NOTE: this blog is no longer active as of 12/07. New one: http://blog.kirchhof.com
Quidquid latine dictum sit, altum viditur.
Mon, 18 Dec 2006
Coolness
The top ten archaeological discoveries of 2006.
Posted at 22:35 by Randy Kirchhof [Permalink]
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Coming Home To Roost
We may be in real trouble. If the rumors bouncing around the net
today are true, then we're in for a really, really rough patch
soon.
A few quotes from Free Market News' China
To Dump One Trillion In US Reserves article:
1) The Federal Reserve Bank ceased publishing "M3" data in March,
making it nearly impossible for anyone to know how much cash is being
printed. China said this act made it impossible to tell how much a
Dollar is worth.
2) The U.S. dollar has lost upwards of thirty percent (30%) of its
value against other foreign currencies in the recent past, meaning
China has lost almost $300 billion simply by holding U.S. dollars in
its reserves.
3) The U.S. has no plans whatsoever to reduce deficit spending or
ability pay down any of its existing debt without printing money to
pay it off.
[...]
What would be the implications of such a sell-off? "This would
cause a worldwide sell-off of dollars, create almost immediate
hyper-inflation in the US and also impact world markets at a level
worse than the Great Depression of 1929."
A few months ago, I pointed you to the CIA World Factbook
"Account Balance" page. Go take a look at it and find the United
States on it. It is shocking.
A quarter century ago, we were the world's largest creditor
nation. During the brief eight years that the Democratic party was in
power, we actually ran a surplus and started to pay down the debt. The
rest of the story is all about Republican monetary policy, and our
country is now all-but in receivership. The whole Potemkin village is
in genuine danger of collapse.
We are insolvent. There are those who
actually apply Generally Accepted Accounting Procedures to the
federal budget, and the numbers that they produce are staggering. Some
say—for example, the General Accounting Office—that we are running an actual annual deficit in excess of
4.6 Trillion
Dollars. Taxing 100% of all wages, salaries, corporate profits
would not eliminate a deficit of this magnitude.
We have no more money, and the chance that our currency is going to
revert to worthless paper is as strong as it has ever been. No one can
say whether it will happen, but I am genuinely worried. Remember
Weimar Germany in the 20's: they were printing Deutschmark bills with
face values in the tens of millions, just so people could buy bread
without having to bring a wheelbarrow full of money to the grocery store.
That is the worst-case possibility that is in question here.
The possible better news (as it were) is that the dollar is still
the primary world currency, and the US is the world's primary consumer
market. It is not in anyone's interest to destroy that market and
therewith destroy their holdings in dollars.
But panics happen. And they never happen on schedule.
Every time the dollar clicks down a single percentage point, China
watches 10 billion dollars of value in their holdings
disappear. What would you do?
Be watchful. Keep an eye on the gold market as one possible
bellwether. And keep plenty of dry goods like beans and rice and
canned goods in the larder; if you think It Can't Happen Here, you are
making an exceedingly dangerous presumption. Let's just hope that "It"
doesn't.
Posted at 15:53 by Randy Kirchhof [Permalink]
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