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No, I have now come to the conclusion the Fed Gov simply can no longer control spending. Forget all the talk and watch what they do. They lie and they spend. The Fed Res will not allow a Treasury auction to fail. If the world will not buy our debt then the Fed Res will move in either directly or through the Primary Dealers to purchase the debt. The terminology for that is "monetization of the debt". This is inflationary and will eventually lead to the total financial collapse of America.
All the events of late among with a careful analysis of the numbers leads me to believe that we are past the tipping point. The Fed Gov is paralyzed and at this point the only answer they have is call up the Fed Res and get more money. It is hard for my mind to comprehend. All my life I have always believed the Fed Gov would always be there and be solvent and above all it would always do the right thing. It turns out I was wrong. It has taken about a year to get that through my head. It is really depressing and I still have moments where I go back to the government will save us thinking. But they can't. The simple but difficult fact is the government can not save us from ourselves.
ds -
I wouldn't go out and rent a leaf shredder and jump in it just yet. Monetization of the debt is about the only option the government has left and in theory it could work and the inflation could be managed. But it is a very low probability of success given that the same clowns who got us here would still be "in charge".
I'm guessing you have several years before you need to start thinking about the leaf shredder.
I hear you. Nope, I am trying to take some actions to cushion the pain if they are unable to manage the situation. While QE2 was happening there were large increases in prices of most stuff. When QE2 stopped it looks like the price increases pretty much stopped. Commodities in particular experienced major price increases in the order of 30 to 40 percent - a few more and a few less. Those increases are working through the system. Where I live (NJ) decent bacon went from $3.50 to $4.50 a 16 ounce pack in a few months. Some manufacturers reduced the sizes of their products to keep the price the same. You can also buy bacon in a 12 oz size for the same price the 16 ounce size used to be. If they go for another major QE type program, commodities will go up again. Is your paycheck going up 30 to 40 percent per year or more ? If not, then you better keep a sharp eye on any proposed QE3 type program. Of course, if we do not do QE or some other major stimulus then we may well take another dip. Nice choices. Do QE and have inflation or don't do QE and have a recession.
Unless something big changes I would guess, and nobody actually knows, that we will be in dire straights by election day - except for a little blank borrowing check that congress gave Obama to the tune of 1.2 Trillion dollars. It got real quiet when he got that check. They are cooking something. That is the wild card. Based on history I would guess they will blow it on dumb stuff and we will be in trouble by election day anyway.
The repubs would love Obama to be in trouble by election day...
What I find the most depressing is from the realization that we as a nation, excluding the top 10%, have been repeatedly lied to and looted. We plan for a future based on an honest government but we are conned. The main constituents of both parties are the elites, the only difference between the parties are prejudices that cater to their respective bases--their secondary constituents.
ds -
I wouldn't go out and rent a leaf shredder and jump in it just yet. Monetization of the debt is about the only option the government has left and in theory it could work and the inflation could be managed. But it is a very low probability of success given that the same clowns who got us here would still be "in charge".
I'm guessing you have several years before you need to start thinking about the leaf shredder.
I hope you are right, my guess is somewhere between mid 2012 and and 2014 but again I hope your guess is more accurate.
What I find the most depressing is from the realization that we as a nation, excluding the top 10%, have been repeatedly lied to and looted. We plan for a future based on an honest government but we are conned. The main constituents of both parties are the elites, the only difference between the parties are prejudices that cater to their respective bases--their secondary constituents.
Frobn
That is very well stated. It is a sad realization.
Travlin
What I find the most depressing is from the realization that we as a nation, excluding the top 10%, have been repeatedly lied to and looted. We plan for a future based on an honest government but we are conned. The main constituents of both parties are the elites, the only difference between the parties are prejudices that cater to their respective bases--their secondary constituents.
Frobn
That is very well stated. It is a sad realization.
Travlin
Yep - I found the following report scary. It is about Great Briton but if you put the words "United States" where ever it says GB it would be the same text with bigger numbers.
http://www.zerohedge.com/news/project-armageddon-tullett-prebon-thinks-u...
The report was put together by a well respected company in GB. The truth can be just as scary as a lie any more. They have the exact same problems there as we have here.
I like this guy. I read a lot of stuff but this guy's stuff is easy to understand (not a wall of complex and questionable math) and it makes sense.
http://www.zerohedge.com/news/doug-casey-how-prepare-when-money-dies
It covers a lot of topics but it is a quick read.