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The U.S.’s 0% Folly

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The U.S. is more fundamentally insolvent than Greece, yet Greek interest rates are fifty times higher than those of the U.S. This is obviously market fraud, and on a scale never before seen in human history. I (and others) have explained the mechanism here on several occasions: the fraudulent manipulation of the credit default swap market. It’s old news.

However, what no one has pointed to yet is how the U.S. has totally squandered its last chance to avoid either debt default, hyperinflation, or both. I’ve mentioned previously what the fate of the U.S. would be if its own interest rates had been fraudulently manipulated to the same levels as that of Greece.

Interest payments alone on the national debt would be more than four times total government revenues. This means the U.S. would have to completely shut down every branch and department of the U.S. government – including its entire military, and even Congress itself – and would have to totally end all government transfer payments. And even after that, taxes would have to be quadrupled merely to pay interest on its debts. This is what the Wall Street terrorists did to Greece.

Conversely, the same fraudulent mechanism which has been used to push-up interest rates all across Europe has been used in reverse, to fraudulently minimize interest rates (and payments) for the world’s biggest deadbeat-debtor. And what has the U.S. government done with these extra years of ultra-light interest payments – courtesy of Wall Street? It has squandered every second of that time and every dollar saved in interest payments, in more of the petty partisan squabbling which has characterized the U.S. government as the world’s most dysfunctional “democracy” (for lack of a better word).

Several years of talking about deficit-fighting has yielded absolutely zero progress. Of course this hasn’t stopped the U.S. from lecturing European leaders about their “fiscal irresponsibility”. Hypocrisy remains the U.S.’s leading export. The latest deficit-fighting gimmick – the ridiculously over-hyped “Super Committee” – not only accomplished nothing, but it pushed the two, juvenile political parties even further apart, as the twelve “sober individuals” appointed to that farcical committee simply intensified the political divide.

What obviously none of the seat-stuffers in the U.S. Congress understand (along with the Obama regime itself) is that the U.S.’s 0% honeymoon cannot be maintained indefinitely – no matter how much it facilitates the serial stealing-by-dilution by the Wall Street crime syndicate. It’s impossible to predict precisely how this fraudulent 0% rate will detonate, so here are a few possibilities.

The most obvious way in which these “bubble” interest rates will end is via hyperinflation. As I already explained in a previous commentary, any currency which can be produced in infinite quantities and at zero cost is worthless – as a simple tautology of arithmetic.

Otherwise, with 0% interest rates, one could simply borrow “infinity” dollars (and with 0% interest there would never be any payments on that money) and then simply “buy” every asset on Earth – and with “infinity” dollars, one could even afford to overpay for everything on the planet. Indeed, buying up all assets is precisely what the Wall Street crime syndicate is doing, except it’s being done in slow-motion – so that the scenario I just outlined doesn’t become obvious to even the clueless stooges in government and the media. As with “Tulip Mania” four hundred years ago in Holland, it is not a question of “if”, only when people will realize that their worthless currency is worthless.

Of course this is only one way in which hyperinflation could hit the U.S. economy. The sheer quantity of paper currency being cranked out by the Federal Reserve and the fractional-reserve fraud-factories of Wall Street could also, easily spark hyperinflation. Even with all of the propaganda lies and market manipulation, commodity prices remain permanently on the verge of spiraling out of control. Indeed, Wall Street’s efforts to hold down commodity prices actually guarantees this.

I have explained this in a previous commentary. All “shorting” (and other forms of price suppression) must lead to both over-consumption and under-production, simultaneously. Fraudulently low prices cause buyers to over-consume, while being under-paid for their commodity discourages producers from producing. The ultimate, inevitable result is market after market imploding – as inventories are totally depleted. And then prices will spike to even higher levels than if there had been no manipulation at all. At that point (at the latest) hyperinflation will overrun the U.S. economy.

There is yet another way in which hyperinflation could be ignited in the U.S.: exponential increases in the deficit. Even with the fraudulent manipulation of debt markets by Wall Street, it is impossible for the U.S. to have the lowest interest rates and the strongest currency – simultaneously – since these two occurrences are mutually exclusive, again as a matter of simple economics.

As we have seen for the last several years (and despite all the absurd propaganda to the contrary), a “low dollar” cripples rather than stimulates the U.S. economy. The pattern has been obvious and the arithmetic is incontrovertible. Each penny lower the U.S. dollar drops causes the rising cost of imports (primarily imported oil) to greatly exceed any/all increases in U.S. exports. Every time the U.S. dollar goes down, the trade deficit goes up.

Worse, with the U.S. remaining the world’s premier oil glutton, and utterly dependent upon the ravenous consumption of oil to prevent immediate economic implosion, the rising price of oil functions much like a highly punitive sales tax – it seriously slows/impairs virtually every facet of the U.S. economy except the financial sector (since it requires very little oil to do nothing but print paper and swindle investors).

What is the U.S. government’s “solution” to this dilemma? To literally burn the world’s food supply in order to meet its gluttonous energy demands. Thus if rising oil prices don’t trigger U.S. hyperinflation, the pending hyperinflationary explosion in food prices will.

With all roads leading to the chasm of hyperinflation, how can the U.S. swerve away from that looming cliff? There is only one economic mechanism which could even partially reverse the economic drivers outlined above: raising U.S. interest rates. It is hear we can truly comprehend the deadbeat status of the U.S.

The U.S. economy currently carries somewhere in excess of $60 trillion in total public/private debt (which doesn’t include one penny of the additional $100+ trillion in unfunded government liabilities – liabilities which are now coming due). Increasing U.S. interest rates by even a paltry 1% would add $600 billion/year in additional interest payments to the U.S. economy. This is equivalent to an immediate drop in U.S. GDP of 5% - even before factoring in the numerous “multipliers” which would work to significantly increase that plunge in GDP.

A 1% increase in interest rates would cause immediate economic collapse in the U.S. – while being totally insignificant in reversing inflation. Even if U.S. interest rates were 1% higher they would still be close to the lowest in the world, meaning further weakness rather than strength in the U.S. dollar.

Conversely, the U.S. economy could easily implode in the reverse manner: via a devastating debt-default at least as ugly as what took place with the Soviet Union. We know (via its policies) that cheating its creditors through diluting its currency is the preferred means of (unofficial) debt-default for the U.S. government. With the Federal Reserve having already reduced the value (i.e. the purchasing power) of the U.S. dollar by 98%, eliminating the last 2% of “value” is as easy as it is inevitable.

However, in trying to delay that fate as long as possible the U.S. could trigger a sudden debt-default – in spite of Bernanke’s “magic” printing press. With government revenues continuing to erode while spending remains utterly unchecked, Helicopter Ben is walking a tightrope. If he prints too much money all at once, hyperinflation instantly detonates. If he miscalculates, and prints too little, the U.S. government could abruptly be facing a massive revenue gap: the result of constantly lying about its own economic projections, while continuing to do absolutely nothing to rein-in its fiscal irresponsibility.

At that point the U.S. would be facing the proverbial no-win scenario: the sudden need for $trillions more in money-printing would guarantee immediate hyperinflation, while failing to print the $trillions would mean immediate debt-default. Given that debt-default is (by far) the more benign of those two “Hells”, debt-default for the U.S. economy remains a likely outcome as well.

The only outcome which remains totally improbable is that the morally/intellectually bankrupt members of the U.S. government will suddenly end their endless posturing and bickering and actually work to make the U.S. economy better – rather than merely being facilitators of economic Armageddon.

It is tragically ironic that the people whom the Wall Street crime syndicate have been the most successful in duping with the endless lies disseminated by its propaganda machine are their servants in the U.S. government. Indeed the vast majority of these dupes could pass a polygraph test, still claiming that the U.S. has “the world’s strongest economy”.

Perched in their ivory towers, and totally insulated from the needs/desires of their constituents thanks to decades of relentless gerrymandering; the U.S. government has become a collection of 500+ “Marie Antoinettes”. Only the media-censored Ron Paul continues to live in the real world, but the Wall Street Oligarchs and media oligopolies continue to collude in ensuring that this compulsive truth-teller has only minimal access to the media. Even then, most of his “coverage” is nothing but derisive ridicule from these talking-heads.

With liars exalted in the U.S. while truth is as relentlessly suppressed as the gold and silver markets, all that remains in doubt today is the precise manner of its self-destruction.

Comments (9)Add Comment
written by david sites, December 11, 2011
Jeff, Perhaps the Banksters debt solution is to continue QE for US, Japan, and Europe untill the Banksters get all the 'paper money' back from all their losses and losing bets in derivitives, etc. Some hyperinflation along the way is incidental to them, as long as the quadrillion in loss is paid to them. Then look for several new fiat currencies to replace the old ones as the masses can no longer compute the gigantic numbers. Banksters would win by finnaly covering their casino losses, and restarting the fiat game with them debtless and holding almost all of the worlds assets.
Jeff Nielson
written by Jeff Nielson, December 10, 2011
Goldbug86, it's gotten to the point where I can't even be bothered to comment on the latest "solutions" to the made-in-Wall-Street "Euro debt crisis".

There is only one thing that needs to be said after EVERY ONE of these pretend-solutions: unless/until the credit default swap market is shut down there CAN NEVER BE A SOLUTION.

No matter how much worthless currency is printed-up and handed out, as a matter of simple arithmetic it is impossible to EVER make any of these debtors solvent when the Wall Street terrorists can drive their interest rates to INFINITY - at will.

Any stooge who uses the word "fix" or "solution" is simply incapable of arithmetic...
written by Lazaros, December 10, 2011
You are so right Jeff! The funniest thing is that not even a person has gone in jail since 2008!! From that and only you can understand how corrupted the US government has become!

Jeff what do you think about the 9th December agreement?

This is what i think:
Germany and EZ are at straight collision with the banking mafia. In the coming week the financial terrorists will unleash their fury (Downgrades, cds etc.) at Germany (EZ), seeing that Merkel is trying to oppose them. Merkel though its clear that she also serves other interests, probably industrial sectors as she wants to create a centralised Europe under her command.

Jeff Nielson
written by Jeff Nielson, December 09, 2011
The problem, Balz, is that the "elites" are blinded by their greed - and thus oblivious to the precipice, while their loyal stooges in government are simply blinded by their own stupdiity.
written by John Smith, December 09, 2011
Thanks for this great text. Reading it, I had the image of the elites walking on besides a tightening cliff with hyperinflation on one side and depression on the other.
Jeff Nielson
written by Jeff Nielson, December 09, 2011
Jeff, you correctly observe that interest rates are the Achilles heel of sovereign debt,
This is exactly why all efforts are being channeled to lowering EU rates to the US rate of zero to perpetuate the debt.
Of course, we know that this will strengthen the banks immensely, as they garner huge profits from free money, but it will drive the nations further into debt.

Bobbbny, I agree with you that this is the picture being portrayed to the European public: that they are working to LOWER interest rates. This is the most ludicrous sham of all - because unless/until the credit default swap market is shut down it is IMPOSSIBLE to lower interest rates against the will of the Wall Street terrorists.

This is one of the realities of terrorism: if the terrorists don't agree to stop "blowing things up", any pretense of a "solution" is totally illusory.
written by robert berg, December 08, 2011
The actions of the EU and the Fed over the past days show what the priority is:
Save the banks at the expense of the nations.
That's what the Fed did in the US in '09 & what the EU & the Fed, in collusion, are doing now in Europe.
Liquidity is being provided to the banks, backstops have been provided, but there is no support for the sovereign debt, which is the true cancer.
The banks are being insulated, but the people are not.
What a surprise.
Jeff, you correctly observe that interest rates are the Achilles heel of sovereign debt,
This is exactly why all efforts are being channeled to lowering EU rates to the US rate of zero to perpetuate the debt.
Of course, we know that this will strengthen the banks immensely, as they garner huge profits from free money, but it will drive the nations further into debt.
This is the intended tactic to wrestle the assets from the people.
Just like the World Bank & the IMF do, strangle a nation in debt & then gain control over their assets.
The ports, the refineries, the oil fields, the gold mines, the farms, the highways & bridges, the society.
This is the bankster endgame strategy, and it ends in debt induced enslavement.
The other outcome is the hyperinflation, as the myth of zero interest rates is overcome by the reality of the printing press.
We are at a crossroad, and neither outcome is palatable.
We can, at least, prepare for the hyperinflation by buying PM.
The other outcome is the definition of a police state, and that, I fear, we cannot prepare for.
Jeff Nielson
written by Jeff Nielson, December 08, 2011
Dylan, when you're as rich as the trillionaires, the numbers no longer have any meaning.

The only way for them to FEEL "wealthier" is through making all of us poorer - and thus increasing the GAP between them and "the little people".
written by Dylan Jones, December 08, 2011
" Indeed, buying up all assets is precisely what the Wall Street crime syndicate is doing, except it’s being done in slow-motion – so that the scenario I just outlined doesn’t become obvious to even the clueless stooges in government and the media. "

This is what happened to the Weimar Republic - the central bank handed over control to the priavte bankers who proceeded to hand themselves infinite fiat and using it buy up the finite assets of the country slowly at first but at ever increasing speeds leading to hyper-inflation - rape and pillage by stealth. The debt was denominated in dollars and pounds, so printing would never have helped the government escape its debt as they couldn`t print dollars and pounds. This highlights the fact that the Weimar government and central bank was the stooge of the private bankers.
It seems that active IMPOVERISHMENT of the masses is as important to these people as ENRICHMENT of themselves.
This is brutally demonstrated in the third-world policies of the Malthusian Maniacs using the food and water supply as a weapon to decimate whole populations.

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