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Guest Post: Is The US Monetary System On The Verge Of Collapse?

Tyler Durden's picture




 

Submitted by David Galland of Casey Research

Is the US Monetary System on the Verge of Collapse?

Tune into CNBC or click onto any of the dozens of mainstream financial news sites, and you’ll find an endless array of opinions on the latest wiggle in equity, bond and commodities markets. As often as not, you'll find those opinions nestled side by side with authoritative analysis on the outlook for the economy, complete with the author’s carefully studied judgment on the best way forward.

Lost in all the noise, however, is any recognition that the US monetary system – and by extension, that of much of the developed world – may very well be on the verge of collapse. Falling back on metaphor, while the world’s many financial experts and economists sit around arguing about the direction of the ship of state, most are missing the point that the ship has already hit an iceberg and is taking on water fast.

Yet if you were to raise your hand to ask 99% of the financial intelligentsia whether we might be on the verge of a failure of the dollar-based world monetary system, the response would be thinly veiled derision. Because, as we all know, such a thing is unimaginable!

Think again.

Monetary Madness

Honestly describing the current monetary system of the United States in just a few words, you could do far worse than stating that it is “money from nothing, cash ex nihilo.”

That’s because for the last 40 years – since Nixon canceled the dollar’s gold convertibility in 1971 – the global monetary system has been based on nothing more tangible than politicians' promises not to print too much.

Unconstrained, the politicians used the gift of being able to create money out of nothing to launch a parade of politically popular programs, each employing fresh brigades of bureaucrats, with no regard to affordability. 

Such programs invariably surged during political campaigns and on downward slopes in the business cycle when politicians hearing the cries of the constituency to “do something” tossed any concern about balancing budgets out the window of expediency. After all, the power to print up the funds for debt service whenever needed makes moot any concern over deficit spending.

Former VP Cheney, who fashions himself a fiscal conservative, let the mask drop when, in 2002, he stated that “Reagan proved deficits don’t matter.”

Those words were echoed just a few weeks ago, when both former Fed Chairman Alan Greenspan and Obama economic advisor Larry Summers, in separate interviews, said almost the same, paraphrased as, “There is no chance of the US defaulting on its bonds, not when our government can borrow dollars and print new dollars to meet any future obligations.”

Of course, Greenspan and Summers were referring to an overt default – of just not paying – and not to a covert default engineered by inflation. Unfortunately, like virtually all of the power elite, both miss the point that the mountain of debt that has been heaped up since 1971 is fast reaching the point of collapsing like a too-big tailings pile and taking the monetary system down with it.

Importantly, the debt shown in this chart whistles past the government's unfunded liabilities, in particular for the Social Security and Medicare systems. Adding those would more than triple the US government’s acknowledged obligations – to over $60 trillion.

Given the role the US dollar plays as the world’s de facto reserve currency – with all major commodities priced in dollars, and dollars forming the bulk of reserves held by foreign central banks – the dismal shape of the US monetary system spells trouble for the global monetary system.

Making matters worse, following the lead of the United States, governments around the world long ago adopted similar fiat monetary systems. You can see the deficit contagion in this next chart. It is worth noting that the dire condition of the United States now leaves it in the same muddy wallow as Europe’s desperate PIIGS. 

In a recent article in The Telegraph, Ambrose Evans-Pritchard referenced a paper out of the BIS that paints the picture using appropriately stark terms.

Stephen Cecchetti and his team at the Bank for International Settlements have written the definitive paper rebutting the pied pipers of ever-escalating credit.

“The debt problems facing advanced economies are even worse than we thought.”

The basic facts are that combined debt in the rich club has risen from 165pc of GDP thirty years ago to 310pc today, led by Japan at 456pc and Portugal at 363pc.

“Debt is rising to points that are above anything we have seen, except during major wars. Public debt ratios are currently on an explosive path in a number of countries. These countries will need to implement drastic policy changes. Stabilization might not be enough.”

Viewing the situation from another perspective, we turn to the work of Carmen Reinhart and Ken Rogoff, who studied the factors contributing to 29 past sovereign defaults. They found that default or debt restructuring occurred, on average, when external debt reached 73% of gross national product (GNP) and 239% of exports. Using the Reinhart/Rogoff findings, Casey Research Chief Economist Bud Conrad prepared the following chart showing that the US government is already far along on the path to bankruptcy.  

It’s hard to argue against the contention that the situation is, to be polite, precarious. Given that the obligations of the US government, as well as most of the world’s other large economies, are now impossible to repay and that their reserves are just IOUs backed by nothing, the stage is set for a highly disruptive but entirely necessary do-over of the fiat monetary system.

“Preposterous!” say the lords of finance and masters of all.

Is it?

Of course, these very same mavens completely missed the looming housing crash and the depth and duration of the subsequent crisis – a crisis that is still far from over. In other words, listen to them at your peril, because in our view it’s essential in calibrating your financial affairs to understand that, if history is any guide, we are now well down the road to a collapse in the monetary system.

In fact, over its relatively short history, the US monetary system has come unglued time and time again thanks to politically expedient attempts to interfere with the workings of a free market in order to reward constituents or kick the can on the economic problems of the day down the road.

Thus it is our contention that while the mainstream media focus on the daily gyrations of equity markets or the futile political charade that is Washington, they overlook powerful tectonic rumblings indicating the world’s prevailing monetary system is about to fracture. 

A Brief Timeline of US Monetary System Failures

Here’s a brief history of past disruptions here in the United States. Importantly, with the US dollar now the de facto reserve currency of the world, this time around it’s global.

1861 – When the Civil War begins, the dollar is convertible into gold and silver.

1862 – Congress passes the Legal Tender Act and authorizes the issuance of non-redeemable "Greenback" currency. Convertibility into gold and silver is suspended for all US currency.

1863 – National Banking Act authorizes the chartering of banks by the federal government.

1865 – A 10% tax is levied on the issuance of bank notes by state-chartered banks, effectively ending that practice.

1879 – The US Treasury resumes redeeming dollars for gold and silver.

1900 – Passage of the Gold Standard Act, adopting the gold standard by the United States and demonetizing silver.

Specifically, the act provided for "...the dollar consisting of twenty-five and eight-tenths grains (1.67 g) of gold nine-tenths fine, as established by section thirty-five hundred and eleven of the Revised Statutes of the United States, shall be the standard unit of value, and all forms of money issued or coined by the United States shall be maintained at a parity of value with this standard..."

But 33 years later, to gain the power to inflate the currency and collect the profit from doing so…

1933 – By executive order, Franklin Roosevelt prohibits the private ownership of gold. Congress passes the Gold Reserve Act, which enacts Roosevelt's executive order, abrogates all gold clauses in all contracts public or private, past or future (which cancels the convertibility of Federal Reserve notes into gold), though it confirms the convertibility of US Treasury notes held by foreigners into gold. Eleven years later, the US government takes its show on the road…

1944 – Bretton Woods system adopted with signature countries agreeing to tie the exchange rates of their currencies to the US dollar, which itself is linked to a fixed price of gold. Foreign trading partners retained the right to swap dollars for gold, imposing a de facto restraint on printing more dollars. For all intents and purposes, the US dollar becomes the world’s reserve currency. But 27 years later…

1971 – Nixon abruptly closes the “gold window,” unilaterally reneging on the Treasury's  promise to allow foreign governments to redeem dollars for gold. Bretton Woods collapses. With no remaining tie to a tangible, the dollar is reduced to a paper token. The transition to a global fiat monetary system is complete.

Until 40 years go by and the inevitable consequences of giving politicians free rein over money creation become untenable…

Present day – Sovereign debt crisis. Desperate, debt-laden governments around the globe – the bulk of their reserves composed of fiat US dollars and euros at risk of going up in smoke –  turn to the only thing they know, printing more money and issuing yet more debt. The global monetary system cracks and heads toward failure with no workable alternative on the horizon.

Governments, corporations and investors alike are caught unprepared in the downward spiral of failing fiat currencies and are wiped out by a combination of frantic currency debasements, higher taxation, exchange controls and worse. Social unrest spreads, with the public paradoxically demanding that governments do more, not less.

That’s because all the world’s major currencies are at risk, simultaneously, as the issuers engage in a dangerous race to the bottom. As the monetary system moves inexorably toward terminal debasement and collapse, the results will be catastrophic for the unprepared.

Importantly, while the list of historical attempts to re-jigger the US monetary system have, to this point, more or less succeeded in kicking the can a bit further down the road, the sheer scale of today’s government obligations has driven us into a box canyon, with no way out. As the government’s debt and spending obligations are mathematically impossible to resolve, it is now a certainty that a lot of people are going to wake up one morning to the reality that they are a lot poorer than they thought.

Fortunately for those now paying attention, the collapse of a monetary system doesn't happen in a flash. It is a progression, like the spiral of water down a drain. Thus, while no one can predict exactly when the downward spiral will accelerate out of control, there is still time to prepare.

Dark though the lens may be, this is the lens through which we here at Casey Research view all our investments. Simply, being right or wrong about your investment decisions in the years just ahead will be insignificant if the currencies underpinning those investments shrivel to just a fraction of their current values.

 

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Tue, 09/20/2011 - 23:09 | 1690916 DaveyJones
DaveyJones's picture

yes

Tue, 09/20/2011 - 23:17 | 1690945 caerus
caerus's picture

agreed

Tue, 09/20/2011 - 23:52 | 1691037 wretch
wretch's picture

With everything but, "Social unrest spreads, with the public paradoxically demanding that governments do more, not less."

When social unrest reaches this country, it won't be about reform.

Wed, 09/21/2011 - 00:06 | 1691068 Ahmeexnal
Ahmeexnal's picture

Smart money has been dumping UST with both hands:

 

http://www.cnsnews.com/news/article/israel-has-dumped-46-percent-its-us-...

 

 

Wed, 09/21/2011 - 00:11 | 1691083 Fish Gone Bad
Fish Gone Bad's picture

When there is a currency crisis, people run out and spend all the money they have to buy things that are actually valuable.  The saying, "Got gold?" is probably better said as, "Got food?".  As always, plan ahead.

Wed, 09/21/2011 - 00:29 | 1691112 FEDbuster
FEDbuster's picture

Don't forget "Got Guns?" and "Got Ammo?" to protect your gold, food, water, etc...

Wed, 09/21/2011 - 02:07 | 1691332 Michael
Michael's picture

Just watch this shit if you want to know everything that is fucking wrong with our country and the rest of the fucking world.

best of walstreetpro2 (greatest fuckin hits) - 1 of 3

http://www.youtube.com/watch?v=4k4xPUZRdC0

best of walstreetpro2 (greatest fuckin hits) - 2 of 3

http://www.youtube.com/watch?v=LyE1GoPtLyI

best of walstreetpro2 (greatest fuckin hits) - 3 of 3

http://www.youtube.com/watch?v=Qd0m_bN2qdY

Wed, 09/21/2011 - 03:18 | 1691430 Maniac Researcher
Maniac Researcher's picture

groupthink.

Wed, 09/21/2011 - 06:47 | 1691575 nmewn
nmewn's picture

Hush little baby, don't say a word...Papa's gonna buy you a mockingbird...

Wed, 09/21/2011 - 07:08 | 1691585 jeff montanye
jeff montanye's picture

what do we make of the fact that on the graph of deficit as a percent of gdp the lonely surpluses of the second clinton administration are clearly giving the left-handed finger to the observer?

Fri, 09/23/2011 - 22:39 | 1704313 eisley79
eisley79's picture

maniacresearcher's actual identity possibly discovered lol:

 

http://twitter.com/#!/designerdean

Sat, 09/24/2011 - 12:47 | 1705302 eisley79
eisley79's picture

and today he deleted his account :D 

 

guess its harder to talk trash when people know who you are....

**EDIT

Maniac Researcher:

http://www.zerohedge.com/users/maniac-researcher

 

Maniac Researcher:

http://www.google.ca/search?source=ig&hl=en&rlz=&q=Dean+Kujala&oq=Dean+K...

 

Maniac Researcher:

http://www.google.ca/search?hl=en&q=Dean+Kujala+411&oq=Dean+Kujala+411&a...

 

Maniac Reseacher:

http://twitter.com/#!/designerdean

 

Maniac Reseacher:

http://a1.twimg.com/profile_images/533293118/me2_june-06_12_reasonably_s...

 

OWNED

Wed, 09/21/2011 - 07:12 | 1691595 Hurdy Gurdy Man
Hurdy Gurdy Man's picture

... and if that mockingbird don't sing / Papa's got an AR-15 for it's right wing...

 

Wed, 09/21/2011 - 05:30 | 1691519 CosmicBuddha
CosmicBuddha's picture

I have just watched the first video. I was drinking a cup of coffee at the time and it was all I could do to stop myself spraying coffee all over my PC screen: that was the funniest thing I have seen in years! Superb, that gets a triple A rating from me.

Wed, 09/21/2011 - 07:03 | 1691583 Snidley Whipsnae
Snidley Whipsnae's picture

Too funny Michael... But, he could have left off the sugar coating and told us what he really thinks. :)

 

Wed, 09/21/2011 - 08:38 | 1691815 jdelano
jdelano's picture

blow + oxy + jack n' coke + north Florida redneck = fucking hilarious.  Where is that, Jacksonville?

Wed, 09/21/2011 - 01:49 | 1691299 lolmao500
lolmao500's picture

It will be about ``WHERE MY ENTITLEMENT! WE WERE PROMISED THIS AND THIS! WHERE IS IT!!!``

Wed, 09/21/2011 - 07:47 | 1691649 rwe2late
rwe2late's picture

Indeed,

the Pentagon , EXXON, Goldman Sachs, and their parasitic institutional brethren are dependent on gorging themselves at public expense.

Tue, 09/20/2011 - 23:57 | 1691046 traderjoe
traderjoe's picture

Yes, please.

Tue, 09/20/2011 - 23:10 | 1690920 sunnydays
sunnydays's picture

We have been on the verge for a few years, the ball has been kicked down the road and hitting the wall.  But it is now bouncing back off the wall into the faces of those who think they can keep getting by with the fraud.  All things end and it is time for the manipulation and fraud to end.

Tue, 09/20/2011 - 23:38 | 1691001 Hero Protagonist
Hero Protagonist's picture

The question has always centered around timing of the end and the issues are what factors influence predicting that timing.  Given that we have removed all safety valves (e.g. mark to market, to big to fail, etc.), for what it's worth I think these three are the keys:

1. The money doesn't truly run out until debt service exceeds tax revenue. With low interest rates we are, at this point, far away from reaching this point.

2. A drastic increase in prices so that John Q. Public can't purchase essentials and would rather fight and risk what they have than stay quiet and subsist. Seems like we're far away from this point.

3. People outside of the US figure out that they can't afford to eat while in the US we continue a life style of borrowing that directly removes food from their kid's mouths.  Doesn't seem like those outside our border will ever recognize this in sufficient size to influence their governments who have a huge interest in keeping the status quo.

It's not like any politician has an incentive to do anything but say "Yes" to their constituents when the credit card hasn't come close to its limit.

Wed, 09/21/2011 - 03:22 | 1691436 kurzdump
kurzdump's picture

Only a minority of people who are forced to cut their life styles significantly is required to start a spiral of riots. Social things tend to follow exonential functions. Do not underestimate the consequence of exponential growth.

Wed, 09/21/2011 - 08:25 | 1691774 Ignorance is bliss
Ignorance is bliss's picture

We have a powder keg. Your premise is basically that no one with a lighter has tehe will to light it. Yet I see an entire generation with matches walking toward the powder keg. I think our "Y Gen coming back from the military, or not able to pay their 6 figure college debts are one of many perfect catalysts running toward that powder keg.

 

When it goes up...it will go quickly. There is a lot of pent up anger in the country looking for an excuse..

Tue, 09/20/2011 - 23:10 | 1690922 espirit
espirit's picture

Fiatsco, meet gold.

Wed, 09/21/2011 - 02:40 | 1691383 Zero Govt
Zero Govt's picture

Fiatsco, meet the zero you always were, born of the zeros (crooks and politicos) that fabricated you

Tue, 09/20/2011 - 23:12 | 1690923 JLee2027
JLee2027's picture

Former VP Cheney, who fashions himself a fiscal conservative, let the mask drop when, in 2002, he stated that “Reagan proved deficits don’t matter.”

Except Cheney never said that.  That is crap from Paul O'Neills book.

Tue, 09/20/2011 - 23:17 | 1690946 LetThemEatRand
LetThemEatRand's picture

Unless you were there, you don't know.  One thing is certain -- Bush/Cheney policy was consistent with the alleged statement.  Assuming actions speak louder than words, Cheney fucking said it really loud.

Tue, 09/20/2011 - 23:22 | 1690960 Bring the Gold
Bring the Gold's picture

I believe he borrowed the sound system from Spinal Tap in fact...

Tue, 09/20/2011 - 23:26 | 1690967 caerus
caerus's picture

it goes to 11

Wed, 09/21/2011 - 00:50 | 1691176 JLee2027
JLee2027's picture

Unless you were there, you don't know.  

Same applies to your statement. Repeating unproven allegations is just rumor mongering. 

One thing is certain -- Bush/Cheney policy was consistent with the alleged statement.  Assuming actions speak louder than words, Cheney fucking said it really loud.

True, but that doesn't prove it either.

Wed, 09/21/2011 - 04:13 | 1691470 srelf
srelf's picture

Me thinks thou wouldst be lost in a world without "prove"

Wed, 09/21/2011 - 08:56 | 1691871 rwe2late
rwe2late's picture

JLee2027

And presumably one could not "prove" to you that Bush said "The Constitution is just a god damn piece of paper".

Ever hear of reasonable doubt? True, no one can say with 100% certainty that any quote is accurate (including witnesses in the room according to psychological testing and some alien invasion believers). But there is a witness, and the quote seems credible enough given the circumstances and what is known about Bush's behavior and policies.

Point is, given Bush’s political actions, the choice is only between being an arrogant hypocrite (claiming respect for the Constitution), or an arrogant cynic (boasting his disrespect).

Finally, you're grasping at a straw in order to defend what? Cheney's reputation re: the Constitution or fiscal conservatism? If Cheney had not said "deficits don't matter", given his policies, he may as well have said it.

Actions DO speak louder than words.

 

Wed, 09/21/2011 - 13:19 | 1693160 JLee2027
JLee2027's picture

You must be joking. A single witness selling books is not a credible witness.

Wed, 09/21/2011 - 17:22 | 1694542 DaveyJones
DaveyJones's picture

The point is moot cause God knows Cheney never said self centered things like that. Things that emphasized executive power, minimized democratic process, and enhanced his military industrial business interests. He was also known for contradicting himself like the famous speech in 91 on the costs and mistakes of trying to take Baghdad.    

Wed, 09/21/2011 - 09:53 | 1692062 ElvisDog
ElvisDog's picture

The Cheney comment is often taken out of context. What he meant was "deficits don't matter politically", and he was right up until the rise of the Tea Party in 2010. As far as the future, we shall see.

Tue, 09/20/2011 - 23:11 | 1690927 StrangerThanFiction
StrangerThanFiction's picture
The world Monetary System On The Verge Of Collapse. The question is what comes next?
Tue, 09/20/2011 - 23:21 | 1690956 Bring the Gold
Bring the Gold's picture

Well now you've gone and made an ass of yourself.

 

 

 

 

 

 

A luscious ass I might add.

Wed, 09/21/2011 - 00:18 | 1691104 Cliff Claven Cheers
Cliff Claven Cheers's picture

are you sure it is woman's ass?  

OT, whats with all the dudes here using femal avatars, is it lika a tranny think. Each to own I guess.

Wed, 09/21/2011 - 00:36 | 1691147 prole
prole's picture

Same sort of thing goes on in Thailand.
(I heard)

Wed, 09/21/2011 - 00:43 | 1691157 Zgangsta
Zgangsta's picture

Reality doesn't matter. Our perception of reality is all that matters.

Wed, 09/21/2011 - 04:50 | 1691499 GoldBricker
GoldBricker's picture

Yup. And that was why deficits didn't matter (see Cheney rants above); they were not perceived as a problem. At some point, however, reality's dog dumps on your lawn and you run over the large, fresh pile with your mower.

Maybe the pile doesn't exist or you don't exist, but something exists, and you perceive its odor.

Wed, 09/21/2011 - 01:21 | 1691252 Bring the Gold
Bring the Gold's picture

No, actually I'm not, disturbing thought. Femaleness was assumed, not something that would happen in real life. Always, ALWAYS check under the hood. :)

Wed, 09/21/2011 - 02:17 | 1691345 Cliff Claven Cheers
Cliff Claven Cheers's picture

I mean it looks feminine but with out a link to the original it is hard to verify.

Wed, 09/21/2011 - 03:08 | 1691420 MisterMousePotato
MisterMousePotato's picture

Are you people crazy? Blind? Virgins? That is a woman's ass. (And not just any woman's, for that matter.)

Consider ... if you took that shot of my ass, there would be, uh (how do I put this) in the picture.

Wed, 09/21/2011 - 09:01 | 1691879 kill switch
kill switch's picture

No, that's Hank Paulson and his twin brother...

Tue, 09/20/2011 - 23:41 | 1690979 X.inf.capt
X.inf.capt's picture

short answer, fiction,

war, a big one

battleground

pakistan, mena

reason, 

control of oil, resourses

and the obvious

the eternal search for cheap labor by TPTB.

Tue, 09/20/2011 - 23:50 | 1691033 westboundnup
westboundnup's picture

Assuming Saudi Arabia, Iran, Russia and Venezuela are among the new axis powers (or their supporters), where will the US get the oil needed to fuel the war machine?  The last time there was a world war, we had cheap, easily accessible petroleum. 

Wed, 09/21/2011 - 00:16 | 1691079 X.inf.capt
X.inf.capt's picture

that was easy pitch, west.

why, all the untapped reserves we have here

we been buying oil from these countries with worthless fiat

while saving ours, you really didnt think leaving these alone was an enviromental issue.

they have been seizing oil andcoal reserves, and making national parks of them

president clinton and the sulfur free coal deposits in utah, remember?

and those laws will be overturned immediately, when we need them...

stategic oil reserves?

until then well continue to do what were currently doing....

Wed, 09/21/2011 - 00:17 | 1691103 Freddie
Freddie's picture

+1

Wed, 09/21/2011 - 00:36 | 1691146 X.inf.capt
X.inf.capt's picture

thanks freddie

and the leaders who want to stop accepting dollars for oil....

yeah, very unhappy ending....

Wed, 09/21/2011 - 00:29 | 1691131 xtop23
xtop23's picture

excellent post

Wed, 09/21/2011 - 00:35 | 1691142 FEDbuster
FEDbuster's picture

I have been arguing this for years.  "Paper" for oil is the rip off of epic proportions.  This IS our energy policy.  Drain the rest of the world's oil and save ours for last.

Wed, 09/21/2011 - 00:45 | 1691158 X.inf.capt
X.inf.capt's picture

that and all of major warships are nuclear. protecting trade routes, being able to go where we please and strike where we please, thats why china lost the opium war with britain.

i knew rotc would come in handy, understanding the way things work...

Wed, 09/21/2011 - 06:17 | 1691555 Vlad Tepid
Vlad Tepid's picture

Only American carriers and subs and a few cruisers are nuclear.  No US underway replenishment ships or task force escorts are.  The American military logistics chain is just as vulnerable to oil shocks as the newspaper deliveryman.

Wed, 09/21/2011 - 09:34 | 1691992 Hedgetard55
Hedgetard55's picture

Not to mention jet fuel for what the carriers carry.

Wed, 09/21/2011 - 09:55 | 1692076 ElvisDog
ElvisDog's picture

The U.S. still produces something like 6 million barrels of oil a day, more than enough to supply the army/navy/air force if need be.

Wed, 09/21/2011 - 10:58 | 1692394 X.inf.capt
X.inf.capt's picture

yep, not to mention the rationing that would occur on civilians...

Wed, 09/21/2011 - 08:33 | 1691804 Flakmeister
Flakmeister's picture

These so called untapped reserves are not oil....not even close.

Wed, 09/21/2011 - 10:56 | 1692381 X.inf.capt
X.inf.capt's picture

thats right, flak,

im talking reserves plus whats in the ground.

Wed, 09/21/2011 - 11:20 | 1692446 Flakmeister
Flakmeister's picture

Let me guess, Green River? Uintah?

These resources have never been demonstrated to be economical, might have something to do with them being Kerogen-Marl and Bitumenous sands.

Green River has been know about for 60 years, it was always going to be "profitable" at the current price of oil + 20% or so. The kerogen has the energy density of a baked potato, it is basically real crappy coal.

Edit: You do understand the difference between the Bakken and Green River. Do you? If you do not I strongly suggest that you simply STFU about domestic oil production. You will only make a fool of yourself.

Wed, 09/21/2011 - 08:29 | 1691791 Ignorance is bliss
Ignorance is bliss's picture

We take it from Canada and Mexico. Somewhere along the time line we became the ugly Americans.

Tue, 09/20/2011 - 23:20 | 1690940 Printfaster
Printfaster's picture

Folks, it is not just government debt to GDP that is at issue.

The real problem is total public and private debt, including state and local debt.  Eventually the federal government is on the hook to assume large portions of state, local and even private debt (eg Railroad Retirement Act).  Those other countries have no such thing as state and local debt, at least not at the level of  US.  Their debt tends to all be national.

Put that on the graph and we are the winners.

Here all US gov debt:  125%  Winning.

http://www.usgovernmentspending.com/federal_state_local_debt_chart.html

Wed, 09/21/2011 - 02:06 | 1691331 rambo1028
rambo1028's picture

Ouch.... Never thought about what the total debt is... that chart should just say "Game Over!" underneath it.

Wed, 09/21/2011 - 08:33 | 1691805 Ignorance is bliss
Ignorance is bliss's picture

We also have a lot of off balance sheet debt. I believe Fanny and Freddie are off balance sheet, and of course my favorite unfunded liabilities....whihc apparently can be measured in stacks of 100 dollar bills reaching to Mars.

Tue, 09/20/2011 - 23:16 | 1690944 runlevel
runlevel's picture

Silver Bitchez

Wed, 09/21/2011 - 07:15 | 1691598 Hurdy Gurdy Man
Hurdy Gurdy Man's picture

and nickelz 

 

Tue, 09/20/2011 - 23:18 | 1690947 props2009
props2009's picture

USDCAD indicates that 2008 is back

http://capital3x.com/?p=1301

Imp trend reversal signs

Tue, 09/20/2011 - 23:26 | 1690968 X.inf.capt
X.inf.capt's picture

.

sobering!

Tue, 09/20/2011 - 23:19 | 1690949 km4
km4's picture


Monetary Madness

Honestly describing the current monetary system of the United States in just a few words, you could do far worse than stating that it is “money from nothing, cash ex nihilo.”

That’s because for the last 40 years – since Nixon canceled the dollar’s gold convertibility in 1971 – the global monetary system has been based on nothing more tangible than politicians' promises not to print too much.

Spot on excellent !

Tue, 09/20/2011 - 23:20 | 1690952 Bring the Gold
Bring the Gold's picture

Not much new info, but sobering information nonetheless. I only pray that we as humans ascend to a level of conciousness capable of solving these problems.

 

"Problems cannot be solved at the same level of conciousness in which they were created."

paraphrase of Albert Einstein. 

Tue, 09/20/2011 - 23:20 | 1690953 Manthong
Manthong's picture

First ones out of a Ponzi make out best.

Wed, 09/21/2011 - 01:15 | 1691232 Yamaha
Yamaha's picture

First one out of the Ponzi does NOT make out best.  If your an investor in a Ponzi.....

 

Sounds good but it is not reality.  You will 1) be sued by the court appointed "trustee" (Friends) of the court.  2)  They will sue you for every dime you took out PLUS interest at a double digit rate.  3)  They will drag it out until the court appointed lawyers and accountants get their fees directly from the recovery.  4)  They will delay for more fees.  5)  When the money is gone they will settle with the investors and you will owe all the money back and in that time the amount owed will double.  6)  They will take any legal action to collect. 

IT DOES NOT MATTER WHAT "BUSINESS" YOU THOUGHT IT WAS - IF RULED A PONZI YOU HAVE NO RECOURSE - PERIOD

Sounds like the IRS doesn't it?  Just another wonderful protection provided to us by our Federal Govenment!  And this Ponzi we will not get out of......

Tue, 09/20/2011 - 23:22 | 1690957 Flakmeister
Flakmeister's picture

The game plays on in the backing of the dollar by oil.... Once that connection is severed or threatened, it is game over.

Wed, 09/21/2011 - 04:45 | 1691494 falak pema
falak pema's picture

Ty Flak, for reminding us all of the key construct since sixty years around the queen commodity that runs western economies. It was interesting to see Turki al Faisal on Bloomberg yesterday explaining the Saud position on Arab spring; no spring in his perspective, as he sees more violence down the road in his region. Ominous signs of Saud now voicing its concerns as the debate around Palestine/Israel divide is now centerstage. The military option seems to be hotting up as the EU economy goes into financial tail spin. 

Fofoa blog take on the USD situation is an original view on USD debt fed spiral. Good read.

http://fofoa.blogspot.com/2010/02/greece-is-word.html

This and other articles on "freegold".

Tue, 09/20/2011 - 23:22 | 1690962 RobotTrader
RobotTrader's picture

<--Bernanke Will Deilver Tomorrow

<--Forget About It, Situation is Hopeless

U.S. Dollar will be King once again, if the Politboro fails to launch a "shock and awe" FOMC statement tomorrow.

If the dollar spikes up, then commodities will crash, and retail stocks will jubilantly rocket higher once again as the "Resilient Consumer" will receive yet another "tax cut".

And the Euro and all commodity currencies will get crushed into a heap.

But, if Ben delivers tomorrow, then all bets are off and it will be "Risk On" again.

PLACE YOUR BETS

 

Tue, 09/20/2011 - 23:42 | 1691014 Al Huxley
Al Huxley's picture

Of course he'll deliver. The whole game is wealth transfer, market crashes don't help that. If I could, I'd buy greek 1 years at +100%, purely on the assumption that the cocksuckers running the show will never let greece default. As it is, no matter how fucking dumb it seems, buy the fucking dip. Stay onside with the elite.

Wed, 09/21/2011 - 00:58 | 1691196 Zgangsta
Zgangsta's picture

He won't deliver. You can't live without a liver for very long.

Wed, 09/21/2011 - 09:11 | 1691912 hettygreen
hettygreen's picture

Sorry but the way this market is manipulated to screw the gambling addicts you would be far better turning off the news / computer etc. and going golfing for the next few days. Placing bets now =  risk of permanent chip loss. Patience. It's still a virtue right?

Wed, 09/21/2011 - 09:58 | 1692094 ElvisDog
ElvisDog's picture

Robo, good to see you again. I wouldn't touch currencies before Bernanke's speech with a 10 foot pole. Could go violently either way depending on what rabbit he tries to pull out of his hat. A strong rise in the dollar is the more likely of the two scenarios, in my opinion, but I won't commit my money to that idea.

Tue, 09/20/2011 - 23:25 | 1690964 Gooserooster
Gooserooster's picture

I think the criminals in charge will figure out a way to continue to kick the can down the road.  Don't underestimate the governments' abilities to enforce the Dollar system.  Fiat currencies are, end the end, held together by force, and government will not hesitate to use force to continue the charade.  It will eventually fall apart, but it's going to take other, uncontrolable events to bring about the collapse.  I think the U.S. government is capable of maintaining the value of the dollar in the US and in Europe (the European Governents are only too happy to cooperate) for some time yet.

I'd like to think we are on the verge, but it's still going to be another decade before we see a major change in the monetary system.  In the meantime, the middle class will be wiped out completely.

Wed, 09/21/2011 - 00:12 | 1691084 DaveyJones
DaveyJones's picture

The wild card is the middle class and what they do about it

Wed, 09/21/2011 - 00:22 | 1691109 Freddie
Freddie's picture

?  Are you serious?  The dumb MF'ers will just watch more TV. TV is for morons and America is a nation of morons.  They can easily control the sheep with inane ball games and fat transexuals dancing with fat women like Nancy Grace.

Wed, 09/21/2011 - 08:17 | 1691111 Flakmeister
Flakmeister's picture

Thev have rolled over and died..... The only voice the middle class had were the labor Unions....

Edit: Not surprised by the scoring on this post, but seriously who stood up for the middle class against the Corporations? Not the Dems or Repubs, that is a given. Not the Church.... What institution(s) with any clout did?

Wed, 09/21/2011 - 10:08 | 1692142 ElvisDog
ElvisDog's picture

I think at one time unions did what you wrote, but they have largely morphed into inflexible, myopic organizations whose idea of collective bargaining is "give us what we want or else". There have been numerous examples recently of public unions allowing many of their junior members to be laid off to protect the pay and benefits of the senior members. Instead of the generic "middle class", I would suggest that unions these days stand up for "people who have been in the union for a long time".

Wed, 09/21/2011 - 10:50 | 1692360 Flakmeister
Flakmeister's picture

I never implied that the Unions were a panacea....Once upon a time a good part of the middle class was unionized, once Unions became "small" their ability to look out for general welfare of the middle class ceased. Classic example of circling the wagons, you take care of your own when under siege.

Hell, I remember my part-time job as a janitor while doing my undergrad. Union pay scale, but no local shop. I was making $9.00 an hour back in 1983....

My point still stands, no institution has championed the middle class. The middle class has, for all intents and purposes, been thrown to the wolves while being provided with empty diversions to ease the pain.

Tue, 09/20/2011 - 23:26 | 1690969 twotraps
twotraps's picture

Awesome article.    'Unimaginable' is right....right up there with Flash Crash (another thing everyone seems to ignore, most shockingly that it does not happen more often), % of debt to GDP (our best estimates because who really has accurate data for that), world wide bank-bailouts, extreme balance sheet expansion by the Fed and teetering sovereign debt defaults.  Unimaginable.   Forget that all that is happening at once!!

 

Its a great article because it reminds us of the fragility of it, something I think is lost on the general population and most of all the politicians.  They seem to operate as though the dollar and its value are given, and eternal.  Personally I can only think taking immediate action with my own situation....obviously some PM, but is ther another currency to own?  Land?  I guess its better to own 'something' like land in that if the dollar is devalued or worse....at least your assets are not dangling on a bank balance sheet.  You will have price risk of the things you buy but perhaps better than digits on your statement.   

 

I mentioned this to some people a few years ago at a party....I can't believe the Fed would print money and risk further devaluation and perhaps wreck the greatest scam ever in the history of the world.....that we got Everyone to take dollars for everything!!  So they just abuse their situation and run it into the fucking ground.  

Wed, 09/21/2011 - 00:07 | 1691071 CapitalistRock
CapitalistRock's picture

Personal property rights aren't a given. Unless you own gold, a shovel, and concrete. Land is a good idea, but has a very poor history as a tool to protect wealth. With land u gamble that u may not be in the right place in history.

Own some land anyway. Diversify. Just not too much of it.

Wed, 09/21/2011 - 00:23 | 1691116 Freddie
Freddie's picture

You better back that gold/shovel/concrete with some brass or lead.  Someone will take that gold, shovel and concrete from you.

Wed, 09/21/2011 - 08:39 | 1691821 Ignorance is bliss
Ignorance is bliss's picture

The problem with land is that it is taxed. At some point land can become a financial burden. not to mention you can't take it with you. We may have to emulate our forefathers and migrate elswhere if things get really bad.

Tue, 09/20/2011 - 23:31 | 1690970 xtop23
xtop23's picture

An interesting recap of US confetti but nothing really new here.

For all intents and purposes theyre already doing QE.

Tue, 09/20/2011 - 23:29 | 1690975 TheSilverJournal
TheSilverJournal's picture

That was an awesome iceberg..now I can imagine my self raking it in with silverrr!!!!

Tue, 09/20/2011 - 23:32 | 1690984 Temporalist
Temporalist's picture
Bullion Vaults Run Out of Space on Gold Rally

"“The European debt crisis and its impact on the solvency of European financial players are driving European customers to find refuge in tangible values like physical gold and other precious metals,” Pages said. Demand “is totally compatible with the current financial and political global turmoil.”"

http://www.bloomberg.com/news/2011-09-21/bullion-vaults-running-out-of-s...

Wed, 09/21/2011 - 00:24 | 1691120 knukles
knukles's picture

Something seems amiss with this information about expanded vaulting facilities from Bberg.
It's not as if all this new gold begging for secure custody is being created out of thin air...
Not as though it has not heretofore been stored in another secure facility.
Something just leaves me with a lingering "WTF?" in there somewhere.

Like economic reports out of the USSR or Red China in the 50's that they'd expanded heavy truck production by 100%.   Something wrong with that number until one found out that production went from 1 to 2 trucks per annum.... 

Someting doesn't square in this report...
Nor does something completely square with Cramer pushing gold... 

It's a deep rabbit hole, Alice...

Wed, 09/21/2011 - 01:37 | 1691278 Temporalist
Temporalist's picture

Meh Cramer and others just seek credibility because they have none. 

 

You may be right about the vaults they seek credibility too.

Tue, 09/20/2011 - 23:35 | 1690993 WonderDawg
WonderDawg's picture

I predict they'll just move the carrot again. Verbiage to indicate they "still have tools at their disposal and are prepared to use them" and so forth.

Tue, 09/20/2011 - 23:36 | 1690994 European American
European American's picture

Verge of collapse? Let's hope so. Never liked the way my hands smelled after holding pennies. On the other hand, can't find any reason to complain for holding precious metals. Throw out the wallet and get a custom leather pouch.

Tue, 09/20/2011 - 23:43 | 1691016 FranSix
FranSix's picture

We'd like to think that government bond markets will automatically fail.  Hasn't happened yet.

This article by Reginal Howe in 1999 is probably bang-on, where there will be a run on the bullion banks:

http://www.fame.org/pdf/howe_war_against_gold.pdf

Tue, 09/20/2011 - 23:45 | 1691020 jomama
jomama's picture

excellent analysis.  not much to refute.

however, the can has been impressively kicked for quite some time, for quite a distance. 

we know it can't continue, but can it?  

japan has pulled it off with grace for decades.

Wed, 09/21/2011 - 00:01 | 1691060 Jumbotron
Jumbotron's picture

jomama says....

Japan has pulled it off with grace for decades.

But that's just it.  The Japanese are a nearly homogenous culture built upon thousands of years of history and one in which the long term view is preferable, a repsect for their elders, a cultural affinity to save rather than consume, a sense of history and common purpose.

We have gone from a melting pot to a fetid cast iron pot of stone soup.  All parts, no blending.  No common purpose.  Tribal.

There is little hope of grace in our case.

Wed, 09/21/2011 - 01:26 | 1691261 Savyindallas
Savyindallas's picture

Spot on  -few people realize just how destructive and dangerous this is and will become later.  A bunch of jews planned this in the 30's. Not blaming all jews- but there is no doubt it was an organized political conspiracy by a group of Jewish american intellectuals and leaders who undertoook this strategy because they thought it would benefit jews  -not America or americans -but jews. i'm not criticizing these folks  - in a free sosciety they had the right to do this -just as the rest of us had the right to stop them. We didn't. I wish we had -looks like now we will pay the price.

Wed, 09/21/2011 - 07:38 | 1691623 Husk-Erzulie
Husk-Erzulie's picture

Cultures which buy into the "God's chosen people" or "Master Race" theme always start out on the offensive, scheming a perfect world where they control all other "inferior" cultures.  Ineveitably they end up fighting desperate defensive actions.  It seems that cultural genocide isn't all that popular with those on the recieving end.  Zionists believe they developed a better game - God's Chosen People would conquer by stealth and slow corosion.  They have given it a hell of a go, masterful really.  However, all the schemes of all the Master Races in history ignore one simple truth... If you think that you are The Master Race, ipso facto - you ain't.

Wed, 09/21/2011 - 08:05 | 1691698 DosZap
DosZap's picture

Husk,

 Master Race and Chosen people are two seperate issues.

One is spawned of sin,the Adamic nature, the other is of God,and HE never meant HIS  Chosen People to be the masters of the world.

They were HIS Chosen People,take it up with HIM.

I am sure HE will explain it to you in depth later.

Wed, 09/21/2011 - 08:48 | 1691846 Husk-Erzulie
Husk-Erzulie's picture

Something to look forward to then (I guess?) :-)

Wed, 09/21/2011 - 09:18 | 1691933 rwe2late
rwe2late's picture

There isn't a whole lot to differentiate between those who believe they belong to a (god-given) master race,

and those who believe they belong to a (god-chosen) people apart from all the other (implicitly god-rejected) people.

Wed, 09/21/2011 - 00:34 | 1691139 TheSilverJournal
TheSilverJournal's picture

The only reason the decline of Japan didn't seem worse was because it was measured against the decline of the dollar, which was / is substantial. For a period, fiat currencies might pop, but in the long hall, all fiat currencies sink..just at different rates.

Tue, 09/20/2011 - 23:46 | 1691026 Park city skier
Park city skier's picture

The people who state the USA will never default because it has the ability to print money never consider the possibility that inflation becomes so bad that there are mass riots and a revolution in the making,  creating the Catalyst  of turning off the printing presses, tighten monetary  policy  and  choosing the lesser pain of a default over the next American revolution.  

 

Wed, 09/21/2011 - 01:43 | 1691287 Savyindallas
Savyindallas's picture

Instead of default or printing - we'll probably just nuke em. The Chinese and Russians are sitting on their ass doing nothing, while we keep invading countries in their backyard. if they keep sitting on their ass doing nothing. or counting their worthless dollars - we just may go into iran, take over Syria, wipe out all opposition in the Middle east, invade Venezuela and any other country in our hemisphere that chooses to criticize us. We're desparate and we just may do it. China and russia can veto and bitch all they want at the UN, but if they don't have the balls to stand up to us, we may just roll right over them. How difficult would it be to destabilize China and topple that government?  I think China is vulnerable.  

When the balance of power gets out of line, other countries are supposed to band together to restore the balance. If they sit on their ass thinking we will implode and destroy ourselves economically , they may be in for a big surprise.

If this is our strategy  -it is a gamble. A high stakes and perhaps reckless gamble. Everything the US and nato does seems to be planting the seeds for another large scale World War  - - my fear is that the war may have already started-that we think we can win  -so we are on the offensive, while the opposition is too stunned and in disbelief to effectively act to counter our aggression. maybe China is scared to death to quit buying our T-bills and debt. I would normally expect bellicose angry rebukes  and threats to rearm from such aggresive US and Nato actions in Russia/China's backyard. The fact that i hear very little suggests to me that something is going on -something big may be coming down.

  

Tue, 09/20/2011 - 23:54 | 1691038 natty light
natty light's picture

I don't understand how they put a figure on obligations; how far out do they project that? In theory wouldn't it be unlimited?

Tue, 09/20/2011 - 23:55 | 1691042 JW n FL
JW n FL's picture

 

 

2 of my Favorite People!

Max! and Bill!! all in one spot!

http://www.youtube.com/watch?v=wWRb38fE3S8

Uploaded by on Sep 20, 2011

20/09/2011

Max Keiser & Stacy Herbert discuss Babyface Bernanke, Eurotarp and 'rogue traders.' In the 2nd half of the show, Max talks to Bill Still, director of The Money Masters & The Secret of Oz, about Fort Knox, state banks and monetary reform.

Tue, 09/20/2011 - 23:59 | 1691052 sasebo
sasebo's picture

While the real economy hums along below capacity producing a ton of stuff the fat cat bankers are fucking around with paper money. Who needs them?

Why not let the real economy produce the paper money while they're producing everything else?

Wed, 09/21/2011 - 03:23 | 1691055 xtop23
xtop23's picture

Projections are difficult if not impossible. You can try to use trending analysis but the variables are infinite.

Black swan events, monetary stimulus, foreign occurances and entanglements, political will, public sentiment, acts of God, etc etc etc.

All you need to know is that fiat currencies ALWAYS go to zero. If you know that, then you know how to position yourself for the long term.

 

Wed, 09/21/2011 - 00:00 | 1691057 Rockfish
Rockfish's picture

I'll miss Ritz crackers the most.

Wed, 09/21/2011 - 00:02 | 1691062 xtop23
xtop23's picture

Ha. That actually made me chuckle.

Wed, 09/21/2011 - 00:15 | 1691095 DaveyJones
DaveyJones's picture

Nice

Wed, 09/21/2011 - 04:30 | 1691487 falak pema
falak pema's picture

best remark I read here on ZH on the humoristic side yesterday was:

DSK humping the crack of dawn. That was sublime...

Wed, 09/21/2011 - 00:07 | 1691073 Rockfish
Rockfish's picture

I remember as a kid seeing Soylant Green, Heston hands E G Robinson a spoon of jelly after he swiped from some bankster penthouse. Do we really want to live like that?

Wed, 09/21/2011 - 00:15 | 1691096 knukles
knukles's picture

With the TipTree "Little Scarlet" in the Penthouse?

Yes! 
Emphatically, Yes!
We been promised that by our fearless leaders!

Wed, 09/21/2011 - 00:16 | 1691097 European American
European American's picture

Depends on the percentage of Fat content.

Wed, 09/21/2011 - 01:49 | 1691086 Habspurg
Habspurg's picture

.

Wed, 09/21/2011 - 00:12 | 1691088 knukles
knukles's picture

Required Reading

http://www.sacredfools.org/crimescene/casefiles/s2/shipoffoolsstory.htm

There will ba an open survival quiz hereafter.

Wed, 09/21/2011 - 02:11 | 1691336 lilimarlene1
lilimarlene1's picture

That is unbelievable. And the Norway guy was a fanboy, hunh?

Hmmmm.

Wed, 09/21/2011 - 00:16 | 1691101 Jumbotron
Jumbotron's picture

The Death Knell of America rang the moment Alexander Hamilton, with the approval of George Washington, rammed down the throat of the American People the First National Bank of the United States, the precursor to the Federal Reserve.

Granted, Hamilton saw it as a way to pay off war debt, but it was his fear of having another superpower like Britain coming to our shores and threatening our liberties and even our lives that drove him to do this.  Hamilton wanted America to be great...an empire...so strong no one would dare bother us again.

What he failed to realize is that you can be great....or you can be good.  You can only be both for the briefest amount of time....before you become one or the other.

Hamilton planted the seed, in the minds of people who would follow, that all great empires control their financial destiny and the way they do that is with a national financial institution...in this case the First National Bank of the United States....and in the hear and now, the Federal Reserve.

We have become great....and have sacrificed being good while doing it.

Wed, 09/21/2011 - 00:33 | 1691137 Snidley Whipsnae
Snidley Whipsnae's picture

Hamilton was a bastard and a thief and had only Hamilton's interests at heart. I don't know what 'Hamilton History' you have been reading but it's obviously not what I have read of him in the Federalist Papers.

Revisionist historians are almost as bad as the bankers.

Wed, 09/21/2011 - 01:29 | 1691185 caerus
caerus's picture

jefferson >> hamilton

btw war has always been the cause of sovereign debt...just ask the medicis

Wed, 09/21/2011 - 05:30 | 1691518 Green Leader
Green Leader's picture

His real name was Alexander Levi.

Wed, 09/21/2011 - 03:23 | 1691434 MisterMousePotato
MisterMousePotato's picture

Alexander de Tocqueville, on behalf of Europeans, studied America in the early 1800s. He came to America to discover the source of its greatness. He wrote that it was not on account of its forests, or its harbors, or its mountains, or its plains, but was because America was good, and "when America ceases to be good, it will cease to be great." (Or words to that effect.)

Thu, 09/22/2011 - 15:45 | 1698464 bid the soldier...
bid the soldiers shoot's picture

The great is the enemy of the good and eventually will destroy it..

Wed, 09/21/2011 - 00:16 | 1691102 TheSilverJournal
TheSilverJournal's picture

0% rates promised for min. 4 years + QE + gov't dependency on borrowing + trade deficit + gov't backing backing of banking system + banking system backing of real estate + rates are soon to raise and will crush real estate = game over.

Wed, 09/21/2011 - 00:27 | 1691129 Snidley Whipsnae
Snidley Whipsnae's picture

The 'London Trader' today reported that orders for physical PMs are massive and that a huge amout of Asian buy orders (huge tonnage) are concentrated around $1730. LT also reports that, reluctantly, central banks have been selling some gold recently to aquire dollars because they are desperately needed ;ie, not because they wanted to sell their gold.

Physical gold was today selling for ~ $17 above COMEX futures and silver ~ $2.50 above in China.

Paper leverage in PMs is failing in 2 ways... 1) Central Bank leasing for sale into the PM mkts is having little effect on price since tonnage demand for physical out of SE Asia is very strong, and diverging from paper prices. 2) If the central banks do succeed in getting gold down to ~ $1730, physical buying is enormous and that gold is going to vaults in the East, never to return... So, Western Central Banks are between a rock and a hard place since they cannot manipulate PM prices down without losing the physical to SE Asia.

Physical PMs continue to migrate from West to East on this trade.

The point is... Paper manipulations of PMs are failing. If central banks leased the gold forward to bullion banks for sale into PM markets, but still retain physical possession of the PMs, they will be far better off than if they transfered physical PMs to the bullion banks for sale into PM mkts. But, we don't know how the CBs carried out this latest beat down of PMs... We only know that SE Asia prefers physical PMs over any paper.

Central banks sale of gold that they have been accumulating for the past couple of years tells me that they are desperate.

The 'barbarous relics' are making a bid for supreme monetary status... Mr Market is talking... and loudly.

I am not a paper fan obviously... So I don't care what Benny says tomorrow about his new paper twisting programs... Benny has two options 1) Print 2) Don't print and raise interest rates to save the dollar... this second option would crash the US and probably world economies...but it would relieve economies of the parasitic bankers.  

As long as Benny can print and keep Treasury interest rates extremely low the can is still being kicked... But what happens if some large holder of US Ts decides to be 'first out the door' and divest? If that happens we all better be holding some PMs cause the dollar is through.

Sort of a ramble but my honest take on whats happening.

 

Wed, 09/21/2011 - 00:43 | 1691156 TheSilverJournal
TheSilverJournal's picture

If Benny prints now..he will be able to extend the game for longer. Oh wait, he is printing now, he's just hasn't announced it yet. How the hell else does anyone think he's keeping rates low? Basically, they're doing QE3 and not saying anything. Don't listen to what these people say, listen to what they do. The malinvestment caused by mispricing money is too great for the economy to overcome. Unemployment will only RISE as long as rates are 0%, unless more and more QE is pumped in until the eventual hyperinflation.

Wed, 09/21/2011 - 02:32 | 1691365 Aeonios
Aeonios's picture

Unemployment will only RISE as long as rates are 0%, unless more and more QE is pumped in until the eventual hyperinflation.

You had me till the word "unless".

If they continue to print to keep rates at 0%, unemployment will continue to increase and the housing market will continue to slide.

If they stop printing and allow interest rates to rise, unemployment will increase much more quickly and the housing market will collapse worse than in 2008.

The real choice is 'do we let the unicorn out of the bag today or tomorrow?', and in the minds of banksters and politicos that's not even a choice.

Wed, 09/21/2011 - 00:42 | 1691155 Tedster
Tedster's picture

Some have posited a gold price at say, $10,000 - in order to "back" M3 or all money in circulation, or analagous to the $35 peg prior 1968, when the
London gold pool collapsed.

Have read that prior to 1933, the gold coin issue of America was the largest free circulating stock of gold in world history. A famous economist once wrote that gold and (economic) freedom are inseparable. A glance at US history shows a steady erosion of basic property rights - one can see that confiscation of a nations money supply is fairly despotic, yet FDR
is revered by many.

Except in hindsight, it is clear the government was responsible in large part for the depression to begin with! And government became more and more powerful and intrusive - and with "printing press" money, able to effect whatever government decides, for good or for ill. There is no representative government to speak of, when politicians can indirectly conjure up money to essentially bribe constituents. Lobby groups perform much the same function in reverse, in order to secure their candidate for election. "An advance auction of stolen goods."

It is remarkable that after several thousand years of technological progress there is, apparently, no substitute in extremis for gold. Unfortunately, while it is possible to elect new leaders, governments also have the option of electing a new people, as it were. At some level government (or the state) is an entity unto itself, and no longer serves the people, rather the other way around.

With a jaundiced eye towards history, the last 100 years is just endless war against the poor and middle class, whether by actual war, or various machinations by the state for example, to un-ass farmers from their land, all the way to present day atrocities of and including "eminent domain", not for the by-definition public use purpose, but to obtain increased tax.

The list is endless, and growing. With all that, gold stands in the way of this process. It stands as a protector of property rights. That's why those bastards hate gold.

Wed, 09/21/2011 - 01:13 | 1691231 RockyRacoon
RockyRacoon's picture

Attaboy, Ted.  

Wed, 09/21/2011 - 04:16 | 1691472 falak pema
falak pema's picture

“The true measure of a career is to be able to be content, even proud, that you succeeded through your own endeavors without leaving a trail of casualties in your wake.” ~Alan Greenspan


Ayn Rand and Alan Greenspan

That's the best statement to damn the current trend by the man who iconised it!....He will go down in history as incarnating the mantra..."don't believe what I say, believe what I do"...Machiavelli's son in the financial domain.

 

Wed, 09/21/2011 - 02:11 | 1691337 hooligan2009
hooligan2009's picture

they also hate gold because it has limited supply at a time of explosive population growth. monetary economists are looking for a gold substitute and haven't yet been able to make the currency backed directly by the tax take. this is coming and then gold will be just another metal.

Wed, 09/21/2011 - 08:25 | 1691780 PivotalTrades
PivotalTrades's picture

FDR was the initial cancerous cell in the body and mind of America

Wed, 09/21/2011 - 08:56 | 1691870 indio007
indio007's picture

You are spot on with the correlation of the loss of gold and property rights. We have a single payor currency system. It says "Federal Reserve" on the top of the promise to pay , not John Doe. There is a first lien (by operation of law) on all property purchased with FRN's. Payment of a debt with a promissory note only extinguishes the debt in personam but no in rem. That means the property has a lien on it. If you follow te bread crumbs to the income tax you will notice that the FED's file a NOTICE of lien when the sieze property. You only get a NOTICE of what already existed. This is also why these notices are filed in a special boook and not in the standard land record where al other liens are recorded.

 

You solution is to endorse your Federal Reserve notes , thus taking the liability to pay in lawful money on yourself. Now the FRN is not an asset, it is a liability and can not be taxed. Theoretically any holder could present the note and demand payment. No woriees though ... when is the last time someone redeemed a Federal Reserve Note?

Wed, 09/21/2011 - 01:06 | 1691212 Stack Trace
Stack Trace's picture

ZH and this article just mentioned on CNBC Asia.

Wed, 09/21/2011 - 01:10 | 1691222 A L I E N
A L I E N's picture

Yeah something about sending you thoughts about the article to Beccy Meehan

http://twitter.com/#!/BeccyMeehan

 

Wed, 09/21/2011 - 01:08 | 1691218 bankruptcylawyer
bankruptcylawyer's picture

when america wakes up to find trouble.....it'll be like this. 

http://www.hulu.com/watch/10308/saturday-night-live-oops-i-crapped-my-pants

Wed, 09/21/2011 - 01:46 | 1691293 Hubris hangover
Hubris hangover's picture

ZH mentioned on CNBC re an article highlighting the CNBC (and ilk) Groupthink! As Bart Simpsons says, the ironing is delicious

Wed, 09/21/2011 - 01:59 | 1691319 Idiocracy
Idiocracy's picture

timeline is missing the Coinage Act of 1873, which de-legitimized silver

http://en.wikipedia.org/wiki/Coinage_Act_of_1873

 

 

 

Wed, 09/21/2011 - 02:05 | 1691330 London Banker
London Banker's picture

Unimaginable?  Don't you mean Inconceivable!

http://www.youtube.com/watch?v=G2y8Sx4B2Sk

 

Wed, 09/21/2011 - 03:56 | 1691459 DrStrangelove
DrStrangelove's picture

I would argue conceivable!

Wed, 09/21/2011 - 02:15 | 1691343 Thunder_Downunder
Thunder_Downunder's picture

More huff and bluster... getting tired of these opinion pieces continually recycling the same old stuff, and presenting it as an 'insight' or 'revelation', is it 2009 again already?

 

If anyone is seriously interested in 'money' there are plenty of books that provide a far more detailed analysis of the politics and economics of numerous periods. Simplistic discussions such as this will not help your trading or investment ROI...

 

Wed, 09/21/2011 - 03:20 | 1691431 xtop23
xtop23's picture

 I agree that this post is relatively flaccid in scope and information relayed.

 I would also say to you that 0Hedge isnt strictly financial / technical analysis and encompasses all manner of things related to financial and political interest.

 I love most of the content here and quite often I have found it invaluable in my investment pursuits.

 I also find that at times a less technical and more observational approach to the current market is of supreme benefit when I go back over my portfolio and decide what changes, if any , need to be made.

Wed, 09/21/2011 - 02:58 | 1691406 honestann
honestann's picture

The predators-that-be will drive the world economy over the edge of the cliff at the greatest speed possible.  It will appear more comical and extreme than the most over-the-top WileyCoyote stunt.  This is their plan, and nobody can stop them... probably not even RonPaul if he is elected.

This is all part of their plan to shift all power and wealth to the predators-that-be and extreme top-end of the predator-class.  They are pure, unadulterated, unapologetic, self-conscious predators, and nothing will stop them.  The only question is, will they kill off practically the entire human race in the process, or will people get so angry (and so clear about who has been doing what to whom on purpose for 100+ years) that the predators get taken out with extreme prejudice.  At present, it appears the predators-that-be know what they are doing, and 99.9999% of humans are complete morons.

Wed, 09/21/2011 - 08:09 | 1691707 prole
prole's picture

They won't kill off the entire human race, just the race they hate. People won't get so angry they do anything. Humans are being domesticated, and soon enough we will be as chickens in a facory chicken farm; lot of clucking, but the reality is miserable short lives in small cages and then they butcher you and me. Rinse repeat forever.

Wed, 09/21/2011 - 03:55 | 1691457 DrStrangelove
DrStrangelove's picture

Uhhh... thats a BIG YES ghostrider

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