Correct me if I’m wrong:
Bernanke’s Fed is colluding with Geitner’s Treasury to monetize massive amounts of government debt, releasing the Head Clown and the clowns in Congress to spend themselves silly because the Fed will simply provide infinite money more directly than ever.
Had I realized these creeps were so creative in stealing what I’ve sacrificed to save, I’d have simply consumed it like all the rest of the sheeple in America. At least I’d have enjoyed the party I could have thrown.
The one fly in this ointment is the fact that there is an outstanding $11 trillion on budget as we speak, and those who own it are not robots.
If you had $100 grand in a 401(k) and taking it out prematurely would yield only $50 grand, you’re likely to let it ride. But if you realize that the people managing it are eroding it fast, and you believe 50 cents on the dollar is better than nothing, you may very well liquidate it even at a steep loss.
Among bondholders, are the folks managing China’s ownership of U.S. treasury debt going to sit back and watch as Bernanke’s masked men walk into their offices in broad daylight and announce they’re going to dilute the value of China’s holdings faster than their computer screens can refresh the image of the numbers?
Let’s take this mental exercise to its conclusion. What if the Fed monetizes all $11 trillion of that debt? What if the Fed ends up owning $15 trillion, $20 trillion, even $30 trillion worth of taxpayer obligations to the United States Government?
Do Bernanke, Geitner, and their ilk think that they’re fast on their way to having all Americans as their indentured servants, obligated for their entire lives and the lives of their children and grandchildren to slave away to make the payments on that debt?
No. The Fed has embarked on a suicide pact with the holders of U.S. debt. Bernanke has announced that he’s going to destroy the dollar, and before he gets his way he will collapse the debt market because what kind of moron sits still while the thief steals the last of his savings? Holders of U.S. debt will, if Bernanke persists, be forced to dump their T-bonds.
What will Bernanke do? Buy it all? Even if he wanted to do so, what happens to the interest rate on Treasuries while he and his merry robbers iron out the details? What happens when people realize that a promise for repayment from Uncle Sam is as trustworthy as a Mortgage-Backed bond filled with subprime properties and insured by AIG?
A Fed-Treasury system based on a monumental fraud, a lie so big that its life-sapping shadow falls on every acre of Planet Earth 24 hours a day, cannot accelerate its con job without causing people to adopt, however belatedly, self-defensive behavior.
As I write this, the stock indexes are already now below where they were when this latest gambit from the clowns-in-charge was announced. Regardless of whether this continues or there’s eventually a rally, it reflects a growing realization that the Wizards of Oz are nothing but arrogant little men hiding behind curtains of ignorance, lies and media boot-licking.
March 21, 2009