Buying time

Because of pressure from Ron Paul, Jim DeMint, and Bernie Sanders, the GAO was forced to do a partial audit of the Federal Reserve and make the results public.  Not a full audit, just a few of more egregious details.

And, (drum roll)….

The Federal Reserve, between 12/07 and 6/10 “loaned out” $16 trillion at 0% interest to banks, corporations, AND governments throughout the world.  More than our yearly GDP ($14.12 trillion).  More than our national debt ($14.5 trillion).  This money was created out of thin air, as the Federal Reserve does not actually have $16 trillion sitting around that needs to be put to some sort of work.  The reason that they did this was that the only other alternative was that big things in the economy of the world were going to start collapsing and threaten to pull everything down with it.  These are not stupid people.  Nor argueably evil although one could make a case for this with their particiaption in perpetuating such a system.  They did this because they are trying to keep things from crashing. 

What this has done is make the “Quantitative Easing” program and the unstimulating “Stimulus” program look like child’s play.  All of the money that currently exists in the world, all of the funding in all of the countries economies in the whole friggin’ world was about $67 trillion.  Chasing a fixed quantity of goods and services.  Now, shazam, all of the money in the world has magically suddenly become (67 plus 16) $83 trillion.  Which means that it has taken a hit in value over that time of (a decline of 16/83 or 0.192) almost 20%.  Way more than the little numbers that they had let us see that the QE1-2-3 were doing to us.   The Federal Reserve has levied a universal tax on any commodity that trades in dollars by making the dollars worth less,  and none get hit so hard as Americans, because the assets that dollars buy are effectively priced 20% higher.

And the reason for doing this is that they have a great fear that the whole shebang is going to collapse and that this will keep it going for now.  For a little while longer.  The problem is that last “for now” part.  Because there still is no end game.  There still is no solution that gets us out from under our own coming bill  (probably over $200 trillion).  The Federal Reserve fought tooth and nail to keep their efforts a secret, lest you lose confidence.  Hardly seems worth letting things implode for a measly $16 trillion when the real problem is more than 10 times bigger.

They do not want it widely known how close things are to collapse.  Still.  And Ben Bernanke, that 1600 SAT scholar, a nerd’s nerd and money wonk, admitted in an interview that he really does not have any good idea on how to prevent this collapse from happening.  Kind a makes Presbo’s little $5 trillion seem almost insignificant.  When Rome seems about to catch fire irregardless, making a little fiddle music  is maybe not a terrible choice.

Remember in the African Queen where they were tearing up the boat to keep it running for a little while longer at the end?  

How long can you tread water?

About drrik

3rd career and 2nd childhood. Spends spare time repairing old things. Aspires to burn more gasoline, gunpowder, and ink in pursuit of slowing down. Child of the 60s and aspiring student of history. No desire to see us repeat the failed social experiments that keep failing for lack of human beings that meet the left wing standards and have to be killed off. Did engineering long enough to realize that very little is new and the wheel does not need to be reinvented.
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2 Responses to Buying time

  1. pepperhawk says:

    I just threw up. Now I think I’ll lie down since we don’t have enough food stored for the crash. Must go grocery shopping soon.

  2. drrik says:

    Chin up. Most folks will be fine. The German people survived the collapse of the Weimar. And it was all over after just a few tight years. People continued, just not the same administration. I still don’t think it’s the last minute. And it still could be avoided. My intent was not to upset but rather that folks be a little more aware and work on preparations. Best I can figure on the outside, with current inclinations, things get sketchy somewhere around the end of the decade. Plenty of time for much more government fraud and shenanigans and malfeasance.
    Dan Mitchell had an interesting graph that showed us back to a balanced budget in under 10 years with just holding the rate of increasing spending to 2% increase a year. Not enough to stave of collapse, but still something to give you an idea of what is possible.
    We have enough energy to be fossil fuel dependent and energy independent for nearly a thousnad years. There is no shortage except that which is imposed on us. The free market will always let us get by and eventually thrive.
    Even if the syndicate manages to collapse what is left of the republic, we still have the original recipe and he can only hold the peices together with great amounts of energy. Texas or Alaska alone could be larger members of OPEC and they ain’t buying what he is selling.

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