Perhaps some of you caught the recent press conference by Fed Chairman Ben Bernanke that the Fed will indefinitely purchase $85,000,000,000 of federal treasury and agency debt each month until a certain unemployment target is reached (see first link). Before we analyze this statement, let’s consider Bernanke’s previous statements in the not-too-distant past. In the second link and third link, Fed Chairman Bernanke solemnly told Congress in 2009 and 2010 that the Fed would not “monetize the debt” of the US federal government.
However, Bernanke’s Fed is now “monetizing the debt” at a rate of $85 billion per month, despite his earlier firm promises to Congress that the Fed would not do any such thing (I wonder if he was “under oath” when he made the promises he is now breaking?). In the second link, the report stated that “with uncharacteristic bluntness, Federal Reserve Chairman Ben S. Bernanke warned Congress on Wednesday that the United States could soon face a debt crisis like the one in Greece, and declared that the central bank will not help legislators by printing money to pay for the ballooning federal debt (emphasis added).” He lied. That is exactly what the Fed is now doing on a grand scale! Bernanke himself announced that the Fed will be monetizing the US debt in the vast amount of $85 billion a month…indefinitely. Also in that same 2010 link, “Mr. Bernanke dismissed concerns that the United States will lose its gold-plated AAA credit rating any time soon.” However, it was not long afterward that the USA did lose its AAA bond rating when Standard and Poor’s, one of the major rating agencies, ended the AAA bond rating for US federal debt (see fourth link). These firm commitments by the Fed chairman, which were not long afterward contradicted by the Fed’s own action and a major rating agency’s downgrade, should once again confirm the truth of the old adage: “Never believe anything until it is officially denied.”
Buying $85 billion per month of federal debt results in the Fed “buying” an annual total of just over $1 trillion of federal debt per year for as long as this scam can continue. The annual admitted federal debt is now just over $1 trillion a year. Hmmm. What a coincidence of numbers.
Why does the Fed have to do this massive buying of federal debt with what is essentially “fantasy money” created out of thin air? The reason the Fed has to do this is obvious. There are no buyers for this gargantuan amount of US federal debt anywhere in the world! If there was a liquid market for US federal debt, and there were actual buyers somewhere in the world for this debt, the Fed wouldn’t have to “buy” any of the US debt. The lack of world buyers for US federal debt indicates that the rest of the world has figured out what is going on, and it doesn’t want to buy any more US debt. Only the endlessly distracted Americans are unaware of how bad the situation has become. Bernanke’s own words cited above warned that the US was approaching the condition of Greece in its finances.
Indeed, a US Senator has warned that the US is facing not just a fiscal cliff in its ongoing inability to get control of its debt problem, but a “fiscal avalanche” as well. US Senator Mike Lee (R-UT) wrote in a column that “No one knows just how long the United States can continue to accrue massive debts before lenders lose confidence.” In my humble, layman’s opinion, the fact that the federal government is now already over $1 trillion short of the buyers it needs for its debts indicates that lenders have already lost confidence in US debt instruments. Sen. Lee warns of a possible “financial meltdown,” and the liklihood of massive federal budget cuts “to avoid a [US] credit default.” His insightful and honest column is in the fifith link, and he (like Bernanke) raises the issue of the US fiscal crisis being comparable to the one which has been unfolding in Greece.
Anyone who follows Wall Street at all knows who Lawrence Kudlow is. He is a respected analyst and a host of a notable program about US financial markets on cable TV. I have always found it well worth watching. The title of his column below (the sixth link) raises the specter that, like President Herbert Hoover, Obama will be left holding the bag for any fiscal collapsed that occurs on his watch and Obama’s name will go down in history alongside that of Herbert Hoover. Mr. Kudlow correctly notes the critical importance of federal spending cuts to make any serious progress in getting control of the US federal deficit monster. He notes that even the Washington Post, a liberal newspaper, criticizes Obama for his lack of proposing any serious spending cuts. Maybe there is some poetic justice in Obama’s re-election. If a major collapse occurs on his watch, largely as a result of his refusal to get serious in cutting federal spending levels and cutting the US debt burden, maybe Obama will be the “fall guy” who gets blamed for the entire mess when it happens. Mr. Kudlow doesn’t say as much, but the title of his column strongly infers that inevitable result.
The biblically-prophesied collapse of the modern global fiscal/monetary system draws ever closer. I won’t predict when it will occur or what will be the trigger which starts the collapse in motion, but Revelation 17-18 will be fulfilled in the years ahead of us. If new readers have not done so, please read my article on the Babylonian origin of the modern banking system. You will find it most revealing, and you will understand why the Bible calls our modern fiscal/monetary system “Babylon the Great.”
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http://www.nationaljournal.com/economy/downgraded-s-p-drops-u-s-credit-rating-to-aa–20110806
