Posted on 05/31/2009 7:41:01 AM PDT by SeekAndFind
This week I'd like to update readers on the funding crisis. That's the third in the three-baseball-game analogy that I dreamed up last fall (read "Economy sinks as we save bankers") as a way to think through the enormous problems we faced.
The first and second games (crises) -- the credit meltdown and the economic downturn -- have been pretty easy for folks to understand, as they were front and center in the news. The view from the dugout Essentially, the financial crisis now lies behind us (with the economic crisis in full bloom, the recent economic "bounce" notwithstanding). That's due to all the moves put together by former Treasury Secretary Hank Paulson and other government officials. Those actions stopped the vaporization of the financial system, essentially giving everyone a do-over.
But therein lay the seeds for the funding crisis -- which, as I noted in my daily column at FleckensteinCapital.com on May 21, appears to have started.
This is a much more subtle but pernicious crisis in some ways, as it's not so apparent but is disastrous in the long term.
My reason for saying so? Because if the dollar is called into question (as now appears to have begun) and if the Federal Reserve's monetization cannot lower interest rates (and in fact causes them to rise, due to the consequences of printing so much money), then the Fed is trapped. The more it tries to solve the problem by printing more money, the worse it all becomes.
How that will play out exactly, how long it will take and what the road map along the way might look like is difficult to say, due to the many permutations of how events might interact.
But the ultimate outcome will be a weaker currency, more inflation and higher rates
(Excerpt) Read more at articles.moneycentral.msn.com ...
All of those who thought they lost half their equity in the market are now faced with reality - their equity is worth half of half - until the Fed and Tiny Tim decide to print even more $$$, at which time it will halve again.
It clearly looks like the Cloward-Piven strategy of orchestrated crisis. They knew that US citizens would not accept communism unless the economy completely collapsed and could be rebuilt by promising hope instead of dispair. Their plan counted on creating such a huge demand for government services that the capitalist system would collapse and only then did they think people would accept communism. The banking system problems were clearly created by leftists in congress (community reinvestment act), ACORN, Freddy and Fanny bundling mortgages bought from banks who would never have made the loans if they had to assume the risk. Now transportation, energy, healthcare and insurance are under attack. Obama admitted that the government is broke. That was the plan. Now they can print money to destroy any wealth left with those who saved money. I see bread lines and government control of food supply in the not too distant future.
I’m already taking steps to prepare for inflation, plus the chaos that will follow it.
“...at which time it will halve again...”
Government officials running a printing press or counterfeiters in action; same thing.
IMHO
Dear “Obama-clone-wannabes”
HA-HA !!!!
....counterfeiters in action;
that’s probably a pretty good assessment of the Obama admin.....
And when the hyper-inflation begins, guess who will declare ownership of gold/silver bullion illegal! Except, of course, for his contributors and supporters.
care to share your vision and responding actions you have already taken...thanks?
The only silver lining (if that’s what you can call it) is that almost everyone else in the world is also printing money as fast as they can. So our stupidity is balanced against worse...
Any suggestions you could share?
Wait till that inflation hits all the retiring Boomers and they haven’t enough to pay their mortgages. But perhaps that is what the gov. has in mind for solving the SS crisis. Inflate the money and the value of the promises becomes much less, in comparison. The boomers will simply have their standard of living lowered in their Golden years on fixed income.
The food crisis should hit this summer, unless we go almost entirely to food imports. The CA central Valley production has been shut down with the redirection of water to Delta fish. California produces a substantial amount of the nation’s food supply, not just California’s. Plant a garden.
If there isn't a good resource, anyone want to participate in a private wiki to share ideas? pbwiki is a good, free resource.
Put your paper reciepts into tangible goods and items that actually have value, stock up on ammo and some good firearms, start stocking supplies in case you have to make a run for it (I wouldn’t want to be in the city when reality finally comes to pass), find some buddies who share your views, etc.
I’m mainly working on the first three.
“...when you ain’t got nothin’, you ain’t got nothin’ to lose...”
So if you're defending your home against rioters - how many do you think will try to break into your home once you shoot a shoot gun in the air? My guess would be ZERO. During the worst riots we've had in this country in modern times - the LA riots - they only lasted a few days. And unarmed shop owners were able to protect their property.
Anything other than a major attack by a foreign country would be the same. A few days.
And in no time, Walmart trucks would be moving into the area to make sure people were fed. Civilization would be restored. After riots are over, people who beat up or hurt others were held criminally libel - as they should be. Would you want to be in that group?
In a worst case financial meltdown, we'd all be poor. Our money would collectively be worth little. Look around you at the poor countries. They're not rioting. They're trying to stay alive.
Again, tell me what you're thinking because I don't "get" it.
Good one - when you find it - let me know.
exactly as whats going on in Zimbabwe!!
Thank you! We’ve already pretty well covered food and PMs. We live in the suburbs so who knows how crazy it might get here. Wish we had a place out in the country! We’re planning on spending some money on the house, figuring we might as well replace some things now while things are still affordable.
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