Wednesday, August 12, 2009

How to cancel Gov debts

US government stages fake coup

Silly fun but strangely plausible at the same time...

Posted by mountain goat @ 01:31 PM (1059 views)
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3 thoughts on “How to cancel Gov debts

  • mountain goat says:

    A more serious take on this issue. Chris Martenson discovered that as soon as the primary dealers had snapped up the 7-year Treasuries at the sale earlier this month, they turned around and sold half of it to the Fed. “This bit of monetary trickery, which was clearly planned in advance, accomplished two things. First, it created the impression that there was abundant demand even for longer-term Treasuries. And second, it obfuscated the fact that the Fed was being forced to step in to monetize the debt.” – Doug Casey

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  • mountain goat says:

    For an even more serious take on this see Antal Fekete, who predicted last year that once QE started that buying Gov bonds and selling them back to the Fed/Central Bank would end up being the most profitable game in town. In this latest article above he says this makes deflation worse by:

    (1) risk-free bond speculation causes interest rates to fall,
    (2) falling interest rates cause a severe erosion of capital throughout the productive apparatus,
    (3) erosion of capital causes a falling trend in prices,
    (4) falling prices further increase the downward pressure on interest rates.

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  • Did they hire the commentator from Bloomberg?

    Excellent take off!

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