Written by Jeff Nielson Friday, 11 October 2013 12:28
In my commentary earlier this week; readers were presented with the latest/newest âclueâ from the Corporate Media as to where the staged shut-down of the U.S. government (via its Debt-Ceiling Farce) is leading the U.S. economy â and the global economy as a whole. Here the mainstream media was succinct and direct (for a change):
A U.S. Default Seen as Catastrophe Dwarfing Lehmanâs Fall
The whole Debt-Ceiling Farce is a totally artificial, totally contrived event. As explained previously, the entire concept of a âdebt ceilingâ (for the worldâs largest/greatest Deadbeat Debtor) is itself entirely absurd. Thus the shut-down of the U.S. government is also an artificial event, and the imminent/subsequent inducement of a U.S. debt-default (at this particular moment) would also be deliberate and artificial.
Obviously, defaulting on its $trillions of debt would instantly make the United States potentially solvent again. But having defaulted on its old debts; new debt will not be an option for the U.S. â meaning money actually being lent to it by foreign Creditors. Simply resuming its economic Ponzi scheme, where it issues vast quantity of debt and pretends to pay for it with (worthless) paper conjured out of thin air, would also no longer be tolerated by the global financial community.
So we know that a U.S. debt-default is not âthe endâ of fiscal problems for the U.S., but rather the real beginning. Itâs massive, structural deficit would have to be addressed; where the U.S. spends more than any nation on Earth â but refuses to tax the individuals/entities now holding all the wealth in that economy. It has no tax base.
A U.S. debt-default would not eliminate the need of that government for massive, economic reform and a complete restructuring of the tax system. Rather, it would force the U.S. government to begin that process immediately, and substantially â not just the pathetic baby-steps which these politicians have the audacity to call âdeficit reductionâ.
But this merely provides a taste of what is in store for the U.S. after any debt-default declaration. For many people, notably hundreds of millions of residents of other, Western deadbeat economies; what will be of most significance here is the inevitable âdomino effect.â
If (when?) the hopelessly insolvent United States declares debt-default â i.e. its own bankruptcy â this will permanently/irrevocably remove the blinders from participants in our fraudulent, global debt markets. It would now be crystal-clear that âAAAâ credit-ratings = âjunkâ.
In turn, Creditors suddenly/finally aware that they are taking a âjunkâ level of risk with all the money they are lending will demand âjunkâ interest rates â as compensation for that massive level of riskâŚat which point the Ponzi-scheme economies of most other Western nations would also be painfully revealed.
As with the U.S.; the only thing stopping many of these Deadbeat Debtors from being forced into immediate declarations of debt-default (bankruptcy) themselves is through paying absurdly/artificially low rates of interest on that debt. Jack-up those interest rates to real âmarket ratesâ, and watch the dominoes fall.
Written by Jeff Nielson Tuesday, 08 October 2013 12:47
A question being asked more frequently than ever by informed readers is âwhat happens next?â This is understandable, and not a reflection of these individuals becoming either more curious or simply more obtuse.
Rather, our fraud-saturated, non-transparent economies (and markets) have grown still more opaque. This is primarily accomplished by the ever-increasing falsification of economic data; first in the U.S., and now across the Western industrialized world. Proof of this lying-with-numbers comes empirically, via our permanent, near-zero interest rates across the West.
No government in History (other than Japan) has ever taken interest rates this low for such an extended period, for one gigantic, obvious reason. A near-zero interest rate â i.e. free money â is quite obviously the most-extreme (and most-reckless) form of economic stimulus which could ever be devisedâŚexcept for âQEâ itself.
As has been explained previously; near-zero interest rates/free money are the economic equivalent of a defibrillator. What has happened in the U.S., and across the West after five years of continuously defibrillating these economies? Nothing.
What happened after Japan defibrillated its economy for 5 years? Nothing. So it defibrillated it for another five years, and another, and another. After a quarter-century what do we see in Japan? After twenty-five years of monetarily defibrillating its own corpse-economy; the corpse is still a corpse. What a surprise!
Five years ago; the U.S. (the ring-leader of current, Western insanity) assured the world that âit could never become another Japanâ. It was correct. The U.S. (and the other Western Deadbeat Debtors) are far worse than Japan.
Japan merely defibrillated its economy with 0% interest rates, alone. The U.S. has brought the world something far, far worse: âQEâ (and 0% interest rates). This is âmoneyâ(?) conjured out of thin air, and (unlike all the other $trillions of near-worthless U.S. paper) all of this âQEâ paper is not even âbackedâ by debt. It is merely Monopoly Money, in every sense of the words.
Readers need to understand that a (permanent) 0% interest rate has the effect of force-feeding huge sums of free money into an economy â hence the obvious metaphor of a defibrillator. Meanwhile, âQEâ is the process of conjuring vast quantities of utterly worthless currency.
Combine the two insanities, and the product is obvious. The U.S. (and the other, Western suicide-jockeys) have been force-feeding vast quantities of totally/absolutely worthless paper into their own economies â and the global economy. It is a âPonzi schemeâ in the truest sense of that expression.
Why (ultimately) have all of these $trillions in new paper failed to âstimulateâ these Western Deadbeat economies? Because you canât stimulate economies with worthless paper.