Saturday, May 25, 2013

Obama Scandals, Financial Markets & 2013 Debt Default/Monetization Update

I want to make some remarks about something I have written about quite a few times over the years.  That is, that 2013 is the year that I believe the U.S. could either default on or monetize some of its debt.   Well, 2013 is here so it’s time for an update.  Now, there is going to be some sidebar discussions about coterminous and tightly coupled issues and a few reasonably short rantings in this post but they are somewhat necessary given the intent of this post.   

I suspect the recent scandals of the Obama administration are tied directly into the White House.  Whether politicians can conjure up plausible deniability as was the case under Iran Contra or not, no one knows right now.  But midlevel bureaucrats or government workers don’t generally use public resources to target American citizens for political purposes or have a reason to lie about the incompetent Benghazi mess and issue conjured up political fatwas as cover-up  or having ardent Obama political supporters use the Department of Justice’s resources to illegally tap cell phones of journalists who are critical of potential White House crimes and substantial incompetence.    The mainstream media’s political bias in one direction or another to support its respective political “team” or defeat the other “team” is simply more of the endless insanity of political theater.  These are real scandals that involve potentially very serious crimes. 

This type of behavior is typical of a day in the life of a politician.  Pass legislation or sign unconstitutional presidential orders, obviously with special interests in mind, that f**ks up the economy or other people’s lives.  Then when the shit hits the fan due to the unintended consequences of that legislation, pass new legislation in an attempt to fix the mess created by politicians in the first place.  Then when that shit hits the fan due to the unintended consequences of passing legislation to fix the original unintended consequences, pass more legislation with even more unintended consequences ………… and on and on and on.   Eventually, you get to the point where we have over one million pages of codified legalese code that makes lawmakers and the legal community rich because no one can breathe with hiring an attorney.   At that point the system is so f**ked up, the only way to fix anything is to hit reset and wipe the slate clean.  Of course, hitting reset isn’t done by choice but when this massive corruption and political megalomania causes the system to implode.  (This is also how central bankers work in their illuminated mindset.)  That is really how our economy and society have become such a clusterf**k.  Politicians are almost always some of the least capable people in society with the most obtuse megalomania.  They are the first to tell us how they are going to “fix” our lives that they f**ked up in the first place.  I think it’s highly plausible the Republican-controlled House will eventually bring articles of impeachment against Obama before his second term ends.  Who knows if he will actually be impeached.   Of course, the reality is the Republican-controlled House should be impeached too.  Well, and the Senate and the corporate Supreme Court. 

The great irony in these recent debacles is that the most impeachable offenses by politicians are ignored because both parties are complicit in substantial impeachable corruption, treason, high crimes & misdemeanors, war crimes, bribery, financial fraud, crimes against humanity, crimes against the American people, incompetence (which is an impeachable offense) etc.  Impeaching Democrats over these acts would also involve impeaching the far right wing of the fascist Democrat-Republican Party, the Republicans themselves and vice versa.  So, instead the Omerta culture of secrecy and corruption that defines politics, in order to cover both party’s asses for the real crimes, keeps most horrendous impeachable offenses from actually being investigated.  And who knows what we don’t know?  As I have said numerous times on here, the political corruption is  almost certainly far, far worse than anyone could ever imagine.  And I, for one, can imagine a lot.  I can imagine the CIA might be involved in much of these scandals given how Obama has granted the CIA unprecedented powers in his unconstitutional shadow wars and black operations.   And anyone who questions these policies, such as Tea Party activists, could become their targets.  Of course, as all politicians can’t wait to tell us, Jesus of Nazareth and his pacifist teachings guide them in their policies of debt slavery, war, murder, spying and mayhem.  I don’t trust anything any politician ever says any more than I would trust Ted Bundy or John Wayne Gacy.   I’ll give some the benefit of the doubt if I can corroborate reality.   Obama isn’t one I give the benefit of the doubt.   

For many years now, I have pointed to three future dates that I am watching regarding the back end of this storm.  Those are 2013, 2016 and 2022.   Well, 2013 is now here.   In my prior posts on a 2013 debt crisis, I have noted that default(likely selective foreign holdings) would be a willful act of belligerence.   

So, why this post right now?  Well, two major developments have happened recently as it pertains to potential monetization or default.  And regardless of the message for public consumption, if this would ever come to pass, there almost certainly would be nontransparent political strategy involved.   

The first development is that the House Republicans passed a bill prioritizing debts in anticipation of a possible debt default.   To my knowledge, this is the first time in U.S. history something like this has ever happened.  And this prioritization ties in directly with my remarks leading up to 2013 that our debt default could be focused on foreign holders including China.  Prioritization is pointing to that distinct possibility.  Obviously this would be a premeditated act of belligerence.  Loot China, extort massive profits, devastate their environment, manipulate commodity prices used to create the China bubble and extort massive profits, then default on their U.S. debt.  What comes after that?  Tariffs on Chinese goods.  Look, for many years I’ve essentially said a trade war or even outright war is highly possible between the U.S. and China and I’ve posted some very lengthy and detailed analyses of how this will likely unfold.  We already see it today in Iran and Africa where China and the U.S. are involved in attempted to outdo each other to control natural resources and potential future consumers for capital markets, the control of oil, the control over the currency used for global trade, etc.   China’s communist dictatorship is wildly corrupt and evil.  Those who mock the U.S. and somehow view China as some docile giant are truly fools.   This is a nation that has murdered 70 million of its citizens, has death vans that are sent around the nation to murder people inside of vans made for this purpose and uses the force of the state for genocide of untold tens or maybe even hundreds of millions of unwanted children.   Then there is the fact that China has literally stolen untold numbers of military technology secrets from the U.S. and Europe as well as untold technology from American companies.  That we have a Bill Clinton and Al Gore created and Wall Street endorsed “free” trade agreement with this nation is effing ludicrous.   It’s much more than ludicrous.  It’s as Cicero noted in my last post. 

The second development is that global markets had the largest intraday reversal since 2012 on Wednesday.  And while Bernanke was testifying at that time, IRS officials were also testifying.  And the buzz in the trader community is that it was the IRS 5th amendment plea that caused the market to reverse.  The reason this testimony was so important in financial markets is that these scandals are starting to look serious enough that there is a growing concern a debt compromise or austerity measures will not be met this year.  In other words, there is starting to be conscious recognition that a debt default might actually happen.  The U.S. has never officially defaulted on its debt and a conscious recognition it actually might do so is no small development. (Some people have cited U.S. actions in the past that were never official defaults.  One is the devaluation of the dollar during the Great Depression.  Another is the breaking of the gold standard under Nixon.  Another a mischaracterization of currency issued to fund the Civil War.  The U.S. has never officially defaulted although these examples could certainly be considered unofficial defaults of some degree.  It’s really a matter of ideology or beliefs as how these events are characterized. )

None of this means a 2013 debt crisis is going to happen.  But we certainly are getting closer to the precipice than we have ever been.  Is that a coincidence that I have been noting for years 2013 is the year I believe this event could come to pass and now in 2013 we are seeing the first signs of such an event?  Ha!  As I have noted before, the U.S. never has to default because all of its debt is domestic.  ie, It is denominated in dollars and that means all they need to do is print money to cover debts.  People hoot and howl when they read that U.S. debt is domestic but that’s because they have no idea what they are talking about.  That China has purchased dollar debt means what?  It’s U.S. domestic debt.   It’s not denominated in yuan or IMF SDRs or other foreign currencies.  It’s denominated in domestic currencies.  We owe it to ourselves regardless of any hooting and howling by fanatics. 

China is the country holding the bag in its Nash Equilibrium with the U.S. as noted many times on here.  When that equilibrium is broken, and it will, there will be consequences on both sides but the fundamental issue is that China will almost certainly eventually be denied foreign capital, technology and investment that has been solely responsible for its bubble.  And to top it off, its dollar holdings could become worthless.  Nothing new on here but just a reminder for newer readers. 

So as noted on here many times, all that needs to happen to monetize debt is the Treasury issue $16 trillion in new debt, have the Federal Reserve step into the market and buy all of it,  issue a credit to the Treasury’s Federal Reserve account, and move the decimal places on the computer screen a dozen places to the right.  Voilà.  The money exists in the Treasury account to pay U.S. debt bond holders.  Or build bridges, roads, high speed rails, pay off student loans, fund Social Security or whatever.  (None of this should be controlled by politicians but instead by transparent democracy. ie, We The People.)  If you wanted, you could let debt come to maturity rather than pay it all off at once and do this in stages over decades if inflation is a concern.  But there are better policy-driven methods to insure inflation doesn’t become an issue.   Now, you can’t do this without limits and regulations or you’ll burn the currency.  And debt should probably always remain a method of funding for certain projects.  But this is basic math and managing it could be accomplished by a deft 6th grader.  There really is no limit to how this can be accomplished.  An act of Congress would likely be necessary to do this in one fell swoop as there are artificial  limitations to the size of the Fed’s balance sheet, but then the government is so completely out of control and unbound by constitutional powers that reality doesn’t even exist anymore.   So who knows what the hell might happen.

In a world where politics, the state and institutions of the ego have become so universally and completely fanaticized, there are plenty of nutjobs, monetary illiterates and uninformed ideologues out there who continue to believe the U.S. should default.  Frankly, were our debt foreign, I would support a default.  As I have noted with Greece and elsewhere, they should default on their foreign debts.   Many supposed “conservatives”  have repeatedly said we should default because we are broke.  Well, we may have limits to the amount of debt we can manage, and we passed that long ago, but we certainly are not broke.  Contrary to the lies and propaganda created by political megalomaniacs, Wall Street criminals and corporate psychopaths, wealth is not determined by little pieces of colored paper or lack thereof and how much of it these kooks allow into our economy.  Or by any particular illusory financial or monetary system.   Wealth is created by the monetization of science and invention and its associated productivity so that we don’t have to lead an existence defined by work or suffering.  Now, if you want to toil your life away to endlessly consume for our corporate masters, then that’s your ego’s prerogative but I would prefer a much more quality-driven life.  By the way, all we do is use colored pieces of paper to encourage this.  We could use juju beans or cans of beer or rocks or simply do away with money.   Money is an irrelevant factor to human progress.  In fact, I could make a very strong argument it stifles human invention and science.

Calling for default is either a severe ignorance or a desire to use violence to bring this system down and inflict unnecessary pain in the process.  I dare say a little bit of schadenfreude.  I want to see this system replaced but I have no desire to use violence and terror to do it.  Even if the people who created this misery are criminals.   We need to see the restoration of the rule of law and human decency not more lawlessness psychotic behavior as is embraced by the corporate state today.  So even though the U.S. has monetized its debt in the past, actually quite a few times in the 20th century, we don’t really know how insane politicians will get.  Default is possible even if it is completely ludicrous and unnecessary.  One has to remember that politicians generally aren’t the sharpest tools in the shed and are prone to substantial violence; our world is made endlessly violent through politicians.  

Regardless of when, the U.S. will eventually be forced to monetize its debts if this global system isn’t changed.   If and when this happens, people in the U.S. and elsewhere will see that debt is nothing more than a myth perpetuated by class that wishes to enslave humanity for their own megalomania.  We could see people refudiate (I’m channeling Sarah Palin) debt on a national or even global scale if the state monetizes its debts. (or defaults)  ie, If a wildly corrupt government, and most people understand it is corrupt on some level, doesn’t have to pay its debts to the banking criminals, why do I have to remain a debt slave?  Having the whole world witness this act of government monetization could be the driver for the beginning of the end of debt slavery and this evil financial and monetary system.  It could awaken the conscious mind to a greater truth for people who have a limited understanding of what is going on.  If the government can wipe away its debts with the stroke of pen, then why can’t it do the same for me?  That will be a glorious day for humanity and freedom.

posted by TimingLogic at 5:17 PM

Links to this post:

Create a Link

<< Home