Good points but the interesting thing is the Fed can keep printing money to prop up bonds, stocks and member banks without authorization from Congress. They only need authorization to allow member banks to buy US Bonds in return for federal reserve notes.
It’s even more interesting that the specter of inflation is kept at bay by strict money lending to the private sector.
The Fed is holding a lot of debt. To continue the charade in propping up member banks they must allow bond sales to China and others who think bonds are a safe haven. But ever more bonds at virtually zero to negative interest rates leads investors such as the Chinese to become disgruntled. The Chinese have been trying to dump the bonds they have.
Without willing bond investors, the Fed finds themselves in a quandary as to how to keep the charade going. They want the debt ceiling raised to keep their member banks as primary bond investors buying paper from the US government without worrying about what China will or won’t do.
Without the US Government selling bond paper in exchange for Fed paper (go over the ‘cliff’), the supply of bonds defaults to corporate and local bonds but those risk kindling inflation in the private sector.
The only way out is to raise interest rates which will choke US Spending which to us as conservatives is a good thing but it means cuts in military, cuts in research and universities, strangling the auto industry (housing is already near dead), and eventually cuts in medicare and social security. None of it will be good and the only question is who will be successful in laying blame, Obama or the GOP House?
The GOP was and is stupid. They put the debt ceiling off until after the election. Gawd they are so stupid it is maddening. Had they let the chips fall where they may, Obama would have been been in flight away from the raging anger of voters. Bu then we would have had Romney who is RINO to his core.
So Obama is not going to be blamed right away. The public may have difficulty accepting the MSM campaign to blame the republicans but someone or some group is going to catch Hell somehow. It is possible that the public can be led to focus on Sheriff Arpaio’s findings and this can lead to Obama being ousted. This could be a relief valve for venting the certain anger to come. This sounds like a long shot but blame and anger will find an outlet somehow. There has to be a sense of justice, a scapegoat.
If the GOP caves on the debt ceiling which I expect them to do, then investors from Moscow to Dubai to Beijing are going to continue forward with more speed to replace the US dollar as the world’s reserve currency. To do this Russian oil needs market share from the Saudis and Euros becomes the reserve currency. Doesn’t matter that Europe is in a depression. What matters is the oil traded in Euros and the Russians are happy to do that with the Chinese.
But for Russian oil to get market share they need to displace Saudi influences. Saudis are content to allow the US dollar to hold as the reserve currency because they invest in gold anyways. The world’s richest person is Prince Alwaleed, worth 26 trillion US dollars half of which is in gold.
And that brings us to the point of Bengazi, Iran, Hamas, Libya and Syria. That theater is a chess match between Saudi and Sino-Russian powers with the US backing Saudi interests via usage of the US military and intelligence assets as mercenaries.
What else could focus the public’s anger and quest for a scapegoat or a diversion? A war somewhere. But then watch oil and gold soar and that in turn means inflation at home. People are going to hurt, Americans are going to hurt. who will be the Bogeyman?
Most of the public has not taken the time to become informed at the sorry state of this current scam being ran by all the insiders. The MSM and business press would make PRAVDA from Stalin’s days proud by the level of disinformation and rainbows, unicorns, and sunshine they pump out 24/7 to the masses.
None of this matters of course. Kyle Bass refers to this stage as the Keynesian endpoint for the world super debt cycle begun by recovering from WW II. It is a giant vacuum cleaner sucking trillion after trillion down it at zero percent as the world debt is 3.5 times larger than the world GDP. Over leveraged and trapped, the masters of the universe keep playing musical chairs because they have no other choice. Over time one chair after another will be removed until the game is over. Greece bond holders lost 90 cents on the dollar and they will lose more because Greece is still broke. No one can stomach the solution so they cling to the hope that another bubble can be created to postpone the mathematical end game of exponential debt growth.
One thing we know from history, is that in the end, what goes up will come down. The final economic reset will reshape the world. Who owes who what will no longer matter. Some think this is a precursor to global government, some think this will lead to every man, corporation, and country looking out for itself.