Financial Failure (continued)

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Fed Buying Maximum Legal Limit of Treasury Debt

The Fed is creating virtual money to buy 70% of new debt issued by the federal government.

This is what financial failure looks like boys and girls - except that your average family don't have access to the federal reserve handing them newly printed money so they can keep buying stuff even though they're broke, destitute, and so deeply in debt there's no way they can keep up with the payments.

This will have major consequences for the dollar, as the available pool of dollars represents a fixed amount of value (in the minds of the financiers, as well as those economists who are still sane and rational)

When the number of dollars keeps rising but the value of what it represents does not, what do you think happens to what you'll be able to get for the dollars you've had all along?

If you said "their value will decrease proportional to the proportion of new additions into the system" you have the first level of understanding. Actually, it's worse than that, as this sets of a cycle of "print more, devalue more" with the only people left out being those people with fixed numbers of dollars who don't have access to the printing press for more.

Yes, this amounts to a tax on those with fixed incomes and fixed assets, which does not, generally speaking, mean the wealthy. A *huge* tax, on those whom the Administration claims to want to help.

This is endgame. The government is going to face a crisis when the markets start wondering if it ever intends to pay those who hold its debts. Quite possibly, the fact that the election is so close may be all that is holding this crisis at bay. While I am not confident Mitt Romney or Gary Johnson can get us past this crisis with the United States as we know it more or less intact, I am quite certain Barack Obama not only will not try, he won't understand that there is a problem, even when the military starts selling its hardware so it can buy food for service folk and their dependents

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About this Entry

This page contains a single entry by Dan Melson published on September 24, 2012 8:06 AM.

World of Warcraft, Blizzard and Activision - Epic Fail was the previous entry in this blog.

Conditions After Loan Closing is the next entry in this blog.

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