| Topic: |
Science > Prophecies-Of-Nostradamus |
| User: |
"Definitely a sick minority..." |
| Date: |
14 Mar 2006 11:46:32 PM |
| Object: |
***** AMERICA: The death of the US dollar |
C10 Q98
For the merry maid the bright splendor
Will shine no longer, for long will she be without salt:
With merchants, bullies, wolves odious,
All confusion universal monster.
===================================================================
***** AMERICA. ***** THIS FILTHY STINKING ***** HOLE WHERE THERE ARE NO
SPIRITUAL VALUES EXCEPT SOCIOECONOMIC DARWINISM. I FUCKING HATE AMERICA
AND I WANT TO SEE PEOPLE SUFFER AND KILL EACH OTHER HERE IN A CIVIL
WAR. ***** YOU. YOU ASSHOLES SHOULD READ REVELATION 18.
INSTEAD OF WORRYING ABOUT TAKING OUT FUCKING LAME ***** ***** LIKE HOME
EQUITY LOANS, YOU PATHETIC LITTLE ***** SCAVENGERS WILL BE WORRYING
ABOUT THINGS LIKE
"HEY YOU FUCKING *****, I RAN THROUGH THE SNIPER AREA TO GET FOOD
LAST TIME, NOW IT IS YOUR TURN, YOU STINKING HPV WART CLOGGED *****"
***** AMERICA
===================================================================
The dollar as we know it is being killed, poisoned by debt from the
hand of the federal government with its accomplices in the Federal
Reserve and the banking system. So far it's been a slow death, with
few people watching, but that's about to change. With the horrific
new amounts of debt being injected into the dollar's weary remains,
its death is not far off.
===================================================================
If the vicious circle is not addressed and corrected, it will turn
into a death spiral in which the dollar is destroyed
Anybody who has been lending money to the US federal government by
buying T-Bills and its other debt instruments received a brutal one-two
punch last week. It was hopefully a sobering experience, causing them
to question why they would want to hold any US government paper.
The Washington Post landed the first punch with the following report on
March 6th. "WASHINGTON -- Treasury Secretary John Snow notified
Congress on Monday that the administration has now taken "all prudent
and legal actions," including tapping certain government retirement
funds, to keep from hitting the $8.2 trillion national debt
limit...Treasury officials, briefing congressional aides last week,
said that the government will run out of maneuvering room to keep from
exceeding the current limit sometime during the week of March 20."
The second punch was delivered a couple of days later by this Dow Jones
Newswires dispatch: "WASHINGTON (Dow Jones) -- The U.S. government
ran a monthly budget deficit of $119.20 billion in February, an
all-time monthly record that was still slightly less than forecast,
according to a Treasury report Friday. The February federal government
deficit was 5% greater than a year earlier, according to the Treasury
Department's monthly budget statement."
These two reports make clear the dire financial straits the federal
government is facing, but its financial position is even worse than it
appears. The $8.2 trillion debt limit -- that has proven inadequate to
meet the federal government's borrowing needs -- covers only its
direct liabilities. In other words, this $8.2 trillion is the total
amount of dollars owed to all the holders of US government debt
instruments. Excluded from this total debt are all of the federal
government's other liabilities, which total another $38 trillion. In
"The 2005 Financial Report of the United States Government", US
Comptroller General David Walker reported that "the federal
government's fiscal exposures now total more than $46 trillion, up
from $20 trillion in 2000."
Yes, it's insane. But it's even more insane that people buy the US
government's T-Bonds and T-Bills thinking that they are a safe,
low-risk investment. Maybe they used to be that, but things change.
US government debt instruments are no longer a safe place to park your
dollars. To substantiate this assertion, here are some shocking facts
to mull over.
1) REVENUE -- Federal revenue peaked at $2.03 trillion in 2000, and
then declined for three years, bottoming in 2003 at $1.78 trillion.
That's never happened before. Revenue typically declines during a
recession, but the most it has ever declined before was two years in a
row, during the severe recession of 1958 and 1959. Revenue has
rebounded the last two years and reached $2.15 trillion in 2005, but in
constant 2000-dollars (i.e., adjusted for inflation), revenue remains
6.3% below that received in 2000.
2) EXPENDITURES -- While the federal government's revenue has been
constrained, not so with expenditures, which have continued to soar.
They were $2.47 trillion in 2005, an alarming 38.2% above the federal
government's expenditures in 2000. Expenditures soared even in
constant 2000-dollars, scoring a shocking 21.8% increase over the five
years from 2000 to 2005.
3) RELIANCE UPON DEBT -- As a consequence of constrained revenue and
uncontrolled spending, the federal government has come to increasingly
rely upon debt in order to obtain the dollars it spends with gay
abandon. In 2000, 1.1% of the federal government's cash flow
(revenue plus the annual increase in debt) came from new debt. This
reliance on debt grew to 20.4% in 2005. In other words, for every $100
spent by the federal government in 2005, $20.40 came from borrowed
money, compared to only $1.10 in 2000.
4) INTEREST RATES -- Of all the major expenditure categories of the
federal government, only one declined from 2000 to 2005 -- interest
expense. It paid $361.9 billion in interest in 2000, and its interest
expense burden fell to $352.3 billion in 2005. During this period, the
federal debt climbed 40.5% from $5.63 trillion to $7.91 trillion. So
given this increase in debt, it is obvious that the federal
government's interest expense burden declined for only one reason --
interest rates fell. In fact, the average interest rate paid by the
federal government on its debt in 2000 was 6.4%; it was only 4.6% in
both 2004 and 2005.
5) INTEREST EXPENSE BURDEN -- During the 1990's, 24.0% of the federal
government's revenue on average was used to pay interest on its debt.
During the Bush administration that burden has declined to only 17.5%
on average. The reason is that the 5.2% average interest rate paid by
the federal government during the Bush administration so far is
significantly less than the 7.2% rate it paid on average in the
1990's. It is clear that the lower interest rates engineered by the
Federal Reserve after the 2000 stock market peak have favorably
impacted the federal government's budget. Lower interest rates
reduced its interest expense burden, thereby making the deficits
incurred so far during the Bush administration much smaller than they
would have been if higher interest rates prevailed.
The above facts are indeed shocking as they clearly highlight that both
the runaway growth in federal spending during the Bush administration
and the resulting deterioration in the financial position of the
federal government have been cloaked and little noticed because
interest rates have been falling in recent years. So the above facts
therefore make the immediate future frightening because as we all know,
the Federal Reserve has been raising interest rates.
What will happen to the federal government's financial condition now
that the Federal Reserve is raising rates in order to try suppressing
the growing inflationary pressures in the economy? The federal
government faces a potentially toxic mix of constrained revenue,
soaring expenditures, ballooning debt and rising interest rates.
The federal government desperately needs strong economic activity in
order to generate the highest possible tax revenue to decrease its
reliance on debt. But rising interest rates work against this
objective. Rising interest rates dampen economic activity. We have
already seen what has happened to the housing market since the Federal
Reserve began raising interest rates.
In addition to adversely impacting revenue, rising interest rates also
have an unfavorable impact on expenditures. This impact is purely
mathematical. A 6% average interest rate on $8.2 trillion of debt
results in a higher interest expense burden than a 4.6% rate.
Thus, higher interest rates restrain tax revenue while increasing the
level of expenditures. Together these factors worsen the budget
deficit, which then causes the federal government to borrow even more
money. The resulting higher level of debt leads to a greater interest
expense burden, further worsening the deficit. Consequently, the
federal government is rapidly moving to the point where its borrowing
becomes an increasingly important source of the dollars that it needs
to meet its interest expense obligations.
It is clear that these circumstances create a vicious circle where the
federal government borrows money to obtain the dollars needed to meet
its debt obligations. This condition is not sustainable, and it will
end in one of two alternatives -- either the dollar is saved or it
isn't. If the vicious circle is not addressed and corrected, it will
turn into a death spiral in which the dollar is destroyed.
To explain this point, the federal government will never default on its
debt. With the ever-helping hand of the Federal Reserve and the
banking system, the federal government will always come up with the
dollars it needs to meet its interest expense and other debt
obligations. But if the vicious circle described above is not
addressed, the federal government will repay its debt obligations with
dollars that are worth less and less until they become worthless when
the death spiral occurs.
The vicious circle does two things. First, it increases the supply of
dollars by creating 'out of thin air' the dollars needed by the
federal government to meet its debt obligations. The second point is
less obvious but just as pernicious. The vicious circle lessens the
demand for the dollar as people over time come to understand the
ruinous, underlying dynamics of what's happening to the currency.
Higher supply and lower demand mean only one thing -- the purchasing
power of the dollar is being inflated away.
These circumstances are not new. They are experienced by every fiat
currency sooner or later when the discipline of the gold standard is
removed. The discipline of the gold standard is needed to constrain
government spending. In the absence of that discipline, a fiat
currency inevitably reaches the vicious circle. In fact, it's even
happened before with the dollar.
The dollar was in a vicious circle during the waning years of the
Carter administration. Paul Volcker was appointed Federal Reserve
chairman to break the vicious circle, and he did it by raising interest
rates. He kept raising interest rates until real rates (nominal
interest rates less the inflation rate) soared to greater than 6%,
historically a phenomenally high rate. It was not surprising therefore
that the demand for the dollar started rising, thereby breaking the
vicious circle and saving the dollar from a death spiral. But Mr.
Volcker had an advantage not available today to Mr. Bernanke.
Back then the federal debt was not the burden it is today. Recall that
the US was the largest creditor nation in the world back then. The
total level of dollar debt was not only much less, but manageable in
the environment of rapidly rising interest rates and the high real
interest rates ushered in by Mr. Volcker.
Today the US is the world's largest debtor. The US savings rate is
negative. American home owners have consumed most of the equity in
their houses. In short, the federal government and many consumers are
borrowing just to try keeping their head above water. What's worse,
there is all the uncertainty arising from trillions of dollars of
outstanding financial derivatives, essentially none of which existed
during Mr. Volcker's era.
In short, Mr. Bernanke cannot raise interest rates the way Volcker did,
which I believe is well understood by both Mr. Bernanke and Mr.
Greenspan. After all, look at what happened during the last year of so
of Mr. Greenspan's tenure at the Fed. He raised interest rates, but
throughout this period, real interest rates remained close to zero and
at times were negative, which is a condition that creates a highly
inflationary framework for the dollar. In other words, there was a lot
of jawboning from Mr. Greenspan to save the dollar from inflation by
raising interest rates, but he did not even come close to following in
the footsteps of Mr. Volcker. Mr. Bernanke won't either.
Today's monetary system is not only broken, it's completely crazy.
For this reason I found the following quote in the current issue of
Barron's to be of interest. It's by Richard Daughty, from the
March 8th issue of his newsletter, The Mogambo Guru (9241 54th St. N.,
Pinellas Park, Fla. 33782):
"What a scam! The week [before last], the Fed snaps its fingers and
creates $2.2 billion, and then uses it to buy $2.2 billion in
government debt! What in the hell can you do but laugh at the sheer
audacity! Somehow, a government creating more and more money and
spending it is not, for the first time in history, going to turn out to
be a bad thing? And especially one where the money is just paper and
computer blips that they can create on a whim? Of course, I sigh
wearily as I note that the banks themselves are in on the scam, and
they bought up another $13 billion in government debt [the week before
last]. Foreign central banks continue to soak up government debt, and
they swallowed another $7.6 billion [that] week, too. The government
sells debt to get money to spend on its deficits, and the bank creates
the money to buy the debt. Debt and money supply both expand, and it
expands to create a bigger and more expensive government! And higher
prices. This is economic suicide!"
Indeed, it truly is "economic suicide", but it's even worse than
that. It's also monetary homicide. The dollar as we know it is
being killed, poisoned by debt from the hand of the federal government
with its accomplices in the Federal Reserve and the banking system. So
far it's been a slow death, with few people watching, but that's
about to change. With the horrific new amounts of debt being injected
into the dollar's weary remains, its death is not far off.
.
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| User: "Perseid" |
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| Title: Re: ***** AMERICA: The death of the US dollar |
15 Mar 2006 07:02:45 AM |
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"Definitely a sick minority..." <bghilliotti@hotmail.com> Spat the Words
The dollar as we know it is being killed, poisoned by debt from the
hand of the federal government with its accomplices in the Federal
Reserve and the banking system. So far it's been a slow death, with
few people watching, but that's about to change. With the horrific
new amounts of debt being injected into the dollar's weary remains,
its death is not far off.
I think that would bring the whole world to it's knees. So
much of the world is desperate to sell things to the US. If
you really want to disentangle yourselves from the US, stop
selling your trinkets to us (we've already got enough trinkets
and bobbles).
.
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| User: "" |
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| Title: Re: ***** AMERICA: The death of the US dollar |
15 Mar 2006 11:44:58 AM |
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Yes, exactly. Everything written in this article is true, but other
countries need to show the same financial discipline. They need
consumers inside their own country and to stop relying on the US. We
are about to enter a global depression, no country and no man will be
left untouched.
.
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| User: "Perseid" |
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| Title: Re: ***** AMERICA: The death of the US dollar |
15 Mar 2006 07:44:36 PM |
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Spat the Words
Yes, exactly. Everything written in this article is true, but other
countries need to show the same financial discipline. They need
consumers inside their own country and to stop relying on the US. We
are about to enter a global depression, no country and no man will be
left untouched.
True, but it may come with much pain for other countries and
little pain for the US. You clearly understand the powerful
position the US holds right now, and if your desire is to
watch the US go down in flames then you may wish to seek a
different avenue. We can contract or even destroy the economies
of smaller countries simply by not buying their stuff, while
they can only cause us a bad afternoon of shopping by not
selling their stuff to us. If we do go down in flames it will
probably be our own doing.
.
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| User: "" |
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| Title: Re: ***** AMERICA: The death of the US dollar |
15 Mar 2006 08:19:37 PM |
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No doubt, the US has all the leverage right now since it holds and
prints the world's reserve currency. China cannot destroy the US, for
example, by dumping the dollar because it would destroy itself in the
process. But the US can destroy itself by continuing to do what it is
doing, that is running the deficit so high that it has no choice but to
print money to pay it's debts, devalueing its own currency and
eventually not only creating run away inflation in the US but making it
untenable to hold dollar positions in foreigh governments.
Remember, it wasn't long ago that Great Britain held the reserve
currency and felt that they were in a superior position. The story is
quite the same.
.
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| User: "Perseid" |
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| Title: Re: ***** AMERICA: The death of the US dollar |
15 Mar 2006 09:24:15 PM |
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Spat the Words
No doubt, the US has all the leverage right now since it holds and
prints the world's reserve currency. China cannot destroy the US, for
example, by dumping the dollar because it would destroy itself in the
process. But the US can destroy itself by continuing to do what it is
doing, that is running the deficit so high that it has no choice but to
print money to pay it's debts, devalueing its own currency and
eventually not only creating run away inflation in the US but making it
untenable to hold dollar positions in foreigh governments.
Remember, it wasn't long ago that Great Britain held the reserve
currency and felt that they were in a superior position. The story is
quite the same.
Probably correct. I wouldn't mind so much losing a dominant
position as long as we don't all suffer an economic meltdown
the likes of which led Germany to start WWII. Hopefully
another country will step up to take the lead if that were
to happen. Probably it will be a gradual thing... continued
increasing disparity between rich and poor, and more and
better ways for the rich to physically separate themselves
from the disadvantaged.
Defaulting on our debt is the last thing the US gov't would
ever want to happen. No one would trust us or loan us money
ever again... the US as the financial center of the world
would come to an end.
.
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| User: "ffuuzzyy_logic" |
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| Title: Re: ***** AMERICA: The death of the US dollar |
16 Mar 2006 04:29:32 PM |
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What if peoples values change (for some yet unknown reason) and we decide we
don't need any of this *stuff* . What then..... Personally, I don't
understand why people feel they need all of these 'things'....
"Perseid" <eidpers@anti-spam.comcast.net> wrote in message
news:Xns9787BEAB19675rrfkwrantispamattbic@216.196.97.136...
skaven.q.blight@gmail.com Spat the Words
Yes, exactly. Everything written in this article is true, but other
countries need to show the same financial discipline. They need
consumers inside their own country and to stop relying on the US. We
are about to enter a global depression, no country and no man will be
left untouched.
True, but it may come with much pain for other countries and
little pain for the US. You clearly understand the powerful
position the US holds right now, and if your desire is to
watch the US go down in flames then you may wish to seek a
different avenue. We can contract or even destroy the economies
of smaller countries simply by not buying their stuff, while
they can only cause us a bad afternoon of shopping by not
selling their stuff to us. If we do go down in flames it will
probably be our own doing.
.
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| User: "Perseid" |
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| Title: Re: ***** AMERICA: The death of the US dollar |
16 Mar 2006 08:35:41 PM |
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"ffuuzzyy_logic" <fuzzy@logic.com> Spat the Words
What if peoples values change (for some yet unknown reason) and we
decide we don't need any of this *stuff* . What then..... Personally,
I don't understand why people feel they need all of these 'things'....
That's a very buddist point of view. We all need some basic stuff
to keep alive, like shelter, food and clothing. Other things are
very necessary in certain cultures just to hold down a job... for
example in the US (and many western and also other developing
countries) an automobile is almost a necessity.
Historically, 'value changes' almost always involve adopting a
time or energy saving device, such as washing machines, clothes
dryers, vacuum cleaners, automobiles, etc. The trend is always
toward easier living. The variations in the trend seem to involve
style and competing with our friends to have the 'coolest' or
latest gadgets.
The point of view you expressed is so difficult to achieve for
most people as to be an impossibility. Still, people who are
very spiritual are easy to spot and the easiest to get along
with, since they place the highest value on the simple things
in life. I'm reminded of a song by Lynyrd Skynyrd called
'Simple Kind of Man'.
"Perseid" <eidpers@anti-spam.comcast.net> wrote in message
news:Xns9787BEAB19675rrfkwrantispamattbic@216.196.97.136...
skaven.q.blight@gmail.com Spat the Words
Yes, exactly. Everything written in this article is true, but other
countries need to show the same financial discipline. They need
consumers inside their own country and to stop relying on the US. We
are about to enter a global depression, no country and no man will be
left untouched.
True, but it may come with much pain for other countries and
little pain for the US. You clearly understand the powerful
position the US holds right now, and if your desire is to
watch the US go down in flames then you may wish to seek a
different avenue. We can contract or even destroy the economies
of smaller countries simply by not buying their stuff, while
they can only cause us a bad afternoon of shopping by not
selling their stuff to us. If we do go down in flames it will
probably be our own doing.
.
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