Hey!! Did you see the good news yesterday?? The Dow Jones Index closed above 12,000 for the first time in a few years! The media and government spin doctors are using that rising index as proof that we are well on our way to economic recovery.
Yippee!! The god of rising stocks has saved us again!! We can't wait to get back to those lazy, hazy, crazy days of shopping incessantly and spending days just strolling through malls!!.....looking for more crap we don't need...using money we don't really have!
So how did the $15 trillion of bankrupting debt fall out of the news so fast? How can we "recover" when most of every single penny that the Treasury takes in will soon be going out the door to service interest on the $15 trillion?
How can we "recover" when we are running $65 billion per month in deficit spending? (that means the government has to borrow $65 billion per month just to keep the lights on) How long can the Federal Reserve pretend they have money to "buy" up $65 billion of Treasury bonds every month....just to keep the illusion going?
In November 2010, the Federal Reserve announced a second round of economic stimulus commonly referred to as Quantitative Easing (QE2). The reason, according to the Fed, was“progress toward its objectives has been disappointingly slow.” So, to try and turn the economy around, the Fed said, “. . . the Committee intends to purchase a further $600 billion of longer-term Treasury securities by the end of the second quarter (June) of 2011, a pace of about $75 billion per month.” (Click here to read the complete announcement from the Fed.) QE means the Fed basically creates money out of thin air to buy debt. The current money printing orgy is financing more than half of U.S. government right now. The first round of QE bought toxic mortgage debt and bailed out the bankers.
I can’t imagine how the U.S. could stop printing money in June and then turn around and ask the world to start buying our debt again at a rate of $75 billion a month. Of course, we would want to pay discount rates in order to keep mortgages affordable and real estate prices from crashing. There would be no legitimate buyers unless we were paying much higher interest rates. Higher rates are the last thing the Fed wants to see because it would kill what little is left of this so-called “recovery.”
In summary, all the experts I polled think QE Will Not End. That will surely mean an imploding U.S. dollar and exploding inflation. This is scheduled to happen by the end of June, making this the most predictable financial calamity in history.
Interesting...."the most predictable financial calamity in history"....because there will be no legitimate buyers at the Treasury auctions once the Federal Reserve quits sending a buyer to the auctions. In order to attract potential buyers we will have to offer MUCH higher interest rates.
Now think clearly for 5 more seconds please...if the U.S. Gov't is already going to have an impossible task of paying off the $15 trillion at 3% interest.....how much more collapsing is it if they have to find buyers for it all at 6%?
As the author above says, there is literally no way the Federal Reserve can now quit buying now. Once they do....calamity can't be far away. And this buying spree is currently set to end in June.
I think the Bible tells us clearly to have faith in God alone. It also tells us to not pay attention to what we can see....because the things that we can see are only illusions that will pass away. The eternal things are currently hidden from our view....but what is there are the only things that are real.
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