I can't get that out of my mind... The Obama administration is putting a middle class tax increase out into the media... no administration does anything this big by accident, and not unless their hand was forced.
The U.S. Treasury has a huge financing in the offing, and the US$ is falling almost every day, down over 10% against the big 6 since March of this year. No creditor nation in their right mind (I know, what creditor nation has BEEN in their right mind to get to this point) is going to buy U.S. Bonds paying 3.5%... especially when they keep falling in price by more than the interest rate. The U.S. MUST halt the decline in the US$, or the U.S. risks a default (I should say a technical default, becasue the Fed would HAVE to step in and monetize BIG TIME... and that would be that - no more US$ as reserve currency. Talk about inflation!)
All eyes gotta be on the US$.
Libertariananimal (at) gmail d0T com
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I stand corrected, "speak the truth" he will.
Peace
The next fight you all can have with Mish is regarding the last paragraph of today's Mish blog post, which says something like "when inflation does appear, it will be a lot less than people are thinking." Seems that the only thing Mish sees that is really important is the wholesale destruction of credit and the collapse of demand. Print dollars all you want. It isn't going to matter much.
Greg,
A few things. Peak Oil is hitting the MSM, at least in other nations, big time.
Check out this fascinating article, in analog text, from Martin Armstrong.
I was camping this weekend, so haven't had a chance to comment on your recent posts. All I can say is that I wish you were my neighbor, if/when I am at the homestead and tending to the gardens and animals. Alas, I will be in Minnesota, much to my wife's chagrin. The cold here doesn't bother me, but she doesn't keep her body heat that well... I tell her that it's because she's a vegetarian (though she eats fish and dairy). Regardless, I am more and more convinced that we will be forced to make a move to rural sustainability, unless I am able to leverage my technical skills and interests to make some kind of business work in the city. If I do that, it will be as bare bones as possible, with minimal overhead, no employees, and the attempt to fly under the radar of the insidious and money hungry youknowwhos.
I saw a headline last week: Maryland may shut down up to 1200 small businesses for not being able to pay sales taxes owed. What would you call that kind of insanity? How will that boost their tax revenues?
I tell you Greg, can I hire you to give my wife a talkin' to? She now believes that things are going south, but she is talking about moving to Hawaii to get a homestead going... I.e., she's trying to combine subsistence/homestead living with dreams of a tropical paradise. What can I do? Our family property is in the upper midwest, not Hawaii... but at least its good, fertile, well-watered land on a river, with a well, a forest, good neighbors, etc.
The political scene is surreal: I think the current health-care "system" is a joke. The insurance industry is corrupt, and is a monopoly (despite the fact that there seems to be competition). The only interesting things I see in the realm of health care are doctors who are cash only and therefore can charge a lot less, and health care coops that are run for the benefit of the enrolled.
The proposed reforms reform nothing. Our health care woes are largely philosophical: we see nothing wrong with spending vast sums to extend lives very little, and to do very little to improve the quality, as opposed quantity, of life. Technology provides diminishing returns at some point, and that point was long since reached in the medical realm. Descartes would be disappointed, but it doesn't look like immortality can be bought with high tech medicine, and I'm not sure that's something we'd want to happen anyway...
No, best to live a satisfying life in the mife of the soil, with family and friends, wine and women, wives and mistresses (be discreet), singing and dancing the whole way, songs both profane and sacred, and go out laughing.
I write this in a cubicle lit by florescent lights.
If anyone knows of a homesteader who needs a family of three willing to work hard, with a father who loves learning knew things, and who is skilled in electronics, boatbuilding, biology, gardening, French language and cooking, and who owns 2 guitars and the means and will to defend all his chattel, drop me a line.
I forgot to link to the article from Martin Armstrong:
http://economicedge.blogspot.com/2009/07/martin-armstrong-how-all-systems-can.html
How can the US halt the dollar decline? Raising taxes is probably one way, but that’ll kill any economic recovery. Remember these fools need to get reelected and you don’t increase taxes a year before the mid term elections!
I think the dollar’s faith comes down to China and Japan. Do these countries continue to buy treasuries or do they take their losses and move on? The world still needs the US to get healthy so they can sell us their products. I’m having a tough time trying to figure out what these countries are thinking since they have huge stakes in our success.
I’m taking it that the forex markets are very large and it would be foolish to believe there is manipulation going on. The treasury market on the other hand is controlled by our central bank cartels so the information from that isn’t too useful. If 10 yr notes only yield 3.6% then it's no surprise the dollar is taking it on the chin.
I heard a few times from Obama’s economic advisory team that it is in the US best interest to have a weaker currency so we can increase our exports and as an added bonus makes our debt more manageable. I dunno, but it seems there are too many “benefits” to slowly weaken our dollar than trying to support it.
I can't help thinking that there must be some kind of agreement between the debtor USA and banker China, perhaps coming out of recent meetings between the two. Its not in either party's interests to see the dollar fail (i.e. fall catastrophically). What might such support consist of?
No point in China buying more bonds - it has more than enough already and they don't offer any protection.
No, if I were the banker I'd look for collateral - I'd use all my spare dollars to buy into basic commodities and the companies that control them, like oil and food production companies, and US banks (so I could keep track of my money) and maybe even military companies, and I'd hold their shares. The dollar may fall but market sentiment would hold up.
Of course, if you started to do this, the stock markets would show a substantial rise! :-)
Donal:
Ever the keen observer...
Donal
That was the scariest, most plausable, outcome I have read about the situation...
imagine that on cnn, msnbc.....
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