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IMF Scrambles To Double Bail Out Capacity To $1.3 Trillion, May Issue Bonds

Tyler Durden's picture




 

The scariest news out of the IMF overnight is not that the scandalized bailout agency telegraphed that the global sovereign debt crisis is about to get into even higher gear after the Dow Jones reported it is "exploring" ways to double its gross lending power to $1.3 trillion (which means that in addition to the EFSF's proposed $3 trillion expansion, global bailout capacity will soon hit $5 trillion), nor is it that the US middle class will soon be on the hook for tens of billions more in real European-facing exposure (over an above the hundreds of billions in USD FX swaps that the Chairman is about to unleash on the world), but that the IMF is in fact considering issuing its own bonds. The reason why this is disturbing to the G-7/8/20 is that such a move would take the SDR one step closer to being an alternative gold-backed reserve currency, an dilute the hegemony of the Western axis much to the delight of Russia and China (which however may be having problems of their own). Well, that's bad, but we take it back - just as bad is that the IMF is about to have $1.3 trillion in bailout power. And yes, they wouldn't scramble to get it if they didn't need it. What next: unlimited rescue capacity, and unlimited exposure for US taxpayers?

From Dow Jones:

The International Monetary Fund, looking to assure markets that it has the financial firepower to deal with deepening problems in Europe and also crises elsewhere, is exploring how it can have at least $1.3 trillion in lending power, according to officials involved with the discussions.

 

The IMF currently has about $630 billion in usable resources; about two-thirds of that could be lent under IMF rules.

 

Under the plan be considered, the fund would need to make permanent a $590 billion temporary lending facility that was put in place in response to the 2008 financial crisis.

 

The IMF is also counting on member nations to finally enact a doubling of IMF member country dues, totaling $750 billion, which have already been approved in principle. Approvals by national parliaments are expected in early 2012.

As for IMF bond issuance (unclear if it will be century bonds like Greece):

The IMF is also weighing whether to sell bonds in private markets on short notice, a move that could bolster its safety net beyond $1.3 trillion. The IMF has never sold bonds of this sort, and the U.S. and Germany among others have resisted such moves out of concern that the IMF would have too much independence from its major shareholders. It's not clear whether that opposition has lessened with the ongoing global financial turmoil.

Probably the saddest take home message from all this is that we have reached a point where nobody has any idea how to deal with the solvency crisis apart from throwing endless amounts of liquidity at it, a process that will achieve absolutely nothing in fixing the underlying cause but will make the symptoms of global default that more palatable for just a few more months. For what happens after, we urge readers to browse last night's BCG piece on precisely this topic.

 

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Fri, 09/30/2011 - 07:00 | 1725128 GeneMarchbanks
GeneMarchbanks's picture

Didn't like our previous comments, eh Tyler?

Fri, 09/30/2011 - 07:04 | 1725136 ??
??'s picture

only double??

meanwhile according to Bloomy this distraction (which of course Zero was on to way ahead of the pack)

Morgan Stanley Seen as Risky as Italian Banks

http://www.bloomberg.com/news/2011-09-30/morgan-stanley-seen-as-risky-as...

Fri, 09/30/2011 - 07:19 | 1725160 Popo
Popo's picture

In other words:   The IMF is also broke.

:O

Fri, 09/30/2011 - 07:59 | 1725248 Oh regional Indian
Oh regional Indian's picture

Hah! Hardly. As long as the US is collecting IRS moniez, the IMF is just fine.

I think this is a big sip and padding for the SDR's soon to come, so so they hope. I doubt there'll be enough order in the markets once they break for that though.

We can only hope.

ORI

Hey America!!!

Fri, 09/30/2011 - 09:42 | 1725553 FEDbuster
FEDbuster's picture

Worldwide IMF Super TARP Bonds?  Are they going to bring back Mike Milken and Bernie Madoff to sell these things to Americans?

So with panic, crisis and collapse all around us, why is gold selling at $1600.?  Gold should be $5K+ right now. 

Fri, 09/30/2011 - 07:14 | 1725148 GetZeeGold
GetZeeGold's picture

Didn't like our previous comments, eh Tyler?

 

Tyler's working for the man now.....it was just a matter of time.

 

Comments about gold are strictly forbodden now.

 

Fri, 09/30/2011 - 09:39 | 1725547 bankonzhongguo
bankonzhongguo's picture

This started as $50 billion, then $500 billion, then around $900 billion.

Now $1.3 trillion.

Frankly, the End Game here is for the IMF to have a balance sheet equal to 2.5x that of every central bank (and their TBTF shareholders).

It will be $100 trillion for an international organization that nobody ever heard that is run by the unelected for unknown purposes.

Those "protected" will be the survivors of the Great Basel III race. Everyone else will be a check casing store.

Take it to the bank.

Fri, 09/30/2011 - 11:38 | 1725969 Panafrican Funk...
Panafrican Funktron Robot's picture

The increase in lending limits is less disconcerting than the issuance of bonds, which if you read the article carefully, would take them above/beyond $1.3 trillion.  Really, given the likely domestic discontent for bailouts in both the US and Germany, bond issuance by the IMF not only seems like essentially a done deal, but I think the size of the IMF balance sheet as a result will look somewhat more like double to triple that $1.3 trillion figure.  Timmy G's ultralevered ticking time bomb idea is going to happen one way or another, it's just more likely to be on the IMF's balance sheet, than contained solely in the Eurozone.

Fri, 09/30/2011 - 07:01 | 1725129 Ray745
Ray745's picture

Thankfully this ridiculous news was out a couple days ago and the markets mainly ignored it.  Hopefully they continue to do so, as I imagine an increase in IMF lending would never get agreed to by the US, especially with the House of Reps we currently have.

 

http://www.forexbrokerz.com/news/imf-likely-to-expand-resources-to-_1_3-...

 

 

Fri, 09/30/2011 - 07:43 | 1725194 anynonmous
anynonmous's picture

the US initiated it

Fri, 09/30/2011 - 07:49 | 1725212 AnAnonymous
AnAnonymous's picture

Does it mean the US will agree with it? Remember, they are the US.

Fri, 09/30/2011 - 08:33 | 1725330 Zedge Hero
Zedge Hero's picture

Sometimes you have to create your own news network, just to get the damnn word out- This weeks episode is the Greek Bailout.

http://www.youtube.com/user/zedgehero

 

Fri, 09/30/2011 - 08:53 | 1725383 Smiddywesson
Smiddywesson's picture

Do they really have any other alternative to continue to kick the can?

Hasn't everything they have done so far been designed to kick the can?

Do you see any will at all to impose fiscal conservatism, or just a lot of rhetoric?  Maybe those few billions they argued about cutting, while running deficits in the trillions, convinced you Washington is really, really, serious, I mean it serious, about spending?

Don't be ridiculous.  The can will continue to be kicked. 

Fri, 09/30/2011 - 07:01 | 1725130 Skid Marks
Skid Marks's picture
Europe Inflation Accelerates to Fastest Since 2008

http://www.bloomberg.com/news/2011-09-30/european-inflation-unexpectedly...

Fri, 09/30/2011 - 07:01 | 1725131 rossi
rossi's picture

hey buddy,this is one of the best posts that I’ve ever seen; you may include some more ideas in the same kamagra theme. I’m still waiting for some interesting thoughts from your side in your next buy viagra post.

Fri, 09/30/2011 - 07:02 | 1725132 Bobbyrib
Bobbyrib's picture

Thanks for the heads up, I just liquidated all my PM holdings and went to cash. /sarcasm

Fri, 09/30/2011 - 07:08 | 1725133 XRAYD
XRAYD's picture

How much interest will have to paid on FIVE TRILLION fabricated out of thin air?

 

Who will pay it?

 

Oh wait, the same bankers and the IMF will create another "stability facility" to pay this interest, and ultimately the principle - right?

 

We already have too many fires. We don't need anymore "fire power" - specially of the kind the ECB/EU/IMF generals rely on: Fire, ready, aim!

Fri, 09/30/2011 - 08:57 | 1725392 Smiddywesson
Smiddywesson's picture

I disagree, but not on principal, just on timing.  The system is already lost.  We are far past the point of no return.  They are throwing everything into the fire to buy time.  They need time to buy gold and to make us all desperate enough, and poor enough to accept any solution they offer when the lid blows off.

I wish we followed your opinions back when it mattered.  Now it is too late.

Fri, 09/30/2011 - 09:20 | 1725487 ElvisDog
ElvisDog's picture

And that's the key point, XRAYD, if Greece can't pay back its loans to its current creditors how will they pay back an even bigger loan to the IMF? Presumably, the IMF assumes that they will in fact get paid back, but looking at what is going on in Greece today they must be either hopelessly out of touch or insane. All these dumb-ass Euro stability funds, IMF bailout funds, etc. do nothing to grow the Greek economies and do nothing to increase the capablity of Greece (or any other country) to repay their debts.

The only other logical conclusion is that the IMF think that Germany will backstop all these new $1.3T in loans. Good luck with that. There are growing rumors that Germany is laying the groundwork to leave the Euro.

Fri, 09/30/2011 - 11:40 | 1725983 Panafrican Funk...
Panafrican Funktron Robot's picture

They could pay a bigger loan on a 100 year timeline.  I initially intended that as a joke, but it wouldn't surprise me to see it actually happen.

Fri, 09/30/2011 - 07:06 | 1725134 MFL8240
MFL8240's picture

".....the IMF is in fact considering issuing
its own bonds".

 

 

The bonds have no buyers so they too would be buying their own debt.  Where does the bullshit end?  It used to be when there were no buyers but, now we issue and buy debt all in the same day.  And Gold is down $300 in 30 days thanks to the criminal CME.  

 

Implossion is coming and Gold must be owened and out of US.

Fri, 09/30/2011 - 07:51 | 1725215 Bobbyrib
Bobbyrib's picture

I suspect Bernanke may be a buyer of the bonds.

Fri, 09/30/2011 - 07:54 | 1725234 Bobbyrib
Bobbyrib's picture

Also I disagree with Peter Schiff when he says the Perth mint is a good option to hold gold out of the US. I don't think Australia would have any problems handing over US citizens' gold.

Fri, 09/30/2011 - 08:03 | 1725258 AnAnonymous
AnAnonymous's picture

Yep, made me laugh. Other traditional partners in the US world Ponzi are growing less and less apt to back up the Ponzi.

Now the US is using one of the arms in the world to grow up as a new partner in the Ponzi.

The IMF will buy the US debt which is returned will buy the IMF bonds.

No US tax payer monee involved, only commodities backed currency as other countries will be forced to accept USD and IMF schemes.

The grand robbery by the US People continues. Dont miss the next episode, same USworlder order hour, same US world order channel.

Fri, 09/30/2011 - 12:02 | 1726064 Panafrican Funk...
Panafrican Funktron Robot's picture

This will likely be executed as a swap facility, ie., IMF issues long dated garbage debt and uses those proceeds to buy short to mid term garbage sov. debt.  Epic can kick, take... I forgot what iteration we were on....

Fri, 09/30/2011 - 07:03 | 1725135 sudzee
sudzee's picture

The IMF better hurry if they want to sell bonds into the private. There amy not be any room since just 2 corporates , HP and Intel, sold 543billion in bonds in the last 3 months as per Bloomberg.

Fri, 09/30/2011 - 07:05 | 1725138 Bobbyrib
Bobbyrib's picture

With HP's management, you would have to be insane to buy thier bonds.

Fri, 09/30/2011 - 07:21 | 1725162 Ray745
Ray745's picture

That stat is completey wrong, two investment grade companies did not just issue 4x their market cap in debt in 3 months.

Fri, 09/30/2011 - 07:04 | 1725137 dognamedabu
dognamedabu's picture

Welcome to the New World Odor.

 

 

 

 

Fri, 09/30/2011 - 07:06 | 1725139 doomandbloom
doomandbloom's picture

Boat Bigger  need gonna

Fri, 09/30/2011 - 07:06 | 1725141 Dick Darlington
Dick Darlington's picture

SPAIN 5Y CDS 380-385 +10BPS
ITALY 5Y CDS 472-477 +20BPS

Fri, 09/30/2011 - 07:08 | 1725142 TradingJoe
TradingJoe's picture

At least for now futures indicate some decoupling of gold/silver from markets and some shy renewed correlation to the USD?! oil going lower with markets?!
Hmhmh?!?!?
German upper house approves bailout funds expansion?! OK! next 2 weeks we'll the greatest show on earth and me got front row tickets!!!

Fri, 09/30/2011 - 07:58 | 1725244 snowball777
snowball777's picture

What jackass would read a Murdoch-controlled rag like it had useful info in the first place?

Fri, 09/30/2011 - 07:15 | 1725145 anynonmous
anynonmous's picture

ECRI just called RECESSION*

Welcome to the club Laks

 

WTF * but on a technichality Lakshman Achuthan says it is not a double dip   nor a continuation of the what most here to believe the current one

Fri, 09/30/2011 - 07:12 | 1725146 pacdm
pacdm's picture

Where does all this money come from, the indebted sovereign states that got us here.


 

Fri, 09/30/2011 - 10:33 | 1725712 Hansel
Hansel's picture

Also, the IMF doesn't have a tax base to back the bonds, and the IMF has its own fairy tale currency.  Why the fuck would anyone buy an IMF bond?

Fri, 09/30/2011 - 07:13 | 1725149 doomz78
doomz78's picture

I have a question.  What fueled the 1505 hour rally yesterday of the Dow Jones?  It was a 2.3% swing from the lows to a positive finish.  Did any news come out?  Earnings?  Anything?  Smells like QE stealth. 

Fri, 09/30/2011 - 07:46 | 1725203 HelluvaEngineer
HelluvaEngineer's picture

Looked like BS, but someone I was listening to pointed out that the bots keep bouncing us off of the various moving averages.  Might go on until we get some serious good/bad news.

Fri, 09/30/2011 - 09:05 | 1725433 Smiddywesson
Smiddywesson's picture

I have a question.  What fueled the 1505 hour rally yesterday of the Dow Jones?  It was a 2.3% swing from the lows to a positive finish. 

It's the end of the quarter and the tug-o-war team has been dragged to the edge of the mud pit.  They need to erase as much of the losses as possible.

Wait until next week.  Look out below!!!!!!!!!!!

Fri, 09/30/2011 - 07:13 | 1725150 BigDuke6
BigDuke6's picture

Why do many so called 'educated' people think the IMF and UN are benign, beneficial useful organisations?

Spending the US taxpayers money like a drunken sailor and telling western countries to fill up with islam.

Because the main stream media in the usa is useless and in collusion with the wall str banks.

Could there be a connenction?

Fri, 09/30/2011 - 09:27 | 1725511 rwe2late
rwe2late's picture

 The UN and the IMF are both servants of the US government. They were established to do just that. The US controls both, has veto power over both, and both support US policies.

The same elite club that rules the US government, rules the UN and IMF.

Neither the UN nor the IMF operate as independent "conspiracies" designing to take over the US.

If anything, the UN and the IMF are just additional global institutions, along with global corporations and the global Pentagon, that are all used to solidify power by what is now a global elite centered in the US.

Fri, 09/30/2011 - 10:36 | 1725715 DosZap
DosZap's picture

Big Duke 6,

They can THINK their spending OUR money, since we're broke as a dead dik dog,it's pie n the sky.As we are broke also.

If they think they are going to lay this one the backs of the taxpayers what's left of us, they will have projectiles ..................In vast quanities headed their way.

You heard of going Postal?.

I believe this would give new meaning to it called going Global.

Welcome to WW III.

Anyone in our gub stupid enough to start taking funds for this from US taxpayers will be hanging from lamp poles.

Fri, 09/30/2011 - 11:40 | 1725980 donsluck
donsluck's picture

Islam forbids lending for profit.

Fri, 09/30/2011 - 07:16 | 1725157 Dick Darlington
Dick Darlington's picture

*ECRI'S ACHUTHAN SAYS U.S. IS ENTERING 'A NEW RECESSION'

Fri, 09/30/2011 - 07:25 | 1725166 BlackholeDivestment
BlackholeDivestment's picture

...something big is about to happen, Iran Israel? city nuke? or something ...and that will ''change'' the whole picture. What ever goes down it will be used to put all the nations in line ( which is now happening) with the whole new world order U.N. ''peace'' plan and global ''single'' market debt mark (already upon this generation) ''final Solution''. Everything is in place for some kind of global tax (happen now) to be spread out among the nations so that labor is marked by debt and thereby under the new world order thumb, just in time for the 2012 new age. Pretty wild to have Palestine and Jerusalem talk in the U.N. as the so called Arab Spring is happening etc...

Fri, 09/30/2011 - 07:25 | 1725170 kahunabear
kahunabear's picture

What does all this shuffling of paper even mean anymore? How many new ways can fiat be sliced diced and levered? It has gone beyond the absurd. Shouldn't money be backed by something real? Production? Assets maybe?

Fri, 09/30/2011 - 07:49 | 1725171 Mentaliusanything
Mentaliusanything's picture

You all must remember that Governments do not have any money of their own. They produce nothing, they only can distribute monies. Those monies are from the pockets wallet and savings of working people gleaned through taxation excise or fines.

They are now offering to spend whatever is left of your money to bail out those who spent like drunken sailors.

Socialism is great .... until you run out of other peoples money. and they have.

This is the greatest theft in history all for Vanity . Just plain old Vanity.

They have Lied through their Teeth - Bank stress test showing well capitalised Bank now needing Billions when the tide made them Naked. They Lied, they Kicked the Can,They lied and laughed at you.

If you allow this ...they will take it ALL.. through stealth, taxation and fees to pay the bill thats now due. That means you will be poorer, very much poorer as they drain you of your hard earned cash and assets.

They Lie to protect a Lie which has been found to be a Lie.

 

The recession they bring down upon our heads through their actions will be catastophic

http://www.forexfactory.com/calendar.php#details=36656

Fri, 09/30/2011 - 07:58 | 1725242 Bobbyrib
Bobbyrib's picture

They're going to have to institute a wealth tax, because there will be loads more people unemployed when this eventually all blows up.

Fri, 09/30/2011 - 09:25 | 1725498 ElvisDog
ElvisDog's picture

They're going to have to institute a middle-class/small business owner asset stripping tax

I fixed it for you. There is no way Buffett/Dimon/Fuld or any of the other billionaire ass clowns will pay a wealth tax. They will have right of correction to any such bill that gets proposed.

Fri, 09/30/2011 - 11:42 | 1725989 donsluck
donsluck's picture

You may be wrong.

Fri, 09/30/2011 - 07:32 | 1725179 yabs
yabs's picture

its a disgrace if people accept this
this is war now , ultimate war
EVERYONE needs to say f*ck you to the system
pay off debts and put savings into physical gold and silver
f*ck the sysetm

Fri, 09/30/2011 - 08:22 | 1725298 Sophist Economicus
Sophist Economicus's picture

Don't pay off the debts, just stay current. The state will make it all worthless soon enough. Not because they want to help you, but because they want to help themselves, in spite if you

Fri, 09/30/2011 - 08:49 | 1725372 Calmyourself
Calmyourself's picture

Exactly, paying debts at this point is foolish.  The highest duty is preservation of family, friends, community.  The nation is going to have to fend for itself.  Staying current and putting excess funds into food, assets.

Fri, 09/30/2011 - 07:45 | 1725198 swissaustrian
swissaustrian's picture

leverage, bitchez!

Fri, 09/30/2011 - 07:46 | 1725204 Greenhead
Greenhead's picture

The US is the largest contributor to the IMF.  Increasing their capacity means more of a burden on the American taxpayers.  They get to spend the money without the oversight, great program only a politican could love.  Anything to maintain the status quo. 

Thought the comment above about "we print 5 trillion but where does the money come from to pay the interest?" was brilliant.  It comes from taxpayers.  It is a theft of capital pure and simple.

Creative destruction means failure is necessary to clean out the bad and make room for the good.  It doesn't mean paper over the failure and transfer the losses to the taxpayers.  Doesn't get much more corrupt than this.

Fri, 09/30/2011 - 07:54 | 1725231 Forgiven
Forgiven's picture

This type corruption can only be stopped by lead poison.

Fri, 09/30/2011 - 07:52 | 1725219 sabra1
sabra1's picture

am sure the actual amount was less, but levered up to 1.3 trillion!

Fri, 09/30/2011 - 08:02 | 1725256 AngryGerman
AngryGerman's picture

it's all one big circle. everybody buys everybody else's bonds, and everyboby is happy

Fri, 09/30/2011 - 08:08 | 1725274 AnAnonymous
AnAnonymous's picture

Yes, it is all one big circle. That is the US world ponzi. But no, not everybody buys everbody's else bonds and not everybody is happy.

Remember that commodity rich countries have to yield their wealth to inject some real wealth into the Ponzi.

The Ponzi would have collapsed without them.

The way the US and its gang are leeching on the rest of the world... A new vampire character has to be created to celebrate the US achievement.

Forget about all vampires you know, real or fictious, just watch in awe the new breed of vampires, born and bred US citizens through and through. Will give nightmares to your children until they die. *wealth sucking sound*

Fri, 09/30/2011 - 09:28 | 1725515 ElvisDog
ElvisDog's picture

Everyone is happy except the resource exporting countries who are trading their non-renewable national wealth for paper. It is for this reason that the game can't go on forever.

Anecdotal story, I was at Burgermaster the other day providing a healthy dinner for my two sons. When the server brought the food to my car (It's a drive-in), I commented "I'm going to trade you that food for two pieces of paper". She paused for a moment and said "I never really thought about it that way".  Maybe now she will.

Fri, 09/30/2011 - 08:08 | 1725271 yabs
yabs's picture

I am confused  Ithought they create money out of thin air?

 

Fri, 09/30/2011 - 08:34 | 1725301 falak pema
falak pema's picture

To put it shortly : The IMF is proposing another route than the broken FED/ECB mecanisms to pump private funds and sovereign BRIC/Oil Oligarchy funds into financing the first world mega debt...The message is subtle coming from a multilateral institution : we're all in this together; sink or swim.

IS THIS THE FIRST STEP THEN TO PROPOSE, A NEW MONETARY BASKET/PM SYSTEM TO THE US OLIGARCHY?

IN WHICH CASE THIS WOULD BE THE IMF TROJAN HORSE...VIS A VIS O'BAMMY/US WS OLIGARCHS...

It is common knowledge that IMF economists feel that without haircuts the Euro crisis is unsustainable. Also the two zone North/South  Euromix is incompatible with ONE money. Europe needs in time to move to EurofrancS/EUroMarks monetary sub-divide type system to allow both zones to breathe as different economic models. 

So the IMF is trying to send a message to TPTB of first world, as their global consultants and fire-brigade, for defining a future monetary architecture that makes sense in the longer run. 

Fri, 09/30/2011 - 09:13 | 1725465 Smiddywesson
Smiddywesson's picture

So the IMF is trying to send a message to TPTB of first world, as their global consultants and fire-brigade, for defining a future monetary architecture that makes sense in the longer run. 

?????

TPTB own the IMF.  It is one of their tools to wield power, and it will never turn against them. 

Fri, 09/30/2011 - 11:26 | 1725916 falak pema
falak pema's picture

There is now a battle on amongst the Oligarchs of different regions...Haven't you noticed? Its called a currency war and more in Euroland speculation. And IMF has many owners...All Oligarchs, granted, but not all aligned in the coming meltdown. Musical chairs, every man for himself...is forever the rule. So a tug of war is the only outcome is what I suggest as a possible scenario behind the curtains.

Fri, 09/30/2011 - 08:29 | 1725321 Sophist Economicus
Sophist Economicus's picture

"remember that commodity rich countries have to yield their wealth to inject some real wealth into the Ponzi"

How stupid are they if there is no benefit!

Fri, 09/30/2011 - 08:29 | 1725323 txpenguin
txpenguin's picture

The banks and their subservient politicians always have an ace up their collective sleeve. They will take a cue from Billy Shakespeare as they cry havoc and let slip the dogs of war.

Fri, 09/30/2011 - 08:43 | 1725357 yabs
yabs's picture

flak the new world order?

Fri, 09/30/2011 - 08:51 | 1725377 warchopper
warchopper's picture

I'm amazed how fast policy makers can move when their ass and societal ranking is on the line, even though the direction is hellishly wrong. 

Fri, 09/30/2011 - 08:56 | 1725390 CvlDobd
CvlDobd's picture

What happens when there are no taxpayers left to be put on the hook?

Fri, 09/30/2011 - 10:45 | 1725756 DosZap
DosZap's picture

CvlDobd

What happens when there are no taxpayers left to be put on the hook?

Then they steal your savings and any money  you have, seize your ass-ets, and paid for himes, anmd proerties, and throw your ass on the sreet.

That's when the shooting starts.

We have 300 million plus eaters here, and less than 150 million working,You do the math.

Fri, 09/30/2011 - 09:19 | 1725483 Smiddywesson
Smiddywesson's picture

Well now, I think this pretty much puts the deflation/inflation argument to rest.  We will print until infinity.  The economy is in deflation, yes, but it doesn't matter how much debt is cancelled, or whether or not that takes money out of the system and makes it scarce, the amount of printing required to keep this abortion afloat will destroy the currency. 

The deflationists won the battle but will lose the war.  Cash is king, but the days of its reign are numbered.

Fri, 09/30/2011 - 09:35 | 1725535 ljag
ljag's picture

Well said SW

Fri, 09/30/2011 - 09:41 | 1725554 yabs
yabs's picture

SW

this has always been my premise that we will have adelfationary shock like in 2008 but then the rpinting will sonn overrideit on ce again so going from deflation to a currecny collpase very quickly

both defaltionsists and hyperinflationists are correct, we will get both

cash is king now but you had better get bthe timing right otherwise that cash will be trash

Thats why I keep PMs now so i do not have to worry about egtting out of cash all the time

Fri, 09/30/2011 - 10:24 | 1725680 Bansters-in-my-...
Bansters-in-my- feces's picture

So.....

WHO is the IMF's share holders.?

Fri, 09/30/2011 - 10:34 | 1725722 Schmuck Raker
Schmuck Raker's picture

"...sell bonds in private markets on short notice..."

"Gotcha" Bonds?!

Fri, 09/30/2011 - 12:14 | 1726129 choorles
Fri, 09/30/2011 - 12:36 | 1726245 koot
koot's picture

Substituting one addicting currency for another will not reduce the pain or agony of dependency, it only insures more will die of misery. 

Sat, 10/01/2011 - 04:28 | 1728395 QuantumCat
QuantumCat's picture

The implication for preserving our individual liberty is pretty clear... just an amateur response on an MBA discussion board:

According to Christine Lagarde, managing director of the International Monetary Fund, Europe faces two major challenges to economic recovery: Sovereign risk and banking risk. She considers the risks to be intertwined, and of course they are as sovereign debt has been used to socialize losses for "Too big to fail" institutions around the world. Keeping this in mind, she offers the following solutions: 1) Sustainability through more financing and fiscal action (but caveats with not too much austerity up front), 2) bank recapitalizations, and 3) a common vision for Europe.

These solutions may have theoretical validity for Keynesian-minded economists, but are destined for failure in the real world for the following reasons: First, these actions require the use of more debt to fix a problem created by debt. Requiring responsible Euro nations to burden their people by willingly sustaining profligate nations is not only immoral, it will have the effect of damaging the credit ratings of those countries, thus making it unsustainable. Europe will also need the help of institutions like the IMF to assist in raising capital. The US provides 17% of total IMF funding... keep that in mind as a taxpayer when you hear about hundreds of billions in IMF funding. Second, providing more financing for banks is politically untenable... have you seen the protests around the world and on Wall Street? Third, the Euro is comprised of many nations with different cultures and visions for the future. How can these nations be expected to agree on economic policies? If Christine Lagarde's plan were to succeed, it would diminish the sovereignty of nations, and individual liberty would suffer through a form of odious debt. Her plan requires more and more sovereign debt to sustain the financial system.  I think we can all agree that the additional taxes required to support that construct will eventually become an obstacle to “life, liberty, and the pursuit of happiness.” All things considered, I think any plan to "Save Europe" is destined to fail, if for no other reason than the immoral, underlying assumptions it is based on. Perhaps this failure will provide the “writing on the wall” for abandoning redistributive schemes that damage our individual liberties, and help put US debt on the path of fiscal sustainability. I wait for the day Texas is asked to bail California... if they didn't know they were already.

Source: Lagarde, Christine. "Save Europe" Bloomberg Businessweek 02 OCT. 2011: 90. Print.

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