Michael Lebowitz (via Zerohedge);
Fiscal policy shifted into turbo-charged, warp speed, overdrive early into the COVID related recession. To facilitate the borrowing binge, the Federal Reserve took unprecedented monetary actions. In 2020, the fiscal deficit (November 2019- October 2020) rose $3.1 trillion and was matched one for one with a $3.2 trillion increase in the Fed’s balance sheet.
The Fed is indirectly funding the government, but are they printing money? Technically they are not. However, they are inching closer through various funding programs in coordination with the Treasury Department.
Will the Fed ever print money? In our opinion, it is becoming increasingly likely as the requirements to service the interest and principal on existing debt, plus new debt, far exceeds what the economy is producing.
Given the increasingly dire mismatch between debt and economic activity, we think it is helpful to retell a tale we wrote about in 2015. This article is more than a history lesson. It effectively illustrates the road on which the U.S. and many other nations currently travel.
h/t Watcher
This isn’t going to end well. We were already on a path to financial catastrophe prior to Covid. We’re just going to get there quicker now. Thanks China!
Canada is in a big mess as well. In 2014 our total public debt was published as 4.1 Trillion under Harper. And then Trudeau the Get of Old Fidel added another 1.2 Trillion.
How much debt does the Canadian government have?
Debt tops $1 trillion
All told, the mounting deficit has pushed the federal government’s total debt level to more than $1 trillion — a number never before seen in Canada. The projected debt will be $1.2 trillion by March 2021, up from $765 billion a year earlier.Jul 8, 2020
Of course now that a democrat is in office, the deficit is now a thing that exists again. How convenient.
I have been pointing out about Harpers debt since last year.
https://torontosun.com/2014/04/11/all-levels-of-canadian-government-debt-total-41-trillion
Trump should be thankful that he lost the (stolen?) election. Within this next term, the likelihood of entry into a major depression is almost a certainty and bankrupt welfare states have nothing left in their tool boxes with which to do anything about it but unleash central bankers to further inflate away their currencies and destroy the wealth of most of their citizenry. And yes, the GOP, even when they controlled both houses, did little to reign in runaway spending.
Similar to Weimar Germany in the early nineteen twenties. Paper currency became worth less and less until it hadn’t any value at
all while a single gold coin could buy the grandest house in Berlin. With the Fed creating multi trillions of new greenbacks
out of thin air the gold old USA is on the slippery slope of repeating what has happened many times in different countries.
Think Zimbabwe or Venezuela.
Bitcoin broke 30,000 headed to 31,000 the US dollar has been dropping and staying in the .89 range.
https://www.zerohedge.com/crypto/bitcoin-tops-30k-supply-squeeze-continues?fbclid=IwAR1nUQ3Upy74Iez4PA6O53DzzDfJ6RklOBh3cFTwrdMaSddVdS7wnKqDLXo
That grand house in Berlin wouldn’t be much of an investment. In twenty years it would be smoking rubble.
The US is well below Canada in terms of debt per capita, and their economy is more dynamic, we’ll go before them I so fervently hope.
No, actually. The US debt is much higher than Canada’s by several measures. 2020 US debt/GDP is 107% while Canada’s is 88%. Per capita debt is US 60,226. while Canada’s is $41,000. Both are hopelessly bankrupt welfare states.
All fiat currencies end in this manner. Why would today be any different.
Oh no, the Keynesians tell us we can borrow insane amounts of money in perpetuity with little thought to paying it back. Left wing economists verify that this is not a theory but a hard fact.
Seriously, when you add the future debt of government employee’s pensions to the debt, we are screwed. I thought we got over all this in the nineties, what with governments around the world balancing their budgets and acting all fiscally responsible and stuff.
When discussing the issue of government debt with a leftie, I invariably ask him to imagine the money that could be used for social spending instead of it going to banks to service the debt. There’s never a reply to that.
It will all be nothing if we keep lizards like Yellen around. Keynesian thinkers are now laying wealth gap blames at fiscal policy makers and urging them to move the cash chute closer to the black hole. This, of course, is stupid.
Trump has demonstrated that by lowering the cost of doing business tax revenues will increase to the point where the debt is servicable. The job market improves, etc. etc.
These idiots want to increase taxes and dump monies where the cost of business is high and risks are great in leiu of eliminating deficit spending. It’s a cash cow for corrupt politicians, the same politicians who are very willing to pick and choose winners and loosers through regulatory practices and be rewarded for doing so guaranteeing wealth stratification.
It’s about power. This article cleverly suggests that fiscal policy is to blame for wealth disparities and then sells the problem as the solution.
I really hate socialists.
We are now in the world of digital currency. Printing money is so passe. Just turn the government bank’s computer on and type 2 trillion in and away you go. People think that the massive debt and deficits can never be repaid. Well, they don’t have to be repaid in a digital world. I may not live long enough to see what I speculate on come true but I would like those younger than me to mark this in the back of their minds, it will happen. Everything is never quite as it seems.
The wacky world of Bitcoin is here, and the “value” of this crypto urgency has been skyrocketing recently. To my old-fashioned mind this portends a severe market correction, or even a crash, soon.
Dittos here. They are the ultimate in fiat currencies where intrinsic value is zero, as a functioning currency, Bitcoin would be extremely deflationary (limited to 21 million) – way more so than gold, non existent in an EMP event or internet crash, hack proof?, right up there with Tulips and South Sea bubbles to my aging mind. Mind you, I lost money every time I tried shorting Tesla and I still think it should be no more than a $40 stock.
The reason the US can keep borrowing money is that the elites of the world see Americans as severely under taxed. I am thinking that may change shortly.
The tech oligarchs want, just like every past elite, to pull up the ladder behind them by imposing taxes, laws, and regulations, that make competition for them impossible.
That has always been the true “great game.”
Time to remind the “elites” of what the great philosopher Arnold Schwarzenegger once said:
“If it bleeds…we can kill it!”
Catherine Austin Fitts
New name to me but she explains the monetary system in concise layman terms.
She refers to the fear mongering media and invisible enemies that guvament must protect us from.
Divide and conquer, obviously happenning, and the convenience of the so called pandemic.
Very matter of fact explanation.
Also explains *Mr Global*
https://www.youtube.com/watch?v=C1-0XKYAZII
THAT VIDEO should be made MANDATORY watching for EVERYONE…
I agree.
Will drop it in Tips also.
Nancy Ross already posted this in Reader Tips.
Although it is not a 1 to 1 ratio, doubling the money supply is the same as stealing half of people’s money. Theft is simpler than doubling taxation. And the moron voters eat it up like candy.
From 1970 to 1980 the purchasing power of the Canadian dollar was completely wiped out. It lost 100% of it’s purchasing power, inflation keep things from collapsing, 19% mortgages and house prices that went through the roof even with huge mortgage interest. Decade after decade the situation has been the same. What could be done with 20 thousand dollars now requires at least 150 thousand. Never believe any number that comes from the government, they lie about everything while lining their own pockets. Only very stupid people believe government.
I retired on my own dime with a 10% inflation per annum built in, that has not been adequate as I have been retired for 20 years. My cash flow is still more than adequate but the costs relative to investments are a joke. I am sure many of the older people who post here know exactly what I mean.
But are they printing money? Technically they are not. .
See this highlights the insufficiency of autodictaticism in the area of money and banking. Clearly, I need remedial education.
MMT (Modern Monetary Theory) is the bastard child of the Marxist Frankfurt School. Idea is that governments can print their way out of financial problems and pay off the debt by simply printing (creating) more currency. No thought is given to debasement of the currency and the very real threat of future rampant price inflation. Simply put it is stealing from the future. Venezuela, Zimbabwe and the Weimar Republic come to mind.
Sorry to thows some cold water on the posted article, but the author makes some basic mistakes in economics. He claims that the M1 money stock includes savings accounts, but in fact it does not. The latter is included in M2. This spoils much of what he is trying to say, and raises questions about how much banking theory he knows.
His graph looks very much like the graph Kate published last summer, only in this case the data is updated to December and applies to the U.S. instead of Canada. What has been happening is that the sharp rise in M1 has been done to finance the huge rise in borrowing by governments, in order to finance the cash payouts to households and businesses.
I do concede the author raises an interesting point as to the sharp rise in M1 during the last two weeks of November. He is also right as to the grim prospects of inflation, and probably stagflation. Many people saved up their CERB money, and will blow much of it once the pandemic ends. Inflation is coming, and signs of it are appearing now.
Barter will still work.
Assuming you have material,skills or some other marketable item.
Not sure what our current parasitic overload will be able to trade,I am quite sure they will attempt banditry first.
Invest those lovely Trudeau Dollars into base metals and dry goods.
Must be time to launch the push for the $3 coin.
We can call it the Trudeau and put Pierre The Idiot on one side and Emperor Justine 1 on the other.
For our money is now officially as “Queer as a 3 dollar bill”