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Crying Wolf?

Discussion in 'Blogs' started by Falcon15, Sep 11, 2011.

  1. Falcon15

    Falcon15 Falco Peregrinus

    You know the other day I was thinking (big shock that eh?) about the boy who cried wolf. Remember that endearing tale?

    Anyhow, I was thinking about the upcoming announcements of the Federal Reserve Chairman, Ben Shalom Bernake and the following day, President Obama will make another speech regarding his "new jobs plan". OK Enough with the crying wolf already. There is inflation and there are no new lasting jobs the government can create.

    Getting a real and honest politician would be a refreshing change. Oh, wait. I am talking about politicians. Speaking of...can any of you remember when an Elder Statesman was someone to be looked up to? Hmmm, nope, I cannot, myself. However the image remains, and that image came from somewhere.

    Gone are the days of the nominally honest politico. Gone too are the days when a congressman's and senators tenure was measured in terms, not decades. Complacency and laziness have caused our downfall. We are the only ones who are to blame for the current state of affairs. We, the people, are ultimately the employers of the very politicians who have destroyed our country out of greed and personal gain. We should have cut off the paychecks, reduced the benefits package and hired a whole new staff, but we did not and it is our fault.

    I know I have done my fair share of (cyber) fist shaking on this blog. Admittedly it is out of frustration and the feeling of powerlessness one gets when nothing changes no matter what efforts one goes to. Oh, and please don't talk to me about the "Tea Party Victory" we had in 2010. Please, give me break. The so-called fiscal conservatives turned chicken and balked when the money ran out. Can't have that. So they create this bogus bill that has $2 Trillion in tax cuts over 10 years and hikes the national deficit which had already doubled in the former 1.5 years by another $2.6 Trillion. Net savings? Negative 10% per annum, average. That is the interest the United States must pay the Federal Reserve on the loan of the $2.6 Trillion. See, we borrow our own money from the Federal Reserve Bank - actually we borrow permission to print our money from them for a fee (interest) of course. The rub is - we already owe the interest on the existing debt. Where does the Federal Government get the interest to pay off the loan? That is the kicker - it was never created in the first place - so the taxpayer has to pay more and more in taxes to meet the fiscal shortfall. As it stands the US has nearly $14.7 Trillion in debt, not including $65 Trillion in unfunded liabilities. What? Oh, let me explain that one.

    An unfunded liability means the US Government has promised to pay or is obligated to pay (liability) some person, organization, or other government. The unfunded part? Well, that means is we just don't have the cash to pay the liabilities. No moolah. No dinero. No jeng. No ching-a-ling-a-ling. Broke. Flat busted. You get the picture. It gets even better...

    Now, former Federal Reserve Chairman Alan Greenspan stated very recently specifically and openly stated "The US Will never default, we can print all the money we need to". Uh yeeeeah, we could. When that happens, we drop into a hyperinflationary spiral that will kill this country so fast we'll be wiping our butts with cash because it is cheaper than toilet paper. See how nasty this gets? Wait! It gets even better!!

    Now we have Asia, particularly China, who are the second largest holders of US Treasury Bonds (the first largest holder? The Federal Reserve Bank). What is the issue with this? Easy. When China buys Treasury Bonds, it does so with Remimbi or Yuan. Which drops the money supply in China, making China look poorer, and America gains X $, making America look richer.


    See, these bonds have a percentage yield. Remember US Savings Bonds? Treasury Bonds are just massively big ones. They state that they will yeield a certain percentage in gain when they mature. Where does the gain come from? Yep, the taxpayer's pocket. Well, not yet anyhow, and here is why: when the bonds have matured over all these years, the foreign investors, like the Chinese government has opted to "roll" or reinvest the yield of those bonds in new bonds. So we have not had to pay up in full yet. Notice I said yet.

    So in recent times, China sees that so much of their own money is tied up in the US dollar. They have explosive exponential growth that is almost out of control. Matter of fact their national interest rate is currently over 6%, and they are talking about raising it. They have also stated very implicitly that unless the US changes it's fiscal policy they will have no choice but to withdraw their fiscal support to protect their currency and economy. What does that mean? Simple, they sell the Treasury Bonds back to the US before they mature fully. The lose the interest they were "making" but they also re-infuse their economy with a large (approximately $1.2 Trillion) liquidity injection. Oh and the US would owe China that $1.2 Trillion dollars. Now. So the Treasury would have to borrow $1.2 Trillion from the Federal Reserve Bank (as discussed above), adding the new money to our $14.6 Trillion Deficit, not including interest.

    The secondary effect of a massive sell off of US Treasury Bonds by China? All other foreign countries who hold our bonds would follow suit, seeing the Chinese move as a vote of "no confidence" in the US's credit. The Treasury borrows from the Fed, and the money is added to our deficit - not including the interest we would owe on that money...and the America we know and love dies, not a noble and glorious demise, but a death by a thousand cuts.

    So I implore the powers that be, quit "crying wolf" with Afghanistan, Syria, Libya, and Iraq. Quit blaming Bush. Step up and fix this - start by rescinding the Federal Reserve Act of 1913, abrogating all debt incurred under this system and replace our current currency with a true representative one (gold standard, based only on how much gold the US actually owns. It is a finite amount and therefore only a finite amount of money can be printed) or the American people - when they really start understanding these things I have written about - will step forward and decide it is time to "refresh the Tree of Liberty".

    "The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. It is it's natural manure" - Thomas Jefferson
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