The Helicopter is loaded and it's all sysytems GO!!!!!
Posted October 7th, 2008 by Susan
output
This one is like a good thriller novel....covert bankruptcy of the Fed and a takeover by Treasury....a bailout that is a rubber stamp and covert fuel for the helicopter....
The above is a very in depth article about how, through the seemingly innocuous announcement on 9-17-08 of the Feds Supplementary Financing Program, the US Treasury covertly took over the bankrupt Federal Reserve.
The bailout is effectively fuel for the helicopter and the Fed is monetizing bank "assets" as evidenced by an examination of reserve balances and the monetary base for September. (Adjusted Monetary Base has shot up 75B in just the last two weeks. 7B additional federal reserve notes in circulation).
"The helicopter is why, out of nowhere, the Reserve Balances and the Adjusted Monetary Base jumped by $75 billion or so in the past two weeks. And the helicopter is why these amounts have jumped and will jump by another $75 billion or more by next week. As you consider the situation, please realize that up until this September, the Monetary Base had barely changed since the beginning of the credit crisis last year." "The idea that the Treasury would buy distressed bank assets using taxpayer money is hugely unpopular with Americans, but the unpopularity itself became the blindfold that kept everybody from asking exactly how the Treasury would actually do this. In fact, several hundred economists (all of them apparently Keynesians) have written letters to Congress urging them not to vote for the bailout because it would not work, mainly on the grounds that banks will need to be recapitalized with banking reserves instead of just having bad assets taken off their books. Well, guess what? Recapitalization of banking reserves was apparently the plan all along!"
Bookmark/Search this post with:
A thought
So, if
"Payback time for Wall St and Washington will be when foreign investors fail to turn up at the bond auctions to finance the bailout plan, whose $800+ billion will have to be created out of thin air. So the bonds will have to be monetized, which will mean an immediate spike in inflation, which will cause the rate of corporate bankruptcies to soar as failing companies take down others in a chain reaction because the losses will be highly leveraged by credit default swaps etc." (from market oracle.com)
and yesterday from Bloomberg "Fed increased auction to 800B"
can we concluded the monetization is under-way from this article?
how can we monitor to see if foreign investors are not showing up at the auction?
Reddit
http://www.reddit.com/r/r...
Is anyone Digging this yet?
Holy S***
DEFLATION HERE WE COME! in my opinion.
"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
---
The way I see it, it now got to a point that the Fed is trying to make up the crashing credit, in my opinion. That way I see it, it's kind of like a man is trying to stop fast falling hundreads of dominos in muti directions.
Maybe all this deflation you
Maybe all this deflation you refer to is in regards to assets. When I think of inflation/deflation it's in regards to the dollar. Many assets are severely overpriced or illiquid, yes - they will deflate in value. But regarding the currency, it will be inflation. The gov / fed will undoubtedly attempt to print themselves/us out of this mess - but all it will do is destroy the dollar via inflation.
Please, look at the 7th and
"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
---
the 8th charts from the bottom of the page and let me know what you think.
http://www.nowandfutures....
Deflation would be much
Deflation would be much easier on the People than an inflationary depression leading into a hyper-inflationary collapse however, I see the latter occurring for several reasons. There will indeed be a period of deflation, in fact I think there will be several sectors of the economy which will suffer from deflation at the same time that there is a growing inflationary pressure mounting until the monetary system begins its last dramatic descent into the terminal point in its life span.
http://www.1776solution.b...
As hard as it would be I think Deflation would be
easier to ultimately handle than an inflationary depression. Hyper-Inflation
would keep more people employed but, the money won't buy much (see Zimbabwe or Argentina) Certainly not enough to eat. There's no way to keep up. Both are devastating to be sure. We are all so familiar with the old black and white films of the great depression and bread lines etc. Because pay can't keep pace with prices those bread lines will be part of an inflationary collapse as well. A while back a link was posted to a documentary on Argentina which was very englightening as to who the manipulative players were; IMF and World Bank, the promises made that weren't delivered on; National Socialized Medicine was one.
Republicae, do you think hyper-inflation grants any advantage to the PTB in terms of power grab-a transition to dictatorship, that a soley deflationary event does not provide? I had been thinking about this and, hyper inflation allows the PTB to pay the burgeoning military police state participants, run the Gov't, expand the Gov't etc etc for longer than if they just allowed it to deflate and shortened the overall length of the coming correction...maintaining the status quo, even a bit longer, provides greater opportunity for expanded power IMO
Please, look at the 7th
"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
---
and the 8th charts from the bottom of the page and let me know what you think.
The US is a debt based
The US is a debt based society. Inflation would actually be better, at least for the majority of people who remain in debt.
No, because WAGES are often contracted and would thus
be worth MORE with each passing month.
And would in short order be worth significantly more relative to physical goods.
Saving -- even a small amount -- would eventually pay large dividends.
And the debt is past debt, normally (unless you are truly stupid) with a pre-defined interest rate.
Deflation is a GOOD thing (we've had 4 decades of deflation in the computer industry -- its the whole reason you can afford to have that fancy-pants laptop you're typing on now).
Deflation rewards frugality and the ability to delay gratification.
Inflation rewards the spendthrifts, the speculators, and the consumerist mentality that has to have everything NOW.
But the deflation we will experience will be short-lived, and it is an UNplanned consequence of the contraction (destruction) of the previous bubble-inflation from the banking/credit money. The Fed & Treasury with all of these "bailouts" (purportedly loans, but really more "grants") is attempting to REflate the housing and other "asset" prices -- the end result will be several years of super inflation (10% to 25%) if it is well-managed, and if it is not, we will end (as all fiat currencies do) with hyperinflation (27% plus... devaluing the dollar by half every 3 years or less).
Inflation would basically
Inflation would basically starve the People to death, eat away everything they have and they would remain in the debt-prison until the dollar finally died. No, inflation would not be better even for those in debt.
http://www.1776solution.b...
your opinion needs to start
your opinion needs to start looking at facts and listening to people like Ron Paul who are much smarter then you!
"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson
I am more concerned about the return of my money than the return on my money. --Mark Twain
If money supply is doubled in a forest and no one is around
"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
---
to take it, does it create inflation (while credit is collapsing in cities)?
It's sort of like adding
It's sort of like adding water to a great tasting 1/2 full glass of iced tea. You don't have to drink it, but you still diluted/inflated it by adding water. The damage is done, because now the iced tea tastes like crapola.
YES....it is not a question
YES....it is not a question of usage but issuance that causes inflation.
http://www.1776solution.b...
Not if credit collapses faster, in my opinion.
"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
---
I think you both may be correct to varying degrees
which remains to be seen/too early to tell. The FED stopped reporting M3 around two years ago, may be longer. Point is that not only is M3 not available but much other data is either unavailable or of questionable accuracy with which one would guesstimate Total Money supply. My best guess right now is a period of deflation of indeterminable length with a greater than 50% probability of a following period of inflation. Why? Because the US Gov Debt/FED Printing Press Money machine waterworks is pumping out water full blast with the purported purpose being the destruction of downstream debt which should occur at something less than the original debt amount.-deflationary. The upstream gov debt is likely to satisfied cheaply due to what so far seams to be a worldwide "flight to quality(ha ha)" USD/US Gov debt instruments-deflationary. Once(if) some degree of stability is achieved re:Total Money supply, economic activity is likely to still remain very stagnant or worse, prompting further upsteam pumping by the FED to spur activity, i.e. shoving undemanded credit down peoples throats with cajoling to patriotically consume.-inflationary. Likely the instrument for forcing much of the undemanded/uneconomic liquidity into the system will be further GOV spending on inefficient socialist "programs" Obama/McCain and further Imperialism(WAR) McCain/Obama.
There is a difference
There is a difference between the mechanisms, over the last 20 years there has been a much greater expansion of credit than the money supply and yet, this massive credit expansion didn’t affect the monetary mechanism of inflation or deflation. Credit actually outstripped economic growth during the last 20 years, there has been a gradual decline in growth even though credit was expanded. The reason for that is the underlying monetary system is itself stressed due to the massive debt burden it relies upon for its continuation.
This skewed the debt-to-GDP ratios and has accordingly lead to a massive imbalance in the mechanisms of the credit markets in relation to the general economy. There reaches a point when the gap between credit and the money supply, the central bank is forced to artificially lower rates and to enormously expand the money supply to meet the challenge of a decreasing demand or liquidity in the credit markets due to a growing lack of confidence in the system. As we now see, despite the credit “crunch” the mechanism of monetary expansion is being ramped up at a mind-bending pace, this monetary mechanism of inflation will not be inhibited by a decline in the credit markets, the fact that they are declining will cause the FED to take action to “liquify” these markets and the general economy overall, this action will inevitably lead to a rapid rise in the inflationary pressure on the economy. As the credit markets continue to unwind, the primary portion of the Federal Reserve Act will kick into action and that is to inflation rather than allow deflation to purge the malinvestments accumulated during the booms.
http://www.1776solution.b...
Interesting essay.
_________________________________________
"An economy built on fiat money is a society on its way to ashes."
Took me two reads to get all the data to sink in
Khomar-you'll love this one!