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U.S. Shut-Down An Excuse For Debt-Default?

Articles & Blogs - US Commentary

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A question being asked more frequently than ever by informed readers is “what happens next?” 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 – i.e. free money – is quite obviously the most-extreme (and most-reckless) form of economic stimulus which could ever be devised…except for “QE” 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 “it could never become another Japan”. 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: “QE” (and 0% interest rates). This is money”(?) conjured out of thin air, and (unlike all the other $trillions of near-worthless U.S. paper) all of this “QE” paper is not even “backed” 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 – hence the obvious metaphor of a defibrillator. Meanwhile, “QE” 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 – and the global economy. It is a “Ponzi scheme” in the truest sense of that expression.

Why (ultimately) have all of these $trillions in new paper failed to “stimulate” these Western Deadbeat economies? Because you can’t stimulate economies with worthless paper.

 

My apology to readers for the need to once again inflict this chart upon them, but it’s difficult not to use a piece of conclusive proof again and again.

The chart above is an extreme example of an exponential function. It could be a picture of anything, and the analytical conclusion would be the same. It is the picture of something which is completely/mathematically/irrevocably broken. There is no way such a function could ever be “fixed”. It is mathematically impossible.

In this case, the chart above is the U.S. economy; reflected in terms of its life-blood – it’s monetary base. To call what has taken place in the chart above a “transfusion” would be an understatement. The Federal Reserve hasn’t been merely injecting “new blood” into this body (corpse). It’s been forcibly pumping all this new blood into the U.S. economy.

Yet what was B.S. Bernanke’s verdict, after he failed (yet again) to begin weaning the “mighty” U.S. economy off of the Federal Reserve’s force-transfusion? “Too anemic.” The U.S., he admitted, can’t afford to pay “market rates” of interest on all of this debt. He implicitly affirmed that the Ponzi scheme is a Ponzi scheme.

This begs the question for both Federal Reserve banksters and U.S. politicians: what next? Well, what was “next” (and it didn’t take long) was the totally contrived/artificical shut-down of the U.S. government, which (as one of its effects) cuts off the Federal Reserve blood-supply to the U.S.’s corpse-economy.

What is the consequence of cutting-off the world’s largest economy from new, free debt? The Corporate Media makes this abundantly clear with today’s headline:

A U.S. Default Seen as Catastrophe Dwarfing Lehman’s Fall

The same Corporate Media which has been assuring Americans (and the world) that the U.S. economy has been “recovering” for the past 4 ½ years even provides us with a timetable on this “catastrophe”, in the first paragraph of the subsequent article:

A U.S. government default, just weeks away if Congress fails to raise the debt ceiling as it now threatens to do, will be an economic calamity like none the world has ever seen. [emphasis mine]

First we had B.S. Bernanke directly implying that the U.S. economy was/is a Ponzi scheme when he failed to pull the trigger on another Exit Strategy. Now we have the Corporate Media confirming that admission.

Solvent economies do not default simply from being cut-off of new debt (new money) for a few weeks. Ponzi schemes do. Put another way; it’s always against the interest of Creditors to impose bankruptcy on a solvent debtor. The Corporate Media’s blunt warning is an implicit confession of the U.S.’s hopelessly insolvent status.

In my previous explanations/warnings to readers of the horrifying implications of the exponentially exploding U.S. monetary base (in the chart above), my prognosis was blunt. Hyperinflation was inevitable – as this exponential/hyperbolic function exploded into infinity. However, implicit in that analysis (and often explicitly included in my commentaries) was that the option always remained to simply “pull the plug”; disconnect this financial/economic Ponzi scheme from its monetary life-support, and cause it to implode.

But for U.S. politicians to simply (and “voluntarily”) choose to pull-the-plug on this Corpse Economy would be an express confession that for the past five years these same politicians (and media talking-heads, and banking community) had been lying to us. They weren’t “fixing” the U.S. economy. They were extending a Ponzi scheme , in order to allow $trillions to be looted from the public treasury (mostly in the form of 0% “loans”, tax breaks, and “loss guarantees”).

Now we see these politicians putting the U.S. on course for “involuntary” debt-default, with their staged shut-down of the U.S. government. Do these same Political Cowards who took the easy way out five years ago have the “stomach” to take their theatrical brinksmanship all the way to its imminent conclusion? We’ll see.

Whether or not “this is it” for the U.S. economy, or whether it “lives” (in zombie form) to die-another-day; there are two important realities which readers need to confront, regardless. The first of these realities is that for those readers who still (wistfully) believed that they/we had “a year or two” before something “really big” (and really bad) happened; you were wrong.

The media propaganda-machine is clear: U.S. debt-default ---and economic Armageddon – is just weeks away. And even if such a catastrophe is delayed still further; “the end” could come at any time, and be (at most) a process of weeks, not months or years.

The other reality which readers need to confront is that just like the post-2008 “bail-outs” were merely the beginning (not the ending) of an economic nightmare; so too is a U.S. debt-default. Indeed, it is the beginning of a nightmare-process which requires an entire (and upcoming) sequel to elucidate.

 

 

[Readers are encouraged to tune-in to The Daily Grind, my daily dialogue on the precious metals sector – and the events which drive this sector]

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Jeff Nielson
...
written by Jeff Nielson, October 09, 2013
Jeff: it is difficult to see the end game of all the posturing among the corrupt and the criminal and the economically illiterate who comment in the MSM. We are definitely being indoctrinated and propagandized in this theatre of the absurd. The doom and gloom scenarios are ludicrous. The FED has already shown it can print $16 trillion to bail out the banks in the Eurozone...


Apberusdisvet, let me address the continuing MYTHOLOGY that the U.S. government and Federal Reserve "bailed out" European banks with some of its money-printing. This might be the most absurd piece of U.S. mythology which still survives (other than "9/11" itself).

What happened BEFORE the U.S. government supposedly "bailed out" these banks? Wall Street had just finished DEFRAUDING the world for $TRILLIONS with its "securitized" mortgage-fraud.

So when I then see the U.S. government REIMBURSE these other nations for some of the STOLEN $trillions; I don't call that a "bail out". I call that DAMAGE PAYMENTS -- privately/secretly negotiated, in lieu of OPENLY SUING Wall Street (and perhaps the U.S. government itself?).
apberusdisvet
...
written by apberusdisvet, October 09, 2013
Jeff: it is difficult to see the end game of all the posturing among the corrupt and the criminal and the economically illiterate who comment in the MSM. We are definitely being indoctrinated and propagandized in this theatre of the absurd. The doom and gloom scenarios are ludicrous. The FED has already shown it can print $16 trillion to bail out the banks in the Eurozone. Could it be martial law after another false flag to consolidate even more dictatorial power? Could it be an overnight 50% USD devaluation? No matter, but it certainly appears that the entire Western world fiat ponzi is coming to an end. The inability to deliver physical gold might be the spark. You fellow Canadian, Harvey Organ, has run the numbers on the October and December Comex deliveries and it appears that the vault inventory will be insufficient.

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