead in plain sight. I believe that will continue this dangerous course until powers outside the United States finally force the issue by refusing to expand their holding of U.S. debt. That will finally bring on the debt and currency crisis that we have created by our current cowardice.

 

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Sun, 12/15/2013 - 21:31 | 4249331 Truther
Truther's picture

"That will finally bring on the debt and currency crisis that we have created by our current cowardice."

These Bitchez never learn Peter....Don't waste your breath. Fuck'em all.

Sun, 12/15/2013 - 21:49 | 4249366 Hedgetard55
Hedgetard55's picture

Hopefully, the SHTF AFTER Xmas so the "boyz" can bank their big bonuses.

Sun, 12/15/2013 - 22:05 | 4249405 DoChenRollingBearing
DoChenRollingBearing's picture

You can dump all over The Bearing and you can dump all over Rush Limbaugh, but he NAILED this.  Citing a very recent Wash. Post story about "Power Zip Codes" (Zip Codes where BOTH Income and Educational Achievement are very high), he postulated that because DC (home of many of the HIGHEST Power Zip Codes) attracts smart people looking for (and getting) mucho dinero, then that is the reason why government will never shrink.

All of these smart people go to DC to milk the cow (lobbyists, etc.).  The Republicans have finally made it obvious that they have betrayed the principles they espouse.

***

So, what to do?  Gold, fishez!

Sun, 12/15/2013 - 22:14 | 4249413 Obchelli
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removed message

Mon, 12/16/2013 - 07:15 | 4249982 negative rates
negative rates's picture

Somebody's got to play the decoy, might as well be star studded Dave.

Sun, 12/15/2013 - 22:37 | 4249461 NoDebt
NoDebt's picture

DCRB- since when did intelligence have anything to do with earnings?  I'm and idiot and I do OK.  With 10 more IQ points I could probably be Warren Buffet.... or living under a bridge.  I've met geniuses that can't figure out how to unlock their own front door to go outside.  And I've met some pretty "simple" people worth millions (by their own hand).

Please don't confuse intelligence with sociopathy.  It doesn't take a lot of brain cells to realize that government power can make people (by the millions) do stuff for you that you couldn't otherwise make them do.

Proof:  Congressman Hank Johnson (D - GA) said that if too many people went to Guam the island might be in danger of tipping over and capsizing.  On tape, dead-serious, in a Congressional hearing.  April 2010.  Anyone could cite additional examples.  Bags of hammers, almost all of them (your average ZH'er is probably smarter and more roundly informed than your average Congressman).  Yet there they are, seated at the table of governmental power.

 

Sun, 12/15/2013 - 23:28 | 4249556 Anusocracy
Anusocracy's picture

Slightly off topic, but Progressive Liberal Jonathan Haidt, http://en.wikipedia.org/wiki/Jonathan_Haidt, moral psychologist, called libertarians the smartest, most consistent, people out there.

And, after the upcoming rupture of our economic and political surreality, the most often correct.

Mon, 12/16/2013 - 02:08 | 4249791 All Risk No Reward
All Risk No Reward's picture

Schiff is part of the problem.  He never discusses the fraud of Debt Money Tyranny...  prima facia fraud and it only takes fifth grade math and some self-confidence to figure it out...

Debt Money Tyranny

http://www.keepandshare.com/doc/4768883/debtmoneytyranny-6-1-pdf-60k?tr=77

As for pimping gold, apparently, Schiff never considered that the trillionaires will buy up almost all the gold in order to impoverish all the dumb *sses that would walk right into their trap.

It isn't like that approach isn't part of their historical arsenal...

Cross of Gold - read it...  the Banksters were pimping "trickle down econmics" in the '90s...  the 1890s...

http://historymatters.gmu.edu/d/5354

Getting 9/10s of the way there and turning everything over to the criminal Global Monetary Power Cabal is not good enough.

Only the individual will defend individual rights, so get busy learning rhetoric and start convincing people to just say no to their Muppetry.

Thank You for Arguing (I'm not the author, just a reader who appreciates good entry level writing on a critical subject)

http://www.amazon.com/Thank-Arguing-Revised-Updated-Edition/dp/0385347758

Try to avoid Money Power corporate front Amazon, if possible.  You are financing our destruction when you do so.  If that's your only option, bite your lip, do it and work overtime to expose these criminals.

Sun, 12/15/2013 - 22:46 | 4249476 LetThemEatRand
LetThemEatRand's picture

Love you, man, and I'm not your downvote.  But there a helluva lot of smart and wealthy people in places other than Washington.  Here's another Rush quote below.   Does anyone believe that Obama is assaulting bankers?  Rush is a brilliant man and knows how to make a strong argument, but at the end of the day he's a tool for the very people who control both Teams.   He's right that smart people are going to Washington to milk the cow that he works for, but that's like saying that smart people go to Palo Alto to milk the computer cow.  It's true, but what does it mean other than that some smart people know to follow money?  At the end of the day, he's trying to convince people simply to elect the other Team to keep the paradigm going.

"To some people, banker is a code word for Jewish; and guess who Obama is assaulting? He's assaulting bankers. He's assaulting money people. And a lot of those people on Wall Street are Jewish. So I wonder if there's – if there's starting to be some buyer's remorse there."

Let that sink in for a minute.  Forget the Jewish stuff.  It's just there to distract and make headlines.  The important point is this:  Does anyone other than a Team player really believe that Obama has it out for bankers?  And does anyone believe that lobbyists care who is in power?

 

Sun, 12/15/2013 - 23:03 | 4249519 Anusocracy
Anusocracy's picture

The idiot Republicans are beginning to make the French look heroic.

Mon, 12/16/2013 - 00:51 | 4249707 Boris Alatovkrap
Boris Alatovkrap's picture

Idiot Republican political class is accomplish impossible?

Mon, 12/16/2013 - 02:01 | 4249742 LetThemEatRand
LetThemEatRand's picture

Perfectly stupid immovable object meeting perfectly idiotic irrestible force.  Les Miserables ensues.  Apres theatre, le pain.  Qu'ils mangent de la Rand.

Mon, 12/16/2013 - 11:22 | 4250339 Boris Alatovkrap
Boris Alatovkrap's picture

Plus ce change, plus ce le meme chose.

Mon, 12/16/2013 - 08:50 | 4250061 drdolittle
drdolittle's picture

You're right, they say one thing and do another. Does anyone think the obama regime is the most transparent? Or the cheney regime didn't get us involvd in foreign wars and nation building. If the next guy tells us he's going to inflate the debt away then I'll sell all my possessions, cause it'll be deflation city.

Mon, 12/16/2013 - 10:13 | 4250163 Crawdaddy
Crawdaddy's picture

El Rushbo is a goat herder who's job it is to establish the boundaries of what constitutes acceptable thinking on the Red team side.

There was a time not long ago when Ed Schultz and Chris Matthews were considered acceptable guest hosts on his show. Rush, like his old guest hosts, is just another carnival barker front man defending the establishment Big Guv guys. They are there to keep the shit disturbed and supply distractions to deflect attention from who really runs the joint.

Mon, 12/16/2013 - 10:33 | 4250199 kridkrid
kridkrid's picture

Nice post. This is the piece that people have a hard time getting their arms around. Part of the reason... the carnival barkers from both sides do appeal to reason in their critiques of the "other side". Their message becomes alluring when you accept the world as it is framed by our masters. I wonder, sometimes, which of the carnival barkers realize it's a con and accept their role in the con and which ones are themselves simply duped.

Mon, 12/16/2013 - 11:03 | 4250277 Crawdaddy
Crawdaddy's picture

I'd say all of them who have reached any sort of prominence know it is a con, mainly because a true believer would blow out before they reached prominence. A true believer with radio/tv talent ends up with a very narrow channel to get their views out there.

Mon, 12/16/2013 - 11:49 | 4250430 marathonman
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El Rushbo never talked about the Fed and how it controls the entire political system until after 2012 when the QE to infinity policy was inescapable.  Maybe he really believes the red team blue team stuff.  Maybe he never really understood how things 'really' worked to begin with.  Or maybe he's found a profitable niche and just never mentions the real deal.  IDK. 

Sun, 12/15/2013 - 23:07 | 4249524 DoChenRollingBearing
DoChenRollingBearing's picture

@ mis amigos above!

I do NOT mean to imply that wealth makes you smart (or the other way around, etc.).  The data are clear about one thing though: there are LOTS of smarts and LOTS of dough being made in and around DC.

All that money means that they are ALL in a game to get more.  Proof?  Almost everyone wants more money!

They go to DC to get it.  With bigger .gov, the more they can get.

RIP Republican Party ideals.  Rush had this one right.

Mon, 12/16/2013 - 03:16 | 4249843 Freddie
Freddie's picture

Paul Ryan is a pro-amnesty stooge for the NWO.  Patty Murray is supposedly one of the dumbest people in Congress.

Mon, 12/16/2013 - 10:27 | 4250179 Crawdaddy
Crawdaddy's picture

Damn right Freddie. Almost all of the pro amnesty people, especially the present house and senate leadership, all have something else in common as well. Where do they go to church?

Fortunately, they are as incompetent as they are arrogant. This is at least slowing their progress. Things have gotten so bad for the NWO Executive branch team's agenda, they had to bring in a new/old Jesuit (John Podesta) to sort things out.

Mon, 12/16/2013 - 12:14 | 4250535 Vendetta
Vendetta's picture

"The Republicans have finally made it obvious that they have betrayed the principles they espouse."

You mean the principles of fiscal conservatism they espouse?  I don't disagree with you but its been obvious to me for many, many years.   There are solutions that don't require making children in the US possibly starve but it would take true courage and leadership by either political party but neither of them possess those qualities.  Of course, such solutions, if implemented, would probably result in some serious blowback to individual politicians by the monied interests for taking their feeding trough away.  I have seen first hand the corrupt forces that feed at that trough ... when they pulled the plug on their particular interest in their corrupted businesses (sold out)... they immediately went into local politics and joined the business roundtable groups in their respective cities.

Mon, 12/16/2013 - 01:31 | 4249754 AmCockerSpaniel
AmCockerSpaniel's picture

"Cowardice" and or  "GREED"

Sun, 12/15/2013 - 21:31 | 4249332 ZH Snob
ZH Snob's picture

how did they sneak this one through?  looks like they finally figured out they look less foolish if they just agree on a quick and dirty back room deal.

Sun, 12/15/2013 - 21:51 | 4249375 Oldwood
Oldwood's picture

Exactly! They see their popularity numbers crashing and realize if they would just stop calling each other names, everything will be fine. No one is really paying attention to the real numbers and those that are, are extremist whack jobs or enablers busily trying to bury the numbers with meaningless bullshit. We will all be "winning" soon!

Sun, 12/15/2013 - 22:17 | 4249427 NoDebt
NoDebt's picture

Agree completely.

Now onto more important things.... like the 2014 election distraction from the overall decline.

It really is amazing when you think about it.  The unstoppable decline of an emprire.  They all go pretty much the same way- decay from within.  We all know it.  History is replete with examples.  Yet the course seems unalterable while it's happening.  

Sun, 12/15/2013 - 22:26 | 4249447 CrashisOptimistic
CrashisOptimistic's picture

I go much futher.

It's the overall decline of civilization.  America is not special.  It's everywhere.

Sun, 12/15/2013 - 22:40 | 4249472 AUD
AUD's picture

Yes, the pollies here in Australia have recently voted to do away with the debt 'ceiling', because they think they are the final arbiters of what is productive or quality debt. In other words, they believe they are Gods.

Mon, 12/16/2013 - 07:24 | 4249987 negative rates
negative rates's picture

They think they feel like one, but the day a God they don't believe in equilizes the playing field, thier game is over and done with, just wait for it, i'll give plenty of notice.

Mon, 12/16/2013 - 12:22 | 4250574 Vendetta
Vendetta's picture

I find it remarkable how US politicians of either party and their minions have, over the years, ceded so much of America's greatest strength (manufacturing) to China. 

Mon, 12/16/2013 - 12:04 | 4250492 Milestones
Milestones's picture

Agree NoDebt-- on to more important things; such as in the article maker Frountrunning just above this article. Fot those who believe the Gubermint account of 9/11 check out the story bring some insight to bear on SAUDIA'S involvment in the mentioned "event of the decade". 

Just suggesting ya might want to take a peek at the allegations mentioned. I know little of the NYC Post but that is the source of the article but it mentions names,places and dates. Check it out. I have never seen it before.              Milestones

Sun, 12/15/2013 - 21:32 | 4249334 Leonardo Fibonacci2
Leonardo Fibonacci2's picture

But we have Obama as a President in da house, the White House.  Aren't we lucky!!!!  

Sun, 12/15/2013 - 21:35 | 4249341 kridkrid
kridkrid's picture

Government debt is a red herring. The monetary system is the problem. It's a Ponzi scheme, more or less. Government debt is merely the bottom floor on a system that will collapse. Math is a bitch that way.

Sun, 12/15/2013 - 21:58 | 4249389 Al Gorerhythm
Al Gorerhythm's picture

Consider that the system is a Ponzi and that the US rests at the apex. Next conider the tiers of membership. If you consider how the expansion of debt payments filter up and who is paying for it, then the Ponzi is hardly in its death throes. The masses of corraled debt slaves have little choice other than to keep paying their tithe and keep droning their wat to work to pay for it. 

Sun, 12/15/2013 - 22:19 | 4249430 kridkrid
kridkrid's picture

But the ponzi is always in need of the next rung is suckers (those willing to take on the debt) and that rung needs to be larger than the one just before it. The system doesn't care who owns the debt, only that it can continue to roll forward at ever increasing numbers. Consumers are tapped out, corporations are tapped out, the explosion of govt debt ( a global phenomenon) will represent the last frontier, I believe. What else is there? The end is near.

Sun, 12/15/2013 - 22:42 | 4249459 Al Gorerhythm
Al Gorerhythm's picture

The next rung of suckers are being bonded at birth. They are already earmarked to pay the debts of their fathers. The crux of the matter is; yes, we are all tapped out but we have a mob of politicians enabling the growth of this debt through deficit spending. There is no oversight or choke on their behaviour. They are spending your money on making themselves seem important enough to be indispensable. As long as they can create debt (deficit spending to maintain THEIR lifestyle), they will. Now that the FED is purchasing 80% of government bonds, this can go on until the FED owns all of our children's futures. They do now. They are printing money to bribe our "Representatives". These guys are there to protect themselves and we are their ticket.

Sun, 12/15/2013 - 22:58 | 4249507 Barry McBear
Barry McBear's picture

Well said kridkrid.  While I agree the end is near, I think near is relative.  They could drag this out for decades, 20-30 years.  It's in the best interest of all the players in the game for the ponzi to continue.  It's not like a small time ponzi, like Madoff, where the authorities will step in to expose it at some point.  In this case, the authorities will do everything in their power to keep it going.  They can and will change the rules at will and the public is only too willing to believe what they're told.

Mon, 12/16/2013 - 08:51 | 4250064 drdolittle
drdolittle's picture

Hence the government's continually increasing debt

Mon, 12/16/2013 - 11:54 | 4250445 marathonman
marathonman's picture

Just checked my birth certificate and it was indeed issued by the American BankNote Company.  It is a bond on birth for the US to tax my wages to pay the IMF for US debt.

Sun, 12/15/2013 - 22:36 | 4249465 Unpopular Truth
Unpopular Truth's picture

Krid-

Voting you up!

 

Sun, 12/15/2013 - 21:38 | 4249347 OwnSilverPlayMusic
OwnSilverPlayMusic's picture

Deficits don't matter...until they do

Mon, 12/16/2013 - 00:32 | 4249684 Anusocracy
Anusocracy's picture

The mental deficits most politicians have matter a whole lot.

Every day they are ruining the lives of those not at the top a little bit more.

Sun, 12/15/2013 - 21:45 | 4249364 Reaper
Reaper's picture

This is the same deal a promising-to-reform alcoholic gives. We spend (drink) more for the next two years and, then, in future years will reduce spending (drinking) to compensate for our increased spending (drinking) now. Ryan has sugar plums of higher office in the House or the Presidency dancing in his little brain. The present Congress cannot compel future Congresses to cut the budget. A Republican House, Senate and Presidency didn't reduce spending under the first six years of Bush, nor in the last two of Bush with a Democrat Congress. Only a fool would trust either party to reduce spending. We need a fiscal collapse to bring sanity.

Sun, 12/15/2013 - 22:36 | 4249471 Beam Me Up Scotty
Beam Me Up Scotty's picture

I like how the current republicans say, we just need to get majorites in congress again and the WH back and everything will get put back on track.  YA RIGHT!!

Mon, 12/16/2013 - 12:29 | 4250621 Vendetta
Vendetta's picture

"We need a fiscal collapse to bring sanity"

The question is really how long can they keep the current insanity going?  It has been 5, going on 6, years since the initial collapse

Sun, 12/15/2013 - 21:48 | 4249368 yogibear
yogibear's picture

Washington DC has gone Chicago style. Spending, budgets, etc.

Expect the same results with the Chicago gang running things.

Sun, 12/15/2013 - 23:58 | 4249625 alentia
alentia's picture

Chicago gangs dont print money

Chicago gangs run responsible budgets.

I would not dare to compare.

Sun, 12/15/2013 - 21:57 | 4249390 stant
stant's picture

word on the street is during the last debt mess the russians and china threatened them, and it wasnt finacial in nature.

Sun, 12/15/2013 - 22:00 | 4249394 q99x2
q99x2's picture

Have faith that the FED knows how to suck every last ounce of wealth out of the United States of America before they light the match.

They are bankers. That's what bankers do.

Sun, 12/15/2013 - 22:05 | 4249407 hairball48
hairball48's picture

Peter is right--again...in my not so  humble redneck opinion. I can't wait until the bond market turns and goes tits up. I'm looking forward to how the nitwits in the financial news "explain" what happens when TSHF. Should be entertaining.

YeeeeeeeeeeeeeHawwwwwwwwwwwwwww!

Who'll be last last out the door when the sale begins?

Sun, 12/15/2013 - 22:24 | 4249444 CrashisOptimistic
CrashisOptimistic's picture

How is this possible when the Fed can buy all the bonds it likes?

The Fed is a guaranteed bidder.  Further, the entire world would suffer if the US bond market went bidless, and because there is nowhere else for various entities to park money in that magnitude, this scenario isn't possible.

STOP THIS.  Just stop thinking numbers on a screen are EVER going to be allowed to kill people.  The numbers will simply be changed.  By decree.  Look at everything done in 2008 and 2009.  The system would have collapsed then.  They just stopped that by decree. 

GM bondholders were told they have no claim on assets, and labor unions did.  The first QE was done.  QE around the world was done. 

Stop thinking money this or that is going to kill millions.  It won't.  Ever.  It won't be allowed to.

Now physics is a different matter.

Sun, 12/15/2013 - 22:31 | 4249456 hairball48
hairball48's picture

"How is this possible when the Fed can buy all the bonds it likes?"

If the Fed becomes the only bidder for U$Treasuries, then the U$Dollar itself is done, finished, worthless. Nobody knows or can predict when that "moment" will happen.

That's why those who know say, "The Fed can continue to buy/monetize U$Treasury securities...until they can't.

Maybe I mssed something but I thought most of y'all knew that?

/sarc

Sun, 12/15/2013 - 22:31 | 4249458 Calmyourself
Calmyourself's picture

numbers  are all that matter tozh'ers.....  supply lines bitchez, logiistics..

 

 

 

 

Mon, 12/16/2013 - 02:17 | 4249790 hobopants
hobopants's picture

Whether or not the fed can buy up the entire bond market is a moot point. The numbers don't lie and they say we're insolvent. The global economy is kaput and needs a structural reset/overhaul. What is happening now is an expectations game. The value of fiat is psychological and that's what they are trying to manage. They need to maintain the illusion of a legitimate recovering market. This can only done by manipulation in tandem with rhetoric claiming that said manipulation is temporary. The fed is playing poker and bluffing hard, the mystique they've built up helps them do this, but sooner or later the fundamentals underlying the economy are going to call their bluff, then it's off to the races... Whoever is left standing with the most real assets and the means of protecting them will be the winner. This goes for both people and nations.

 

Mon, 12/16/2013 - 09:07 | 4250083 Marco
Marco's picture

The Fed will always buy, but when foreigners stop buying the US trade balance will shift towards actual balance overnight ... which will require quite a bit of inflation.

Mon, 12/16/2013 - 11:37 | 4250393 2bit Hoarder
2bit Hoarder's picture

History might argue otherwise.  Whether it kills millions or not, it will still be a very interesting time to be alive.

Sun, 12/15/2013 - 22:25 | 4249448 stant
stant's picture

yep and i was reading martin armstrong today on the yaun dollar etc and he said eventually the us would break up. well i can read a map. go long confederate flags

Sun, 12/15/2013 - 23:45 | 4249592 SmallerGovNow2
SmallerGovNow2's picture

bring it!!!!

Sun, 12/15/2013 - 22:13 | 4249425 loonyleft
loonyleft's picture

I promise....no new taxes, and I did not have sexual relatons with that woman, so mission accomplished, which is why, If you like your plan, you can keep it. 

Signed Sincerely, 

Mr. Potatoe Head

Mon, 12/16/2013 - 07:19 | 4249985 OldPhart
OldPhart's picture

Signed Sincerely, 

Mr. Potatoe Head

One has to wonder if anyone under 40 gets this reference?

Sun, 12/15/2013 - 22:16 | 4249428 disabledvet
disabledvet's picture

Speaker Boehner has done a total end around of the right wing. http://www.youtube.com/watch?v=JummB7AIDRY "tied them down with their suicidal support of a Government shutdown" then "drove home the victory" with a huge end around "in a totally unsurprising attack of actually passing a piece of legislation that had bipartisan support." (bipartisan is what legislation actually looks like folks. take a look at the ACA to see what "uni-partisan" legislation looks like.) just throwing out a hypothetical here but if i were to say "what will the conservatives look like once a legislative majority drives home the victory" that the latter just had should the right wing persist? http://www.youtube.com/watch?v=3NCLfhmWvJ8 (politically speaking of course.) we'll see about the Senate...they have a voice and it is indeed a powerful one. I don't see Speaker Boehner going anywhere for a long time insofar as his Party is concerned however....something that his highly unusual if not unique for that position. Obviously the Democrats could take back the House. That doesn't seem like a realistic prospect at this point. Here's the latest video feed from inside the White House: http://www.youtube.com/watch?v=0QHcXtEVdag Here's the model for the only thing that makes DC work: http://en.wikipedia.org/wiki/Robert_H._Michel 38 years in Congress and never once the Majority Leader. for him? "not a problem." He was an infantryman in WWII and didn't need to be told what the real deal looked like. This Congressman is THE case study for anyone fancying themselves an "extremist" or "idealogue" in DC. Simply put there is no such thing in that town.

Sun, 12/15/2013 - 23:34 | 4249570 Ident 7777 economy
Ident 7777 economy's picture

 

 

 

What right wing?

 

You mean, he went left? Yes ...

 

 

 

 

Sun, 12/15/2013 - 23:52 | 4249614 stant
stant's picture

so when the gov boots on your neck you look to see if its a left boot or a right?

Mon, 12/16/2013 - 03:46 | 4249862 Freddie
Freddie's picture

I don't like either one but the Democrats are the worsty followed by the RINOs.  You post as "disabled vet" so go look up The Gulf of Tonkin - it is what go the Vietnam War going and it was all Democrat LBJ.  57,000 American boys dead due to an LBJ lie along with at least a million Vietnamese people.

The same Democrat LBJ who sold out the USS Liberty.

Mon, 12/16/2013 - 06:31 | 4249958 Moe Howard
Moe Howard's picture

Michel wore a minature CIB on his lapel.

Mon, 12/16/2013 - 08:23 | 4250044 therover
therover's picture

38 years in CONgress...that's the fucking problem ! 

Sun, 12/15/2013 - 22:19 | 4249431 Whoa Dammit
Whoa Dammit's picture

Here's the theme song for the budget deal, complete with interpretation for the deaf:

Johnny Otis: Willie and the Hand Jive

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

Mon, 12/16/2013 - 13:09 | 4250784 TalkToLind
TalkToLind's picture

Those hand signs are way too crisp, the interpretation needs to be more ambiguous.  After all, you have to pass the bill first to see what is in it.

Sun, 12/15/2013 - 23:33 | 4249571 ebworthen
ebworthen's picture

The left and the right colluding to fuck over the citizens AGAIN.

They will collect their salary and bennies and pensions and have catered meals and vacations; what the fuck do they care?

Both sides are completely bought by the corporate/banking cabal, the oligarchs bribe the complicit kleptocrats, and thus our kleptoligarchy.

There will NEVER be a political solution to the debt, currency debasement, the illegal FED Ponzi scheme, or the rape of The Constitution; COLLAPSE is the only thing that will change the path we are on.

Lots and lots and lots of dead people.

Tragic.

Mon, 12/16/2013 - 07:26 | 4249989 negative rates
negative rates's picture

Tragic yes, but if it equilizes the colluding masses, it will be well worth it.

Sun, 12/15/2013 - 23:48 | 4249596 NoWayJose
NoWayJose's picture

The deal has only one goal - to push the budget issue past the next election. The Republicans have caved so many times that they gave Obama the signal that he never has to negotiate. Could the Republicans have gotten a better deal? Not with Boehner, Ryan, Cantor, McCain, and McConnell as leaders. The only meaningful changes will take a Republican sweep in 2016 -- and the best news there is that the Democrats have gutted the Filibuster rules. Unfortunately, I think our economy and the dollar will collapse before November 2016....

Mon, 12/16/2013 - 08:17 | 4250039 MyBrothersKeeper
MyBrothersKeeper's picture

I agree with your assumptions but there is a huge problem in GOP land.  They have no candidate capable of winning in 2016.  The Democratic vote machine has every free-stuff army ready and willing to pull the lever for more free stuff and with them voting 95%+ democrat it sets GOP up for a big failure.  Secondly, Hillary will unite (bamboozle) women just as the dems have united the free stuff army and the GOP will realize just how stacked the deck is. Who can offset that?  Christie?  Hell no, he'd be lucky to win the majority of conservatives.  The only snowballs chance, imo, would be a Paul/Rubio ticket but that's not likely as it would be a big risk running vs Hillary (and hubby Bill) with so many votes already locked up. Chances are they'd be better to wait until 2020, but by then we'll likely be in a worldwide recession.

Mon, 12/16/2013 - 00:31 | 4249685 chart_gazer
chart_gazer's picture

The feds not going to stop. Their goal--to get all of the outstanding debt held by the public in their possession then poof it away. Presto, US debt goes to $5T overnight

Mon, 12/16/2013 - 01:48 | 4249770 kchrisc
kchrisc's picture

There won’t be any real cutting until the guillotines come on the scene. And they won;t need 10 years to trim things down to size.

Mon, 12/16/2013 - 06:30 | 4249956 Snoopy the Economist
Snoopy the Economist's picture

Cut spending? How could they knowing full well that the resulting depression (fully witnessed depression - not the hidden depression we have now) would bring about too many politicians to be voted out of office. Bread and circuses until the end.

After all..."Never let a good crisis go to waste"

Mon, 12/16/2013 - 07:49 | 4250005 skippy9
skippy9's picture

The US Gov't debt as a % of GDP has fallen to about 3% from over 10% without gov't interference. There is no crisis.

Mon, 12/16/2013 - 11:28 | 4250351 2bit Hoarder
2bit Hoarder's picture

I'm guessing English is not your first language?  

Mon, 12/16/2013 - 12:15 | 4250542 All_Your_Base
All_Your_Base's picture

puff, puff, give

Mon, 12/16/2013 - 08:28 | 4250046 MyBrothersKeeper
MyBrothersKeeper's picture

Cutting QE won't hurt the economy much just like it hasn't helped it.  It will take a psychological toll on markets for a period and then markets can return to more fundamental tenets...especially when done gradually.  The problem is, without the perceived backstop volatility will return (as it should).  But all that is window dressing as the underlying issue is all that cash is already out there and containing inflation will be an issue if real growth takes hold. Secondly, if things go the other direction, the Fed/politicians are basically out of bullets. And if, with a rebel yell, they cry moar, moar, moar the danger of a currency collapse becomes more imminent.  My opinion.

Mon, 12/16/2013 - 08:51 | 4250062 TalkToLind
TalkToLind's picture

Oh great, now they're working together.

Mon, 12/16/2013 - 08:57 | 4250068 Disenchanted
Disenchanted's picture

Funnily enough Peter doesn't mention the win in this for the MIC

The Budget Deal Is a Big Win for the Pentagon | Mother Jones
Mon, 12/16/2013 - 09:48 | 4250119 22winmag
22winmag's picture

If you doubted the fix was in... now you know.

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