Events unfold daily that, when considered in sum, should give reasonably intelligent people a good idea about what’s coming down the pike. Presented below are some news articles aggregated over the last 24 hours. Watch as it builds!
- Morgan Stanley Says Government Defaults Inevitable
- “The question is not whether they will renege on their promises, but rather upon which of their promises they will renege, and what form this default will take.”
This means that those that purchased treasury bonds from the US government won’t be able to exchange them for the prearranged value agreed upon when initially purchased.
- “Enron Accounting” Has Bankrupted America: U.S. Deficit Really $202 Trillion, Kotlikoff Says
- “In time, the U.S. will have a major inflation problem to rival that of Germany’s post World War I Weimar Republic, he predicts.”
You remember those stories in your history class about how people lined up for blocks to purchase bread with container upon container full of money? A pound of bread cost 3 billion Rentenmarks.
- Home Sales Plunge 27 Percent to 15-Year Low as Economy Weakens
- “Sales were particularly weak among homes in the lower- to mid-priced ranges. For example, in the Midwest, homes priced between $100,000 and $250,000 tumbled nearly 47 percent.”
This means that those that can’t afford the homes they purchased are going to take a horrible loss on their initial investment. This isn’t the sub-prime market, by the way. These are people who weren’t swindled by a corrupt banking industry.
- Why US Treasury Notes Will Eventually Yield Nothing
- “For a currency to be in demand, it has to have a purpose. I think we all know by now that all currencies in circulation today are fiat currencies. The currency has no real value. However, the US dollar has a purpose. Even though the US produces just over 5% of the world’s oil supply, oil is traded in US dollars. So are most commodities. If investors want to buy commodities, they have to have US dollars. Interestingly enough, if they want to buy US Treasuries, they also must have US dollars. Paradoxically, the more the US sells debt, the more demand there is for the currency. With the promise of the perpetual printing press, the return of principal is a guarantee. What the principal will buy in the future is another story. Let’s save that discussion for another day and concentrate on the interest coupon.”
As I have presented in other articles and commentaries, if the reserve currency changed from US dollars to another currency, we would find ourselves in a situation akin to that of the Weimar Republic following the conclusion of WWI. Imagine that OPEC began to trade their petroleum in Euros in lieu of US dollars. Now imagine that Saddam Hussein threatened to pressure OPEC to do so.
- Cutbacks force police to curtail calls for some crimes
- Police will not be responding to certain calls. Vandalism, identity theft, and burglary will not be responded to in Oakland. Tulsa isn’t sending its cops to the scenes of fraud, larceny, and car thefts. Other police departments reduce their numbers and do not address the effect on their patrols and response to calls.
How long until other municipal departments are affected? How long until cities and towns are forced to make that horrible decision? “Do we layoff the last three police officers, or do we lay off three of the last 6 firemen?” People don’t really think that people who are no longer being paid are going to show up at work out of the kindness of their heart and a sense of good will, right?
I conclude with this article:
Three top republicans have called for the resignation of Timothy Geithner, Secretary of the Treasury, in addition to the ouster of the rest of the Obama economic team. But I am confused. Why hold accountable for our current situation someone who does not, for the most part, have anything to do with the state of our economy?
The Federal Reserve is the predominate determinate upon the state of our economy. They control the entire US economic system with their fiat money. Transparency within our banking institutions is necessary to provide Congress, and the People, oversight of one of the most important systems in US government. Ben Bernanke argued that any audit of the Federal Reserve system would be “highly destructive” to the US economic system. This does not take into consideration that, well after the fact, it came to light that the US Federal Reserve sent hundreds of billions of dollars to the central banks of foreign nations.
US citizens need to vehemently support the endeavor of auditing the Federal Reserve system in addition to passing legislation that engenders more oversight by Congress, as well as other citizen watchdogs, into the Federal Reserve’s daily machinations (which on second thought is a silly choice of words considering that only 7% of US dollars in “existence” are physical dollars. The other 93% exists only in computer systems).
So, what might be coming down the pike?