It’s hard to believe that the ChiComs weren’t hip to this before now, but I see from this morning’s Telegraph that they’re finally speaking out publicly. “Cheng Siwei, former vice-chairman of the Standing Committee” is quoted
“If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies,” he said.
Do we all get that? The biggest holder of foreign debt, $2,000,000,000,000 worth according to this story, is going to try to slip away from the dollar while no one’s looking. What Turbo Tax Timmy is doing is printing dollars to buy up Treasuries. Meaning, he’s printing money, which has no intrinsic value other than what you can get someone to trade you for it … that is, it’s basically a piece of paper, to buy up an asset which at least gives the appearance of having value since at least in theory the Fed will redeem it for dollars. That it just printed. You can see the problem here. You do that enough, pretty soon even the appearance of value is gone. Inflation is absolutely inevitable. Given the size of the pile of green backs they have to pump out of the Treasury, we’re talking Weimar Republic. Probably not Zimbabwe, but Weimar no doubt.
“He who goes borrowing, goes sorrowing,” said Mr Cheng.
It was a quote from US founding father Benjamin Franklin.
I’m sure The One will be quoting Franklin on thrift and responsibility at length next week in his speech to the “skulls full of mush.”
Moe Lane
Steve Maley
Dan McLaughlin
Neil Stevens
Daniel Horowitz
We are Absolutely talking Weimar
Section9 Monday, September 7th at 10:36AM EST (link)The Chinese are not our friends, but they like to be careful with their money.
The currency crisis is at hand, friends. What has this been predicted for, ten years, at least. America’s love affair with progressivism is about to come to an end.
“History will be kind to me, for I intend to write it”-Winston Churchill
...and about to experience dictatorship, if inflation become runaway
civil truth (Diary) Monday, September 7th at 12:32PM EST (link)And this is not referring specifically to the propensities of our current Administration.
Rather, I am referring to the lessons of history, that when a currency experiences runaway inflation and loss of values, social cohesion falls apart and you end up with government at the end of a gun barrel. That’s exactly the outcome of Weimar and Zimbabwe.
In the lesser extreme, power centralizes further in the hands of a government and freedom is diminished.
That said, it’s not clear whether the large holders of U.S. debt will allow runaway inflation, or whether they will force the Fed to raise interest rates to protect the value of their investments, which would be a deflationary pressure, and at a minimum cut-off any economic recovery as private capital is squeezed by government demands.
We’ve got two cross-currents here, and it’s hard to know whether their interaction will sink us or whether they will cancel each other enough to allow our ship to stay afloat.
The greatest evil…is conceived and ordered (moved, seconded, carried, and minuted) in clean, carpeted, warmed, and well-lighted offices, by quiet men with white collars and cut fingernails and smooth-shaven cheeks who do not need to raise their voice. Hence, naturally enough, my symbol for Hell is something like the bureaucracy of a police state or the offices of a thoroughly nasty business concern. -C.S. Lewis
http://www.gmsplace.com/
Just so long as it is a RedState dictator
RoguePolitics (Diary) Wednesday, September 9th at 1:52PM EST (link)Give me four years to teach the children and the seed I have sown will never be uprooted. Lenin
“So much of left-wing thought is a kind of playing with fire by people who don’t even know that fire is hot.” George Orwell
“Ancient Rome declined because it had a Senate, now what’s going to happen to us with both a House and a Senate?” Will Rogers
When the American spirit was in its youth, the language of America was different: Liberty, sir, was the primary object. Patrick Henry
http://theprecinctproject.wordpress.com
Because the Republican Party is NOT going to fix the Republican Party.
http://americanamendment.com/
Because Washington is NOT going to fix Washington.
Francis Cianfrotta....... Your expertise is needed here.
Kenny Solomon (Diary) Monday, September 7th at 1:32PM EST (link)Personally, I still think there’s a day coming soon when every single nation holding US debt will say “called”….. and they’ll all be ready for what comes after that…. and not care, because it will take us down completely.
I sure miss having Francis as a regular here.
Achance (Diary) Monday, September 7th at 3:12PM EST (link)There were NO economic surprises if you followed his writings. He seemed almost supernaturally prescient about the credit collapse.
In Vino Veritas
You can find Francis
mbecker908 (Diary) Monday, September 7th at 8:59PM EST (link)here. Pay special attention to his July 14 article.
Thanks, mbecker..... bookmarked and added to my daily list of visits....... nt
Kenny Solomon (Diary) Monday, September 7th at 10:08PM EST (link)This is *EXACTLY* the kind of news...
Justin Spagnolo (standardcandle) (Diary) Monday, September 7th at 3:33PM EST (link)That makes Mr. R. Paul look like a genius to libertarians…
However… I’m quite certain that this will lead to more Nationalizing of private sectors than it will do to help HWMNBN to get elected in 2012…
I have my 1 year food supply… I wish I had 2.
“Knowledge will forever govern ignorance; and a people who mean to be their own governors must arm themselves with the power which knowledge gives. “ -James Madison
It doesn't take Ron Paul prescriptions to solve this problem
6eorge Jetson (Diary) Monday, September 7th at 4:29PM EST (link)Lose the stimulus. Issue Treasurys at the interest rate that will clear the market. Don’t do a complete, costly makeover of one-seventh of the American economy.
Correcting the momentum of the accumulating debt would take some backbone, but there are ways to do that today if Obama was so inclined. Unfortunately, he’s not, and foreign dollar holders will be calling him on it.
putting the obvious snark aside...
Justin Spagnolo (standardcandle) (Diary) Monday, September 7th at 4:49PM EST (link)you have a great start to a prescription that may ease the symptoms but not cure the disease…
your proposal would make sense and prevent debt-holders from bailing on future investments… and may return us to ante-housingbubble™ economy…
however, this news is exactly what both the Ronulons and the Leftists want to hear… The Ronulons cause they can walk around the living room of their bunkers reveling in the value of their gold coin collection telling themselves… “I was right… THOSE FOOLS… I’M RICH, RICH RICH!” and the Leftists as they salivate over the real prospects of driving the economy into the ground so they can repeat the history of other unamed socialists turned fascists.
I’m just sayin’…
“Knowledge will forever govern ignorance; and a people who mean to be their own governors must arm themselves with the power which knowledge gives. “ -James Madison
I do have a significant overweight in a precious metals fund
6eorge Jetson (Diary) Monday, September 7th at 5:34PM EST (link)Just wish I could say “I’M RICH, RICH RICH!”
It’s just a defensive position against the obvious risk.
hahah... obviously, I can't put the snark aside... n/t
Justin Spagnolo (standardcandle) (Diary) Monday, September 7th at 6:36PM EST (link)nt.
“Knowledge will forever govern ignorance; and a people who mean to be their own governors must arm themselves with the power which knowledge gives. “ -James Madison
I don't buy Gold to be rich
RoguePolitics (Diary) Wednesday, September 9th at 2:03PM EST (link)I buy gold so that what I have today will buy the same amount of stuff tomorrow.
Speculation can move gold around but in the end it is merely a store of value.
Another guy to read on what is happening and why is Robert Prechter who predicted all of this back in the 90′s.
I am curious, aside from the war issue (which we now have a loser fighting anyway),what is it that so many hate Ron Paul about?
I know the cultish following creeps people out but;
Is a sound currency bad?
Is liberty a threat to the republic?
I don’t agree with him entirely on war issues but most of what seems to be out there regarding Ron Paul is kneejerk hatred like what the left displays when presented with a profitable business.
What gives?
“So much of left-wing thought is a kind of playing with fire by people who don’t even know that fire is hot.” George Orwell
“Ancient Rome declined because it had a Senate, now what’s going to happen to us with both a House and a Senate?” Will Rogers
When the American spirit was in its youth, the language of America was different: Liberty, sir, was the primary object. Patrick Henry
http://theprecinctproject.wordpress.com
Because the Republican Party is NOT going to fix the Republican Party.
http://americanamendment.com/
Because Washington is NOT going to fix Washington.
Please,
The_Gadfly (Diary) Thursday, September 10th at 12:12PM EST (link)don’t get Becker started. It took us months for us to get him back to his usual COF status last time.
For most posters here, it IS the Paultards who move in hordes on posting boards. But the man himself rarely works with anyone to get anything accomplished. He is called ‘Dr. No’ for a reason. In other words, while some of the principles he espouses are good, he is completely incapable of changing government based on those principles.
So it is the plague of locusts that is disturbing
RoguePolitics (Diary) Thursday, September 10th at 2:30PM EST (link)As my “member since” date shows I haven’t been on RedState as long as mosst and perhaps haven’t seen it.
As for the Dr No label I see it.
As a small business operator I have to deal with customers, employees, etc and know sometimes things have to be finessed.
But surely there are lines we can draw and say this I will not cross. His lines aren’t necessarily your lines or in some cases my lines.
He is having pretty good success right now in collaborating with others on the Audit the Fed effort.
Thanks for the info.
From now on if I feel I should post anything pro Ron I will pull one of my fingernails out before hitting the post button. If I can’t bring myself to do it then it obviously isn’t important enough to post.
“So much of left-wing thought is a kind of playing with fire by people who don’t even know that fire is hot.” George Orwell
“Ancient Rome declined because it had a Senate, now what’s going to happen to us with both a House and a Senate?” Will Rogers
When the American spirit was in its youth, the language of America was different: Liberty, sir, was the primary object. Patrick Henry
http://theprecinctproject.wordpress.com
Because the Republican Party is NOT going to fix the Republican Party.
http://americanamendment.com/
Because Washington is NOT going to fix Washington.
No problem.
The_Gadfly (Diary) Thursday, September 10th at 6:26PM EST (link)You didn’t smell of troll or Paultard so I didn’t bother checking your start date or checking other comments you made. You deserved an honest and unscathing answer.
Also, I’d suggest checking on a couple of articles posted by Red State’s Blackhedd before getting too enthusiastic about auditing the fed. In this one he discusses the problems with our current situation: http://newledger.com/2009/08/bloomberg-prevails-on-the-federal-reserve-and-disclosure/, but in this one he outlines the risks of Ron Paul’s proposal: http://newledger.com/2009/08/why-auditing-the-fed-is-a-terrible-idea/.
And since you are relatively new here, you should know that Francis called just about every major downturn of the current recession before it happened, usually by about a week. And on a few that he was legally obligated not to speak on, other posters called them in the comments section of his diaries.
Thanks for the links
RoguePolitics (Diary) Friday, September 11th at 1:22AM EST (link)Given the existance of the Fed it has a reasonably strong argument in favor of secrecy.
I have always believed in a gold standard. Probably not before Ron Paul did but certainly before I ever heard of him.
I think the FED is too close to Marx’s fifth action item “Centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly.”
As Blackhedd points out they were able to move faster than anybody with literally trillions.
When you consider how that lines up with the fact that the former head of the AFL-CIO in NY was just appointed to be the head of the New York Fed it makes you wonder what else they can do before anybody else can act.
I know that starts to fall into the conspiracy theory line of thinking. Maybe a branch of the Crazy Tree.
“I have always been afraid of banks.” Andrew Jackson
“[The] Bank of the United States… is one of the most deadly hostility existing, against the principles and form of our Constitution… An institution like this, penetrating by its branches every part of the Union, acting by command and in phalanx, may, in a critical moment, upset the government. I deem no government safe which is under the vassalage of any self-constituted authorities, or any other authority than that of the nation, or its regular functionaries. What an obstruction could not this bank of the United States, with all its branch banks, be in time of war! It might dictate to us the peace we should accept, or withdraw its aids. Ought we then to give further growth to an institution so powerful, so hostile?” –Thomas Jefferson to Albert Gallatin, 1803.
http://etext.virginia.edu/jefferson/quotations/jeff1325.htm
“So much of left-wing thought is a kind of playing with fire by people who don’t even know that fire is hot.” George Orwell
“Ancient Rome declined because it had a Senate, now what’s going to happen to us with both a House and a Senate?” Will Rogers
When the American spirit was in its youth, the language of America was different: Liberty, sir, was the primary object. Patrick Henry
http://theprecinctproject.wordpress.com
Because the Republican Party is NOT going to fix the Republican Party.
http://americanamendment.com/
Because Washington is NOT going to fix Washington.
You can never created a locus of power,
The_Gadfly (Diary) Friday, September 11th at 11:07AM EST (link)without also creating a locus that corruption will target. The key is always in establishing the mechanism by which the locus of power is monitored*.
What is scary here is that I fear the corruption of the politicians reading the monitoring reports more than I fear the corruption at the Fed itself. I forget which one of those twits it was who started a run on a regional bank because he announced the Fed was monitoring them. If one of them has already done it, you can be sure others will again probably for partisan advantage. At least the Fed hasn’t abused its power so far, which is more than is true for the so-called Congressional oversight groups.
On the issue of whether or not we need the Fed, history seems to indicate that we do. Hamilton put together the first central bank, which was the concern of Jefferson and which Jackson did destroy. We went without one for a while, and then created it again. Given that we created one again after it was explicitly destroyed I don’t think it will be helpful to destroy it again.
——
*And one of our significant cultural problems today is that our primary monitor, the free press, has for all practical purposes become corrupted. It sees its responsibility as leading the social changes instead of reporting accurately on issues and allowing the electorate to make decisions. Until the press is restored to its needed function, everything is always at risk.
Is there a Federal Agency that has never abused whatever power it has?
RoguePolitics (Diary) Friday, September 11th at 11:57AM EST (link)And even assuming they haven’t abused it yet, we can be sure the abuse is only a matter of time and the power they have is incredible.
But have they not abused it? We really don’t know what they may have done.
No sweetheart deals to congressmen charged with oversight? We don’t know.
How did TARP get slammed through so fast? Did the FED apply undue pressure? We don’t know.
If the FED has adopted a leftward bent and has steered money to likeminded individuals at institutions so they can then use the “laundered” money to support leftist policies? We wouldn’t have a clue.
That is almost the entire reason I object to it. Inflation, which rarely occurred before the FED is another.
They only thing we can be sure of, if the FED has not yet abused it’s power, is that eventually it will. And we will only find out after it is too late to stop it.
I say since we obviously survived quite well without it, and therefore it represents an unnecessary and potentially dangerous delegation of power, we should scrap it.
I know a central bank has been created and killed several times. That doesn’t mean it is a good idea, it means the people pushing the central bank concept recognize and desire the power it represents. Hamilton was a strong Nationalist and always pushed for a stronger central government. He saw the First Bank as an important step in that direction.
Washington created, at the behest of Hamilton, the First Bank. Madison and Jefferson opposed it. It died a natural death when it’s charter expired. Madison later, as President, created the Second bank which Jackson killed.
It is rare for a servant to be able to act in complete secrecy, mushrooming even his master, without the master suffering at the hands of his servant.
“So much of left-wing thought is a kind of playing with fire by people who don’t even know that fire is hot.” George Orwell
“Ancient Rome declined because it had a Senate, now what’s going to happen to us with both a House and a Senate?” Will Rogers
When the American spirit was in its youth, the language of America was different: Liberty, sir, was the primary object. Patrick Henry
http://theprecinctproject.wordpress.com
Because the Republican Party is NOT going to fix the Republican Party.
http://americanamendment.com/
Because Washington is NOT going to fix Washington.
This may be the crisis that Comrade Obama needs.
Achance (Diary) Monday, September 7th at 5:00PM EST (link)Wiemar is the best study on the dislocations caused by inflation. It got violently bad in Germany in a racially and economically much more homogenous country than the US. Organized labor and the welfare system will only be able to keep up with the inflation with wage and benefit increases for a very short while before companies start shedding jobs. Comrade Obama will try to nationalize companies to keep them form shedding jobs but that just causes more inflation. There you have the death spiral into violence and revolution.
In Vino Veritas
Most believe we will have hyperinflation
redneck_hippie (Diary) Monday, September 7th at 5:32PM EST (link)and very few see us going into debt repudiation.
Article from Powerline asks, “What’s in store, inflation or default?”
http://www.powerlineblog.com/archives/2009/09/024433.php
Hyper-inflation is what doomed the Wiemar Republic.
Achance (Diary) Monday, September 7th at 8:49PM EST (link)And there really isn’t any way for Comrade Obama and the Democrat Politburo to avoid it short of a complete repudiation and the following war, a war that will be complicated by civil war inside the Country. I laid out the nasty scenario in a diary about Wiemar a few months ago here: http://www.redstate.com/achance/2009/02/20/gleichschaltung-a-german-word-we-should-understand/
In Vino Veritas
Won't it start with gas prices suddenly going through the roof?
bk (Diary) Wednesday, September 9th at 1:59PM EST (link)Gas prices will skyrocket only if the dollar plummets
civil truth (Diary) Wednesday, September 9th at 2:37PM EST (link)…barring, of course, a transient, news-event price spike due to a crisis that wipes out supply for a while (or a serious threat to).
A demand side push to accelerate a price increase seems unlikely in the absence of the prospect of a worldwide brisk economic recovery, which no one sees as far I can tell, Thus far, though I haven’t been following closely, oil futures are remaining relatively stable.
The greatest evil…is conceived and ordered (moved, seconded, carried, and minuted) in clean, carpeted, warmed, and well-lighted offices, by quiet men with white collars and cut fingernails and smooth-shaven cheeks who do not need to raise their voice. Hence, naturally enough, my symbol for Hell is something like the bureaucracy of a police state or the offices of a thoroughly nasty business concern. -C.S. Lewis
http://www.gmsplace.com/
Or if "speculators" start playing with the gas prices - again.
Achance (Diary) Wednesday, September 9th at 3:25PM EST (link)The same gang that gave us last year’s high prices – and in large measure elected Comrade Obama – could play the same game again if BHO needed another “crisis.”
In Vino Veritas
Let's not get carried away with this yet
dsmurf (Diary) Monday, September 7th at 10:15PM EST (link)The bond sales have been going well or better than expected, like maybe all the central banks are still buying US bonds, the Swiss are certainly interested in depreciating their currency against many, including the USD. This is not the first evidence of the Chinese selling US bonds this year. There’s already Fed Governors in waiting, that don’t have voting rights this year, that are talking about increasing rates sooner than later, hence strengthening the USD. OTH, The economic research council is already talking about, see Friday editions of Investors Business Daily, a robust economy here, very bearish for bonds. As long as there is develeveraging going on, the USD will stay in demand whether anyone else wants it or not.
Other regions of the world are experiencing deflation, especially Japan. The world is not decoupled. For further reading see www.stockcharts.com>free charts>public chart lists>Howard Blackstein his Sep 2 entry regarding 2 highly regarding financial analysts and their reasons for inflation vs deflation.
Meanwhile there are CNBC stories and the Baltic Dry Index are showing decreased demand for shipping as shown by lower prices, see Mr Blackstein’s charts.
The CNBC stories over the last couple of weeks have indicated less demand from China from less stimulative efforts. Though who can blame them for expanding their oil acquisitions if the USD is due for another depreciation run against the commodity currencies like New Zealand, Australia and Canada akin to the Carteresque, 1970s or worse.
A "Robust Economy" Is Not Possible
Ausonius (Diary) Wednesday, September 9th at 3:09PM EST (link)given all the uncertainty caused and perpetuated by NObama’s War On Business.
Certain kinds of businesses and speculators might make some money on the edges, but from my contacts – especially certain former students at PNC Bank and elsewhere – things do not look good for a “robust economy.”
For such to occur, you would have to cancel all tax increases and institute investment tax credits and general tax cuts across the board, especially for small businesses. You would have to eliminate Sarbanes-Oxley to promote start-up entrepreneurship again. Other things come to mind, like a general immolation of ambulance-chasers and similar vampires among the lawyertariat, but…
Within 24 months, you would have a robust economy: this will not happen under NObama of course.
Repudiating national debts has been typical of socialist/Communist governments in the past. We will see what happens: creating a new currency to replace an earlier one was typical of the Weimar Republic, with for example a one trillion Mark note being exchanged for a new one mark note. But the problem was the trust in government had been shattered: the new currency would hyper-inflate as quickly as the old one.
Ausonius: 310-395 A.D. Teacher, Poet, Consul, General, Farmer.
Personal Tutor to the future St. Paulinus of Nola and to young Gratian, heir to the throne during the turbulent final years of the Western Roman Empire. When his former student Gratian was assassinated, Ausonius threw up his hands and retired to his farm in Gaul. Rome was captured by barbarians 14 years after his death.
Cato@rock.com
inflation? deflation? stagflation?
Common_Cents (Diary) Thursday, September 10th at 6:37PM EST (link)It is very confusing. I don’t see the economy turning a corner anytime soon, inversely related to “success” of Obama implementing his economic killer plans. If Obama gets exposed and America wakes up to turn things around we would look for inflation.
Obama continuing to damage the economy I see things deflationary, further job loss etc. Any porkulus would be pushing on a rope.
Stagflation with a flat economy but inflation with falling dollar and defensive plays running up commodities, oil etc….
Ouch.
Geez, I think I’m going to re-look at my info on moving to Panama!
Obama=Golfer in Chief, Leading from,
behind, the Back Nine.Leaders don’t create movements. Movements create leaders. Get involved. Your future depends on it.
Govt “invests” YOUR tax money for POLITICAL return rather than economic return.
Repudiation v Weimar
RoguePolitics (Diary) Wednesday, September 9th at 2:25PM EST (link)The wave is coming. Which route it takes is uncertain but may not matter.
If we repudiate; the global economy collapses because the dollar is being held by so many as an asset.
If we print our way out those dollars still become worthless.
China and other debt holders are as stuck as we are. As they used to say when you owe the bank $100,000 the bank owns you. When you owe the bank $2,000,000,000,000 you own the bank.
China and others know if they stop buying we will start printing and they are screwed. At least while they are buying it looks like they are holding something of value.
Everyone of them is looking at how they can get out of dollars without crashing dollars before they are out. Just like an institutional investor with a large stake in a bad company is stuck unable to dump more shares than the market can bear without destroying what they have left.
The dollar is rapidly reaching the same status as a securitized mortgage, a piece of paper with no inherent underlying value. (In fact since we departed the gold standard it has had no inherent value.)
Even after the banks recognized the securitized mortgages for what they were, they kept quiet for a time in the hopes of unloading the hot potato before it burned them. But it just didn’t happen. Word got out that the emperor had no cloths and the securitized mortgages crashed virtually overnight.
The dollar will do the same. It is mass psychology. One day everybody will wake up and realize the dollar is worthless and more importantly that EVERYBODY KNOWS it is worthless. On that day, it will tank as fast as Lehman or Bear Stearns.
Or somebody will roll double sixes and we will all go to the Candy Cane Forest.
“So much of left-wing thought is a kind of playing with fire by people who don’t even know that fire is hot.” George Orwell
“Ancient Rome declined because it had a Senate, now what’s going to happen to us with both a House and a Senate?” Will Rogers
When the American spirit was in its youth, the language of America was different: Liberty, sir, was the primary object. Patrick Henry
http://theprecinctproject.wordpress.com
Because the Republican Party is NOT going to fix the Republican Party.
http://americanamendment.com/
Because Washington is NOT going to fix Washington.
Think What Universal Health Care Would Do To The Dollar?
DavidSage (Diary) Wednesday, September 9th at 7:38PM EST (link)If some form of universal health care does end up passing, I think that’s when I cash out all my dollar holdings. (along with every other sane investor) and the US would experience some sort of currency crisis like Argentina had a few years ago. Whatever the estimates are for what it would cost the government, just add another digit and you’d probably be close.
We’re already in uncharted waters as far as our debt levels, and that’s not taking into account the MASSIVE entitlement liabilities from Social Security and Medicare in the near future that are simply unaffordable. These programs will never be reformed, they’ll simply hit a wall. Even if you doubled everyone’s taxes, you still couldn’t keep this ponzi scheme up.
I don’t see how we’re NOT (at the very least) going to have double digit inflation and high interest rates like we did with Carter.
I wouldn't say we are in unchartered waters
RoguePolitics (Diary) Friday, September 11th at 12:01PM EST (link)Plenty of countries have been where we are now.
“So much of left-wing thought is a kind of playing with fire by people who don’t even know that fire is hot.” George Orwell
“Ancient Rome declined because it had a Senate, now what’s going to happen to us with both a House and a Senate?” Will Rogers
When the American spirit was in its youth, the language of America was different: Liberty, sir, was the primary object. Patrick Henry
http://theprecinctproject.wordpress.com
Because the Republican Party is NOT going to fix the Republican Party.
http://americanamendment.com/
Because Washington is NOT going to fix Washington.