“As the size of the Fed’s balance sheet ballooned,” continues Mr. Pento, “the dollar amount of capital held at the Fed has remained fairly constant. Today, the Fed has $52.5 billion of capital backing a $2.7 trillion balance sheet.
“Prior to the bursting of the credit bubble, the public was shocked to learn that our biggest investment banks were levered 30-to-1. When asset values fell, those banks were quickly wiped out. But now the Fed is holding many of the same types of assets and is levered 51-to-1! If the value of their portfolio were to fall by just 2%, the Fed itself would be wiped out.”
There is simple stupidity all around including Canada. The whole problem is caused by excess borrowing. How is everyone trying to solve the problem – more borrowing?
Until the socialist president is booted out of the White House, there is no solution. When there is a clear sailing vote of confidence for business there will be recovery.
…and run away inflation!
Frankly, I don’t trust any mainstream politican of any party to work towards fixing this. Their focus is far too short term. they only want to stay popular for the next election. This problem will likely take a generation to properly fix. It would be prudent to prepare for hyperinflation and economic malaise. Owning some good hard assets and stocking up on ammo should be high on the list.
It will all have to come crashing down unfortunately. Even if politicians do face up to the people and explain that austerity measures are the only answer there are two problems. First, it’s too little too late IMO and second, people just burn down their cities in protest because ‘it can’t happen this way’. Bad times ahead for sure.
Try this from zero hedge. Startling reality about to set in.
http://www.zerohedge.com/news/entire-system-has-been-utterly-destroyed-mf-global-collapse-presenting-first-mf-global-casualty
Read through comments section as well. the vampire squid is being called out.
Thanks reil deil.
So, do I continue trying to pay down my debt before the big crash, keep my debt level where it’s at and spend whatever cash I come across on survival gear, or do I borrow like Greece and buy up whatever I think will be useful after civilization collapses?
good questions Dab.S.
Is real estate (cabin) a good investment right now?….sHould i hold onto my silver ?
Paul and Dab S.
I am not one to buy into hysteric but stuff is getting real and the possibility of hyperinflation may become real after a deflationary period more printing by any or all of the central banks. If things keep on a chugging down the debt / print spiral as they are, hyperinflation would inddeed lead to high leverage on my end (right to the max) as it will be worthless in months.
I carry a relatively small mortgage thats it.
For now holding steady in cash, and physical and I repeat physical pm’s and have acres at the farm, an urban abode and access at the lake front.
No panic yet but i do have access to bullets potatoes and lots of tasty criters both domestic and wild.
Timing is everything (and evasive) in manners of hyperinflationary spirals and i believe we will be given the opportunity to see it coming.
cheers for now.
“more printing”
That has already been well underway. Much of The money is parked. Just waiting for “conditions to be right”.