[snippet from issue of The Golden Jackass]
◄$$$ THE DEATH OF THE MONETARY SYSTEM HAS ITS MAIN MOTIVE IN THE REFUSAL OF GOVERNMENTS EITHER TO MANAGE FINANCES OR TO REPAY DEBT. THE SWINDLE IS INFLATION. THEIR ONLY VIABLE APPROACH, HARDLY A SOLUTION, IS TO INFLATE DEBT AND THUS TO REDUCE ITS BURDEN. CREDITORS FEEL BETRAYED, SEEK DEFENSIVE MEASURES, LIKE TO CUT OFF CREDIT. A RUN ON THE USTBONDS IS OCCURRING QUIETLY BY ANGRY FOREIGN CREDITORS. THE USDOLLAR IS KEPT AFLOAT BY SOME SECRET CORNERS. $$$
The pages of history are littered with examples of government debt default, but more often with the public paying for debt reduction in basic price inflation. Their pensions and life savings are reduced in value so as to accommodate the costs of social welfare systems, a society living beyond its means, and even the excesses of war. The debts accumulated by many governments large and small cannot be repaid. In some cases riots, corruption, and political extremism have been malignancy offshoots encouraged by the hyper-inflation. History shows that tangible assets like Gold & Silver protect from the worst economic consequences. For the current financial crisis, only one pathway seems likely, although painful. The system cannot be remedied, only patched over. Vast inflation is the only politically viable method of repudiating these unmanageable obligations. Of key importance is the velocity of money in determining whether or not inflation turns into hyper-inflation, which requires final demand not to falter badly. Hyper-inflation requires sustained activity like an engine, which cannot stall. Higher price inflation is coming like night follows day, but probably not an extreme case. It will be painful though, since the cost structure will be the primary damage center. A great honest quote came from Jean-Claude Juncker, prime minister of Luxembourg. He recently commented with respect of the sovereign debt crisis, "We all know what has to be done. What we do not know is how to get re-elected once we have done it."
It is like burning people's homes and expecting to stay in high office. The other betrayal is to creditors, who suffer losses in the principal repaid, as a result of a unilateral decision not within their participation. They see the inflation approach as a deep betrayal, and lose their willingness to offer further credit. See the Zero Hedge article (CLICK HERE).
The Fed was hit with withdrawals of $83.3 billion on November 2nd, the largest withdrawals coming from its deposit accounts. This single day yank was the largest since February 2009, and not associated with quarterly tax payments. The USFed was forced to meet $76 billion in requests apart from movement net of outlays.
Details of transactions were in the USFed weekly H.4.1 report. Extraordinary measures were taken to fund the withdrawals, like the outright sale of nearly $24 billion in its USTreasury Note and Bond holdings from the System Open Market Account. After clearing, the SOMA account fell to $2.611 trillion, $43 billion below their stated target of $2.654 trillion. See the Minyanville article (CLICK HERE). The withdrawals are being demanded by countries angered by USGovt policies, like China, Russia, Latin American, and other Asian players. It is only the beginning of a bloodletting. The syndicate running the USGovt is totally clueless what they are up against, misjudging the adversaries. A run on USTBonds is in progress, covered up by Quantitative Easing and Operation Twist, programs given innocuous names but integral to hyper monetary inflation itself.
