Wednesday, September 19, 2012

The Romney Comments the Press Didn't Tell You

I'm sure you've heard Romney's comments made at a private fundraising event about the 47% of American's who pay no Federal taxes. Its all over in the press. This is not about that. This is about the comments the press didn't bother to tell you about from the same fundraiser.

From Motherjones:

Romney: Yeah, it's interesting…the former head of Goldman Sachs, John Whitehead, was also the former head of the New York Federal Reserve. And I met with him, and he said as soon as the Fed stops buying all the debt that we're issuing—which they've been doing, the Fed's buying like three-quarters of the debt that America issues. He said, once that's over, he said we're going to have a failed Treasury auction, interest rates are going to have to go up. We're living in this borrowed fantasy world, where the government keeps on borrowing money. You know, we borrow this extra trillion a year, we wonder who's loaning us the trillion? The Chinese aren't loaning us anymore. The Russians aren't loaning it to us anymore. So who's giving us the trillion? And the answer is we're just making it up. The Federal Reserve is just taking it and saying, "Here, we're giving it.' It's just made up money, and this does not augur well for our economic future.
You know, some of these things are complex enough it's not easy for people to understand, but your point of saying, bankruptcy usually concentrates the mind.
 Click below for more.

And just a reminder of how Fed purchases have increased over the last few years watch this: The black lines are Federal Reserve purchases of Treasuries. In the last few seconds you can see the purchasing explode. And this is before QE to infinity:

 Let that sink in for a moment.

The Federal Reserve is buying 75% of all the new debt we're issuing. On top of that is $40 Billion a month in new QE for the foreseeable future. We are debasing the US dollar at a rate unimaginable even a few years ago. This can lead to only two outcomes:

  1. Inflation leading to hyper-inflation
  2. A return to some form of gold standard
#2 would likely follow #1. Prepare accordingly.

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