Monetization Of The National Debt Is Inevitable

storm888

The charts below paint a gloomy picture for folks who
are not taking steps to protect their wealth.



Charts Tell The Whole Story



The kite could crash anytime. The printing-press solution
will be invoked, eventually; prolly sooner rather than later.

roadrunner

Same basic stuff that David Walker (former Comptroller of the Currency) has been preaching for years. There are still enough
leftovers in congress from the "deficits don't matter" crowd that getting things on track any time soon is probably a pipe-dream.
Their primary concern is getting their retirement war-chest padded and a lucrative post-govt job lined up.

The only thing missing from this analysis is that no mention of otc derivatives or off-balance sheet risks are brought up.
Only thing easily understood are being considered. Many GSE's are loaded with derivatives. And it would appear that the
TBTF banks are counting on the US govt to socialize any future derivative's losses they may accrue.

roadrunner

derryb

The National Debt has already been monetized. That's what they hired the bernake for.

pf70collector

And it would appear that the
TBTF banks are counting on the US govt to socialize any future derivative's losses they may accrue.

We don't have that option open anymore. How does the U.S. come up with the trillions needed for that? I think we are indeed headed for some dark times ahead. Default or inflate our way out of our debt?

roadrunner

<< <i>And it would appear that the TBTF banks are counting on the US govt to socialize any future derivative's losses they may accrue.

We don't have that option open anymore. How does the U.S. come up with the trillions needed for that? I think we are indeed headed for some dark times ahead. Default or inflate our way out of our debt? >>



How? The same way they paid off trillions around the world to thousands of payees using AIG's back door...with "funny" money that never shows up in M1, M2, or M3.
Whatever comes after QE2 and QE2 light won't be called QE3, but you can bet that back door monetization will continue. Fannie and Freddie are
waiting with open arms to accept all the junk assets that Geithner and Bernanke want to throw out. It could amount to Trillions on its own. The
FED's foreign custody (slush fund) account grew by hundreds of billions of dollars per year during the years surrounding the financial crisis. Yet doesn't show up
in M1, M2, or M3. It's a checking/brokerage account that's about 20% of GDP. Many shell games can occur here as well as other places in the shadows.
Swapping illiquid foreign held agency debt for spanking new TBonds is just one such game. The FED has already shown that they don't congressional approval
to issue trillions of dollars in assets. Where there's a will...there's a way.

roadrunner

cohodk

<< <i>And it would appear that the
TBTF banks are counting on the US govt to socialize any future derivative's losses they may accrue.

We don't have that option open anymore. How does the U.S. come up with the trillions needed for that? >>




I agree. Any future bank bailouts will have to be covert, cuz J6P aint gonna let happen like last time. And when/if it gets to that event again, it will finally trigger the deflation that has been postponed for 3 generations. Maybe it will take 4 generations, but its coming.

Bear

It is very simple. The Fed will print 74 notes in the denomination of one trillion dollars

and pay off all of our Federal obligations. Zimbabwe USA.

SanctionII

What happens when a country falls apart [i.e. the USSR, Germany after WW1] as a result of it being unable to pay its obligations? Are the holders of those obligations [i.e. persons and companies and foreign governements holding US T-Bills] out of luck and unable to collect the monies owed? Or does the new government that rises from the ashes of the old government legally obligated to honor [if only partially] the obligations of its predecessor?

Whatever the answer is, are we looking at this occurence as the inevitable place where the USA [and for that matter many other countries in the world] are going to end up?

secondrepublic

<< <i>It is very simple. The Fed will print 74 notes in the denomination of one trillion dollars

and pay off all of our Federal obligations. Zimbabwe USA. >>



I laughed out loud reading that. I think they should print one and send it to China, along with a photo of Obama showing them the middle-fingered international symbol of friendship.

BigE

<< <i>

<< <i>It is very simple. The Fed will print 74 notes in the denomination of one trillion dollars

and pay off all of our Federal obligations. Zimbabwe USA. >>



I laughed out loud reading that. I think they should print one and send it to China, along with a photo of Obama showing them the middle-fingered international symbol of friendship. >>




Rather than print funny money and pawn it off on other countries, I believe they found a better way to rip them off---------by creating derivatives and selling them to foreign countries to steal their more valuable wealth and currency--------BigE

Wolf359

Default, better sooner than later.

jmski52

Rather than print funny money and pawn it off on other countries, I believe they found a better way to rip them off---------by creating derivatives and selling them to foreign countries to steal their more valuable wealth and currency--------BigE

Yeah, that works good until they get smart.

How long do think that it will take until they do?

MrEureka

As usual, I have a funny way of looking at things. To me, the only difference (beyond the short term) between government debt and paper money is that they pay interest on the debt. Therefore, "monetizing the debt" is just a mini-default. I say "mini", because it saves the government little (at current interest rates) and costs you nothing (because you can at least still use the freshly printed paper to pay your taxes). So to me, monetizing the debt is a non-issue, even with respect to inflation. In other words, when debt is monetized, it's only the result of damage that was already done. And if the damage was already done, and if nothing has really changed, what is going to move the market?