Currency

Of Debt, Gold and Okun’s Law

Is gold’s run over? Let’s look at some facts.

The amount of money the federal government owes to its creditors, combined with IOUs to government retirement and other programs, now tops $15.23 trillion. That’s roughly equal to the value of all goods and services the US economy produces in one year: $15.17 trillion as of September, 2011.

Among advanced economies, only Greece, Iceland, Ireland, Italy, Japan and Portugal have debts larger than their economies.

The US government spent over $454 billion just on interest on the national debt during fiscal 2011.

The debt ceiling stands at nearly $16.4 trillion. Some predict the US will run out of money by September 2012. The next increase to the debt ceiling could be as high as $2 trillion.

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zerohedge.com

Since Barack Obama was elected, the US government has added $5 trillion more to the national debt.

The United States government is responsible for more than a third of all the government debt in the entire world.

Mandatory federal spending surpassed total federal revenue for the first time ever in fiscal 2011.

 

Is Paper Money Legal

One of the fascinating aspects of all the controversy about paper money v hard money, has been the
lack of knowledge of just how did it come about? Oh we can go back to paper money being a receipt
from bullion dealers offering money storage, and we can go the American Colonial Period and point to
the drastic shortage of coin that necessitated paper money issues. But those stories are fairly common
knowledge. What isn’t talked about even in school is the manipulation of the Supreme Court AFTER it
declared that PAPER MONEY WAS UNCONSTITUTIONAL!

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Reader Mail, Bundesbank Frustration, and Impressed by an Elder…

“A fool thinks himself to be wise, but a wise man knows himself to be a fool.”  

– William Shakespeare

 
Reader Mail Commenting on the “Pavlovian QE-Barking Dog”

[Thank you JCD; well said.]  

“Watching the current behavior of the markets as a sign-post pointing to something more that is behind its irrational mania, perhaps we can see that there are also problems that we are witnessing today involving the structural challenges in government and our economy.  The oppressive condition we are under when it comes to how the market is behaving is – in my opinion – the result of legally-sanctioned organized crime.  In order for the FED to do what it is doing to prop the market up presumably requires some degree of legislation allowing what would otherwise be illegal and unethical behavior; i.e., legally-sanctioned fraud.
 
“If the FED is legally obliged to answer to Congress, then how can it continue with this fraudulent show of a false recovery unless Congress is also complicit in the act? The current economic policies under which we now suffer are those that (by any other description) can be defined as the policies of an organized crime syndicate.  In the belief that it can buy more time until a truly sustainable recovery can be installed is like believing that so long as we ignore the bad weather all around by sticking our heads in the sand it will go away.

To Read More CLICK HERE

wise fool

China’s Reminbi: The World’s Next Reserve Currency?

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The Fed bought 61 per cent of the net new debt the US government issued last year. Before the financial crisis, the Federal Reserve used to buy small amounts, but not the lion’s share of the US government’s debt. This is quantitative easing like we have never seen before. This is more money than it cost to fight World War II, the first Gulf War, put a man on the moon and the entire African aid budget for the past 30 years – all put together.

Not If But When….

Is there anything else driving up the price of petrol at the pumps that could be closer to home?

The answer is yes. At the moment, the central banks of the world are responding to this mega-debt crisis and huge de-leveraging everywhere with lower and lower interest rates. Earlier this month, a report from the US Federal Reserve (www.federalreserve.gov) on the flow of funds in the US made for quite shocking reading if you are someone who worries about what central banks all around the world are doing.

The report reveals that the Fed bought 61 per cent of the net new debt the US government issued last year. Before the financial crisis, the Federal Reserve used to buy small amounts, but not the lion’s share of the US government’s debt. This is quantitative easing like we have never seen before.

One way of putting all this into context is to examine how much this is in terms of US total income. This is particularly important right now in order to ascertain whether the US recovery is real or temporary.

Net treasury debt amounts to 8.6 per cent of GDP. If 61 per cent of that figure is caused by printing money, it means that about 5.3 per cent of US economic output is now being driven by the Federal Reserve’s printing presses. This is reminiscent of Argentina in its 1980s heyday, and is extremely worrying.

….read more HERE

ConfederateInflationRates

If it works for the ECB it can work for the Fed. Be happy!

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“The only thing that saves us from bureaucracy is its inefficiency.”

– Eugene McCarthy

We foolishly find ourselves asking: when will Federal Reserve quantitative easing reach its limit?

Considering the consequent boost to risk appetite that flows from QE, enriching those who hold financial assets while doing little for those holding welding torches and spatulas, we are happy to tell you that the Fed has plenty of room to maneuver the printing presses still.

And if you’re wondering just how much credit they can pump into banks or how much government debt they can buy up in order to keep the Keynesian desperados operating, it’s at least 26% more of total government debt – that would take them to even with the ECB efforts that have to this point “succeeded” in suppressing severe risks:

To read full article CLICK HERE