Treasury

IMF poised to print billions of dollars in global quantitative easing

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This is of course not about preventing a depression, because the depression is already here. Quantitative easing is the ultimate instrument to loot the people. The dollar is about to be destroyed and it seems that some elitists want to further accelerate the process. Why? Because the people are waking up to what is really going on.

The International Monetary Fund is poised to embark on what analysts have described as “global quantitative easing” by printing billions of dollars worth of a global “super-currency” in an unprecedented new effort to address the economic crisis.

Alistair Darling and senior figures in the US Treasury have been encouraging the Fund to issue hundreds of billions of dollars worth of so-called Special Drawing Rights in the coming months as part of its campaign to prevent the recession from turning into a global depression.

Should the move, which is up for discussion by the summit of G20 finance ministers this weekend, be adopted, it will represent a global equivalent of the Bank of England’s plan to pump extra cash into the UK economy.

However, economists warned that the scheme could cause a major swell of inflation around the world as the newly-created money filters through the system. The idea has been suggested by a number of key figures, including billionaire investor George Soros and US Treasury adviser Ted Truman.

Read moreIMF poised to print billions of dollars in global quantitative easing

The Obama Deception

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See also: Ron Paul: Obama Foreign Policy Identical To Bush


1:51:21 – 12.03.2009
Source: Google Video

U.S. 30-Year Yields Reach Four-Month High as Auctions Increase

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March 14 (Bloomberg) — Treasury 30-year bond yields touched the highest in almost four months as the pace of debt sales by the government accelerated and stocks posted the biggest weekly gain since November, lessening the refuge appeal of U.S. debt.

Yields on the longest maturity government security rose as the Treasury sold $63 billion in securities this week, including $11 billion in bonds. Shorter-maturity debt was little changed as the cost of borrowing in dollars approached the highest level of the year as bank hoarded cash and governments struggled to thaw credit markets.

Read moreU.S. 30-Year Yields Reach Four-Month High as Auctions Increase

NIA Warns Massive Inflation Could Hit the U.S.

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FORT LEE, N.J., March 12 /PRNewswire-USNewswire/ — The National Inflation Association today released the following statement to its http://inflation.us members:

“The United States today is in a short-term deflationary phase caused by forced liquidations, de-leveraging, going out of business sales, and other temporary factors.

It is our belief that the monetary policies of the Federal Reserve and United States Treasury will soon put an end to this deflationary phase, and we will see massive inflation in the U.S. that could ultimately lead to Zimbabwe-style Hyperinflation.


Media Alert: Hyperinflation Is Big Risk for U.S. Economy in 2010 — But That Could Be Good News for Investors, Says Forex Expert, Wayne McDonell (msnbc):
PEACHTREE CITY, GA – Hyperinflation, the scenario in which prices skyrocket while the value of currency falls, could be the next in a series of risks to the U.S. economy — but it would create opportunities for traders, says a forex expert. It would give these traders the opportunity to profit by selling the U.S. Dollar (USD) and the Japanese Yen (JPY) — the two currencies most likely to be devalued.


Total funds allocated by the Federal Reserve and United States Treasury during the financial crisis have now reached $10.3 trillion. Although only $2.6 trillion or 25.5% of these funds have so far been spent, it is our belief that the Federal Reserve has been taking worthless assets onto its balance sheet. Not only is it possible that the whole $10.3 trillion will be spent, but this could be just the tip of the iceberg.

The United States currently has an $11 trillion national debt which it has no way of paying back. Sure, we have an annual GDP of $14 trillion, but most of this comes from consumption and not production.

See also:
– Glenn Beck: United States Debt Obligations Exceed World GDP
– Federal obligations exceed world GDP

Read moreNIA Warns Massive Inflation Could Hit the U.S.

Bill Seeks to Let FDIC Borrow up to $500 Billion

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WASHINGTON — Senate Banking Committee Chairman Christopher Dodd is moving to allow the Federal Deposit Insurance Corp. to temporarily borrow as much as $500 billion from the Treasury Department.

The Connecticut Democrat’s effort — which comes in response to urging from FDIC Chairman Sheila Bair, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner — would give the FDIC access to more money to rebuild its fund that insures consumers’ deposits, which have been hard hit by a string of bank failures.

Last week, the FDIC proposed raising fees on banks in order to build up its deposit insurance fund, which had just $19 billion at the end of 2008. That idea provoked protests from banks, which said such a burden would worsen their already shaken condition. The Dodd bill, if it becomes law, would represent an alternative source of funding.

Mr. Dodd’s bill could also give the FDIC more firepower to help address “systemic risks” in the economy, potentially creating another source of bailout funds in addition to the $700 billion already appropriated by Congress.

Read moreBill Seeks to Let FDIC Borrow up to $500 Billion

Roubini tells Geithner to nationalise US banks

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Roubini is definitely not the only one that has forecasted the crisis and many others offered better solutions, but the government ignored them, because their solutions have been quite the opposite of the catastrophic policies favored by the government . Soon it will not matter anymore what the government and the Fed are doing, because it is too late. So far the government and the Fed have turned a recession, that would have healed the economy, into the Greatest Depression.

Tim Geithner must nationalise some of America’s biggest banks and take the total toll of the US bail-out to around $2 trillion, according to one of the world’s most prominent economists.

Nouriel Roubini – the man feted with having foreseen the financial crisis before almost any of his peers – has warned that the US Treasury Secretary must go significantly further than his detail-light bail-out plan delivered last week, and argues that the Obama administration should move swiftly to take public ownership of those major US banks which are failing.

Professor Roubini, who worked with Mr Geithner in the Clinton administration, told The Daily Telegraph: “Many US banks are insolvent, even the major ones.” While nationalisation is “a politically- charged decision” which needs to handled carefully, he said it needs to take place “sooner rather than later” for the sake of the wider economy.

Professor Roubini calculated that, on top of the existing $700bn (£491bn) of American taxpayers’ money allocated to solving the banking crisis, Mr Geithner may need to ask the US Congress for between $1,000bn and $1,250bn in extra funds. “Sooner rather than later, they’ll need more money,” he added.

Prof Roubini, professor of economics and international business at NYU Stern, New York University’s business school, is highly critical of Mr Geithner’s bail-out plan, which he unveiled to much market chagrin last Tuesday.

Read moreRoubini tells Geithner to nationalise US banks

Federal obligations exceed world GDP

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Must-read!

Does $65.5 trillion terrify anyone yet?

As the Obama administration pushes through Congress its $800 billion deficit-spending economic stimulus plan, the American public is largely unaware that the true deficit of the federal government already is measured in trillions of dollars, and in fact its $65.5 trillion in total obligations exceeds the gross domestic product of the world.

The total U.S. obligations, including Social Security and Medicare benefits to be paid in the future, effectively have placed the U.S. government in bankruptcy, even before new continuing social welfare obligation embedded in the massive spending plan are taken into account.

The real 2008 federal budget deficit was $5.1 trillion, not the $455 billion previously reported by the Congressional Budget Office, according to the “2008 Financial Report of the United States Government” as released by the U.S. Department of Treasury.

The difference between the $455 billion “official” budget deficit numbers and the $5.1 trillion budget deficit cited by “2008 Financial Report of the United States Government” is that the official budget deficit is calculated on a cash basis, where all tax receipts, including Social Security tax receipts, are used to pay government liabilities as they occur.

But the numbers in the 2008 report are calculated on a GAAP basis (“Generally Accepted Accounting Practices”) that include year-for-year changes in the net present value of unfunded liabilities in social insurance programs such as Social Security and Medicare.

Under cash accounting, the government makes no provision for future Social Security and Medicare benefits in the year in which those benefits accrue.

“As bad as 2008 was, the $455 billion budget deficit on a cash basis and the $5.1 trillion federal budget deficit on a GAAP accounting basis does not reflect any significant money [from] the financial bailout or Troubled Asset Relief Program, or TARP, which was approved after the close of the fiscal year,” economist John Williams, who publishes the Internet website Shadow Government Statistics, told WND.

Find out what’s behind the chaos at the White House, in the No. 1 best-seller “Obama Nation”

“The Congressional Budget Office estimated the fiscal year 2009 budget deficit as being $1.2 trillion on a cash basis and that was before taking into consideration the full costs of the war in Iraq and Afghanistan, before the cost of the Obama nearly $800 billion economic stimulus plan, or the cost of the second $350 billion in TARP funds, as well as all current bailouts being contemplated by the U.S. Treasury and Federal Reserve,” he said.

“The federal government’s deficit is hemorrhaging at a pace which threatens the viability of the financial system,” Williams added. “The popularly reported 2009 [deficit] will clearly exceed $2 trillion on a cash basis and that full amount has to be funded by Treasury borrowing.

“It’s not likely this will happen without the Federal Reserve acting as lender of last resort for the Treasury by buying Treasury debt and monetizing the debt,” he said.

“Monetizing the debt” is a term used to signify that the Federal Reserve will be required simply to print cash to meet the Treasury debt obligations, acting in this capacity only because the Treasury cannot sell the huge of amount debt elsewhere.

The Treasury has been largely dependent upon foreign buyers, principally China and Japan and other major holders of U.S. dollar foreign exchange reserves, including OPEC buyers purchasing U.S. debt through London.

“The appetite of foreign buyers to purchase continued trillions of U.S. debt has become more questionable as the world has witnessed the rapid deterioration of the U.S. fiscal condition in the current financial crisis,” Williams noted.

“Truthfully,” Williams pointed out, “there is no Social Security ‘lock-box.’ There are no funds held in reserve today for Social Security and Medicare obligations that are earned each year. It’s only a matter of time until the public realizes that the government is truly bankrupt and no taxes are being held in reserve to pay in the future the Social Security and Medicare benefits taxpayers are earning today.”

Calculations from the “2008 Financial Report of the United States Government” also show that the GAAP negative net worth of the federal government has increased to $59.3 trillion while the total federal obligations under GAAP accounting now total $65.5 trillion.

The $65.5 trillion total federal obligations under GAAP accounting not only now exceed four times the U.S. gross domestic product, or GDP, the $65.5 trillion deficit exceeds total world GDP.

“In the seven years of GAAP reporting, we have seen an annual average deficit in excess of $4 trillion, which could not be possibly covered by any form of taxation,” Williams argued.

“Shy of the government severely slashing social welfare programs, federal deficits of this magnitude are beyond any hope of containment, government or otherwise,” he said.

“Put simply, there is no way the government can possibly pay for the level of social welfare benefits the federal government has promised unless the government simply prints cash and debases the currency, which the government will increasingly be doing this year,” Williams said, explaining in more detail why he feels the government is now in the process of monetizing the federal debt.

“Social Security and Medicare must be shown as liabilities on the federal balance sheet in the year they accrue according to GAAP accounting,” Williams argues. “To do otherwise is irresponsible, nothing more than an attempt to hide the painful truth from the American public. The public has a right to know just how bad off the federal government budget deficit situation really is, especially since the situation is rapidly spinning out of control.

“The federal government is bankrupt,” Williams told WND. “In a post-Enron world, if the federal government were a corporation such as General Motors, the president and senior Treasury officers would be in federal penitentiary.”

Posted: February 13, 2009
By Jerome R. Corsi

Source: WorldNetDaily

Paul Craig Roberts: The U.S. economy is imploding; Budget deficit cannot be financed

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Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan’s first term. He was Associate Editor of the Wall Street Journal. He has held numerous academic appointments, including the William E. Simon Chair, Center for Strategic and International Studies, Georgetown University, and Senior Research Fellow, Hoover Institution, Stanford University.


Added: 8. Februar 2009
Source: YouTube

Flashback:

Asia Needs Deal to Prevent Panic Selling of U.S. Debt, Yu Says

Sept. 25 (Bloomberg) — Japan, China and other holders of U.S. government debt must quickly reach an agreement to prevent panic sales leading to a global financial collapse, said Yu Yongding, a former adviser to the Chinese central bank.

“We are in the same boat, we must cooperate,” Yu said in an interview in Beijing on Sept. 23. “If there’s no selling in a panicked way, then China willingly can continue to provide our financial support by continuing to hold U.S. assets.”

An agreement is needed so that no nation rushes to sell, “causing a collapse,” Yu said. Japan is the biggest owner of U.S. Treasury bills, holding $593 billion, and China is second with $519 billion. Asian countries together hold half of the $2.67 trillion total held by foreign nations.

Read morePaul Craig Roberts: The U.S. economy is imploding; Budget deficit cannot be financed

U.S. Taxpayers Risk $9.7 Trillion on Bailout Programs

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Feb. 9 (Bloomberg) — The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages.

The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged up to $5.7 trillion more. The Senate is to vote this week on an economic-stimulus measure of at least $780 billion. It would need to be reconciled with an $819 billion plan the House approved last month.

Only the stimulus bill to be approved this week, the $700 billion Troubled Asset Relief Program passed four months ago and $168 billion in tax cuts and rebates enacted in 2008 have been voted on by lawmakers. The remaining $8 trillion is in lending programs and guarantees, almost all under the Fed and FDIC. Recipients’ names have not been disclosed.

“We’ve seen money go out the back door of this government unlike any time in the history of our country,” Senator Byron Dorgan, a North Dakota Democrat, said on the Senate floor Feb. 3. “Nobody knows what went out of the Federal Reserve Board, to whom and for what purpose. How much from the FDIC? How much from TARP? When? Why?”

Related article:
Federal Reserve Refuses to Disclose Recipients of $2 Trillion (Bloomberg)

Financial Rescue

The pledges, amounting to almost two-thirds of the value of everything produced in the U.S. last year, are intended to rescue the financial system after the credit markets seized up about 18 months ago. The promises are composed of about $1 trillion in stimulus packages, around $3 trillion in lending and spending and $5.7 trillion in agreements to provide aid. The total already tapped has decreased about 1 percent since November, mostly because foreign central banks are using fewer dollars in currency-exchange agreements called swaps.

Federal Reserve lending to banks peaked at a record $2.3 trillion in December, dropping to $1.83 trillion by last week. The Fed balance sheet is still more than double the $880 billion it was in the week before Sept. 17 when it agreed to accept lower-quality collateral.

Read moreU.S. Taxpayers Risk $9.7 Trillion on Bailout Programs

Bond market calls Fed’s bluff as global economy falls apart

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Oh Mr. Ambrose Evans-Pritchard, look what happened to the money supply before you talk about deflation, please.
The bond bubble is about to burst. No one plans to hold Treasuries for 10 to 30 years for nothing (or less than nothing) in return. Those investors that have been jumping into Treasuries are short-term speculators and they are not planning to catch a falling knife by holding onto them.

Don’t miss: Peter Schiff: Stimulus Bill Will Lead to “Unmitigated Disaster”

Global bond markets are calling the bluff of the US Federal Reserve.

The yield on 10-year US Treasury bonds – the world’s benchmark cost of capital – has jumped from 2pc to 3pc since Christmas despite efforts to talk the rate down.

This level will asphyxiate the US economy if allowed to persist, as Fed chair Ben Bernanke must know. The US is already in deflation. Core prices – stripping out energy – fell at an annual rate of 2pc in the fourth quarter. Wages are following. IBM, Chrysler, General Motors, and YRC, have all begun to cut pay.

The “real” cost of capital is rising as the slump deepens. This is textbook debt deflation. It was not supposed to happen. The Bernanke doctrine assumes that the Fed can bring down the whole structure of interest costs, first by slashing the Fed Funds rate to zero, and then by making a “credible threat” to buy Treasuries outright with printed money.

Mr Bernanke has been repeating this threat since early December. But talk is cheap. As the Fed hesitates, real yields climb ever higher. Plainly, the markets do not regard Fed rhetoric as “credible” at all.

Who can blame bond vigilantes for going on strike? Nobody wants to be left holding the bag if and when the global monetary blitz succeeds in stoking inflation. Governments are borrowing frantically to fund their bail-outs and cover a collapse in tax revenue. The US Treasury alone needs to raise $2 trillion in 2009.

Where is the money to come from? China, the Pacific tigers and the commodity powers are no longer amassing foreign reserves ($7.6 trillion). Their exports have collapsed. Instead of buying a trillion dollars of extra bonds each year, they have become net sellers. In aggregate, they dumped $190bn over the last fifteen weeks.

Read moreBond market calls Fed’s bluff as global economy falls apart

Taxpayer to insure Treasury’s £400bn toxic loan scheme

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The Treasury’s scheme to ring-fence toxic loans made by British banks is likely to involve more than £400bn of assets being insured by the taxpayer, The Sunday Telegraph has learnt.


Submissions from banks including RBS suggest the total value of assets that will be included in the toxic loans scheme will be well over £200bn Photo: Getty

Although the details of the scheme announced last month are still being finalised, submissions from Royal Bank of Scotland and discussions with Lloyds Banking Group suggest that the total value of assets that will ultimately be included in the scheme will be significantly larger than the original estimate of £200bn.

Read moreTaxpayer to insure Treasury’s £400bn toxic loan scheme

Fed Calls Consultants to Treat AIG, Stricken Markets

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Feb. 6 (Bloomberg) — Every Sunday night, New York bankruptcy lawyer Marshall Huebner spends a 13-hour shift on call as an emergency medical technician. His day job involves work on another sort of rescue: The government’s $152.5 billion bailout of American International Group Inc.

“There’s a stronger parallel than you would think,” Huebner, a partner at Davis Polk & Wardwell, said in an interview. Helping resuscitate the insurance giant takes “a lot of the same qualities that I think stand you in very good stead with emergency medicine — the ability to remain calm in almost any situation, and the ability to assess, triage and treat, even in a crisis.”

Huebner, 41, is part of an army of outside lawyers and consultants the Federal Reserve has called upon to help fight the biggest financial crisis in 70 years. While the central bank won’t disclose how much work it has outsourced, Fed watchers say the institution is relying on Wall Street experts to an unprecedented extent, seeking help from insiders in the very industries where the turmoil originated.

“I don’t think the Fed has seen anything like this,” former New York Fed general counsel and AIG executive Ernest Patrikis said in an interview. “AIG just got so complex in terms of private corporate matters that you just need that outside expertise.” Patrikis is now with the law firm of White & Case in New York.

In addition to hiring consultants, the Fed and the Treasury have retained Wall Street firms to help manage more than $2 trillion in bailout and emergency-loan programs.

Pimco, JPMorgan

Pacific Investment Management Co. runs a $259 billion program to backstop the commercial-paper market. BlackRock Inc., Goldman Sachs Asset Management, Pimco and Wellington Management Co. are managing the Fed’s purchases of up to $500 billion of mortgage-backed securities. JPMorgan Chase & Co. oversees a separate program under which the Fed may lend up to $540 billion to support money market mutual funds.

Morgan Stanley is also advising the Fed on the AIG rescue.

Read moreFed Calls Consultants to Treat AIG, Stricken Markets

Treasury rethink hits defence budget

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Britain’s deepening financial crisis has prompted the Treasury to pull back from funding any unexpected costs from fighting in Iraq and Afghanistan, putting further pressure on the core defence equipment budget.

Gordon Brown, as chancellor, set up the Treasury reserve to pay for any equipment urgently needed for operations and half of any unforeseen costs. But Treasury officials have recently told the Ministry of Defence to cover the entire cost of any overruns itself.

The Treasury sees the move as increasing the incentive for the MoD accurately to estimate the costs of operations. But it was attacked as a cost-cutting measure that would put further pressure on the strained military budget and have a negative impact on troops in the field.

Read moreTreasury rethink hits defence budget

Glenn Beck: Economic Apocalypse

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Glenn Beck on the coming devaluation of the dollar.

“We have pumped all of this money in (see chart) and devalued our money.”

“How is it not going to be worthless?”

“This has never ever been done by anybody ever before.”

“This is real trouble, not in a thousand years, perhaps the next year.”


Added: February 02, 2009
Source: YouTube

Treasury Real Yields at 16-Month High as Deflation Bets Die

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“Investors in 30-year bonds lost 14.6 percent last month, according to Merrill Lynch & Co. index data. January was the worst month for government securities since Merrill Lynch began tracking returns on the securities in 1988.”

The bond bubble is bursting (this year).

The dollar will be destroyed through hyperinflation and the “Greatest Depression” is about to happen (this year).

Feb. 2 (Bloomberg) — For the first time since 2007, Treasury investors are betting that inflation will accelerate.

The yield on 10-year notes exceeds the consumer price index by 2.74 percentage points, the most since December 2006. The gap between two- and 10-year rates widened at the fastest pace in a year last month as traders demanded more compensation for longer-term debt. Treasury Inflation Protected Securities that signaled falling prices as recently as Nov. 20 show they will increase in the U.S. this year.

Deflation was the growing concern for investors in 2008 as government bond yields fell to historic lows in December, the Reuters/Jefferies CRB Index of commodities tumbled 53 percent since July and home prices plunged 18 percent amid a deepening recession.

Now, the bond market is saying Federal Reserve interest rates at zero percent, President Barack Obama’s $819 billion planned stimulus package and $8.5 trillion of U.S. initiatives to revive credit markets will reignite inflation.

“When the Fed gets finished here they will have an inflation nightmare on their hands,” said Mark MacQueen, who helps oversee $7 billion as co-founder of Sage Advisor Services Ltd. in Austin, Texas. “There is a lot of downside in conservative government bonds.”

MacQueen is selling 30-year Treasuries, which are more sensitive to inflation expectations than shorter-maturity debt.

Read moreTreasury Real Yields at 16-Month High as Deflation Bets Die

TREASURIES-Bonds set for worst month in 5 yrs as GDP falls

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The bond bubble is about to burst (this year).

This is the ultimate bubble.

Are you ready for the “Greatest Depression”?

* Anxiety about ballooning supply cap bond’s gains

* Treasuries on track for worst month in nearly 5 years

* Long-dated debt set for weakest month in about 16 years

NEW YORK, Jan 30 (Reuters) – The U.S. Treasury bond market crashed back to earth in January after a high-flying 2008, as fears over the government’s mammoth borrowing needs overshadowed evidence of further economic contraction.

U.S. government securities, despite their price gains on Friday, were on track for their worst month since April 2004, dragged down by a dramatic sell-off in long-dated Treasuries.

“It’s been an ugly month,” said Ralph Manigat, senior bond strategist with 4Cast Ltd. in New York.

On a month-to-date basis, Barclays Capital’s Treasury total return index was down 2.80 percent through Thursday. In 2008, it rose 13.74 percent, the largest annual gain since 1995.

Read moreTREASURIES-Bonds set for worst month in 5 yrs as GDP falls

Another day, yet another bail-out: £50bn to rescue ailing firms

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Quantitative easing: The Bank of England will “create money out of thin air” and inject it into the financial system, this will “increase the money supply” (= “Inflation”). Inflation is a hidden tax.

“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
– John Maynard Keynes

The government and the Bank of England are robbing the people of their wealth.


Economic jitters: Alistair Darling has set out the details of a £50billion scheme to head off a slump

The Bank of England was put on standby to print more money last night amid growing signs of Labour jitters about the Prime Minister’s strategy for escaping a political wipeout.

Alistair Darling set out the details of a radical £50billion scheme to head off a slump by injecting hard cash into the stricken economy.

The move represents a major step towards so-called quantitative easing, whereby the Government creates more money to ease the shortage of credit in the economy.

But it also takes the Bank a step closer to losing the independence it won from Mr Brown more than a decade ago, as ministers prepare to seize control of monetary policy.

The Chancellor wrote to Bank Governor Mervyn King to confirm that the £50billion fund will be used to effectively purchase companies’ debts and even give them extra cash.

Read moreAnother day, yet another bail-out: £50bn to rescue ailing firms

Is It Time to Bail Out of the US?

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Paul Craig Roberts [email him] was Assistant Secretary of the Treasury during President Reagan’s first term. He was Associate Editor of the Wall Street Journal. He has held numerous academic appointments, including the William E. Simon Chair, Center for Strategic and International Studies, Georgetown University, and Senior Research Fellow, Hoover Institution, Stanford University.

By Paul Craig Roberts

California State Controller John Chiang announced on January 26 that California’s bills exceed its tax revenues and credit line and that the state is going to print its own money known as IOUs. The template is already designed.

Instead of receiving their state tax refunds in dollars, California residents will receive IOUs. Student aid and payments to disabled and needy will also come in the form of IOUs. California is negotiating with banks to get them to accept the IOUs as deposits.

Don’t miss:
– Paul Craig Roberts: Another real estate crisis is about to hit
– Paul Craig Roberts: Our Collapsing Economy
– Paul Craig Roberts On The U.S. Leadership: “They Are Criminals” – The Potential Here Is Far Worse Than The Great Depression
– Paul Craig Roberts: The American Puppet State

California is often identified as the world’s eighth largest economy, and it is broke.

A person might think that California’s plight would introduce some realism into Washington, DC, but it has not. President Obama is taking steps to intensify the war in Afghanistan and, perhaps, to expand it to Pakistan.

Obama has retained the Republican warmongers in the Pentagon, and the US continues to illegally bomb Pakistan and to murder its civilians. At the World Economic Forum at Davos this week, Pakistan’s prime minister, Y. R. Gilani, said that the American attacks on Pakistan are counterproductive and done without Pakistan’s permission. In an interview with CNN, Gilani said: “I want to put on record that we do not have any agreement between the government of the United States and the government of Pakistan.”

How long before Washington will be printing money?

Read moreIs It Time to Bail Out of the US?

Fannie, Freddie may tap U.S. Treasury for $51 bln

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The headquarters of mortgage lender Fannie Mae is shown in Washington September 8, 2008. REUTERS

NEW YORK (Reuters) – Fannie Mae and Freddie Mac could tap the government for up to $51 billion in coming weeks, exceeding some Wall Street estimates, so they can continue to operate as the largest providers of funding for U.S. residential mortgages.

The storm of rising delinquencies and falling securities values that led to the government’s seizure of the companies in September accelerated in the last quarter, requiring Fannie Mae and Freddie Mac to seek more of the stop-gap measures organized by the U.S. Treasury and their regulator. Analysts predicted more capital needs from Treasury through 2009.

Fresh losses in the most recent quarter will probably be the harshest on Freddie Mac, which holds a larger portfolio of risky mortgage securities, including subprime bonds. The McLean, Virginia-based company said on Friday it may have to seek $30 billion to $35 billion in capital from the Treasury in the form of senior preferred stock.

Washington-based Fannie Mae said late on Monday that the Federal Housing Finance Agency, the regulator, may request $11 billion to $16 billion, based on estimates for fourth-quarter results.

Read moreFannie, Freddie may tap U.S. Treasury for $51 bln

Bernanke Risks ‘Very Unstable’ Market as He Weighs Buying Bonds

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“Tony Crescenzi, chief bond-market strategist at Miller Tabak & Co. in New York, says foreign investors might also get spooked if they conclude that the Fed is monetizing the government’s debt — in effect, printing money — by buying Treasuries.”

“Bernanke himself, in his 2003 speech, said monetization of the debt risked faster inflation — something bond investors, foreign or domestic, wouldn’t like.”

Because the U.S. government can’t raise taxes much higher it has to finance its debt and all those ‘not working’ bailouts and stimulus packages by issuing an enormous amount of Treasuries. This is nothing more than a promise of a tax hike in the future, because that debt has to be paid back one day plus interest.

Countries like China, Japan and Saudi Arabia have to believe in the solvency of the U.S. to buy those Treasuries, but since the U.S. Treasury will issue record amounts of treasuries in the coming years the trust that the U.S. might be able to pay its debt back wanes.

Since those countries are now also in serious trouble themselves their appetite for U.S. Treasuries will decline dramatically.

If the Fed is now buying those Treasuries by ‘printing money’ – which increases the money supply = the definition for inflation – then it will create massive inflation.

Inflation is really nothing more than a hidden tax:

“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. … This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”
– Alan Greenspan

“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
– John Maynard Keynes

That is why the governments of the world love Keynesianism – Obamanomics stimulus packages – so much.

The Fed calls this monetary policy ‘quantitative easing’ (= creating money out of thin air).

It should be called stealing or high treason instead.

The Fed and the government will create hyperinflation and destroy the dollar.

The Greatest Depression is coming.

– Gerald Celente: The Collapse of 2009; The Greatest Depression
– Peter Schiff: The World Won’t Buy Unlimited U.S. Debt
– Jim Rogers: Obama administration run by people who caused the latest financial problems
– Paul Craig Roberts On The U.S. Leadership: “They Are Criminals” – The Potential Here Is Far Worse Than The Great Depression
– Ron Paul on Glenn Beck: Destruction of the dollar
– Peter Schiff: We are the United States of Madoff
– Peter Schiff: We are on the verge of another major crisis
– Peter Schiff: US Dollar is on the verge of collapse; This is hyperinflation; This is Zimbabwe

Source: Bloomberg


Ben S. Bernanke, chairman of the U.S. Federal Reserve, gestures to a staff member following an open board of meeting on credit-card practices in Washington on Dec. 18, 2008. Photographer: Brendan Smialowski/Bloomberg News

Jan. 26 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke and his colleagues may try once again to cure the aftermath of a bubble in one kind of asset by overheating the market for another.

Fed policy makers meeting tomorrow and the day after are exploring the purchase of longer-dated Treasury securities in an effort to push up their price and bring down their yield. Behind the potential move: a desire to reduce long-term borrowing costs at a time when the Fed can’t lower short-term interest rates any further because they are effectively at zero.

The risk is that central bankers will end up distorting the Treasury market, triggering wild swings in prices — and long-term interest rates — as investors react to what they say and do. “It sets forth a speculative dynamic that is very unstable,” says William Poole, former president of the Federal Reserve Bank of St. Louis and now a senior fellow at the Cato Institute in Washington.

The Treasury market has “some bubble characteristics,” Bill Gross, the manager of Newport Beach, California-based Pacific Investment Management Co.’s $132 billion Total Return Fund, said in December on Bloomberg Television. He echoed that sentiment last week.

Read moreBernanke Risks ‘Very Unstable’ Market as He Weighs Buying Bonds

Lending drops at big U.S. banks – WSJ

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Jan 26 (Reuters) – Lending at many of the largest U.S. banks fell in recent months, the Wall Street Journal said, citing an analysis of banks that recently announced their quarterly results.

Ten of the 13 big beneficiaries of the U.S. Treasury Department’s Troubled Asset Relief Program (TARP), saw their outstanding loan balances decline by a total of about $46 billion, or 1.4 percent, between the third and fourth quarters of 2008, according to the paper.

Those 13 banks have collected the lion’s share of the roughly $200 billion the government has doled out since TARP was launched last October to stabilize financial institutions, the paper said.

Read moreLending drops at big U.S. banks – WSJ

Peter Schiff: The World Won’t Buy Unlimited U.S. Debt

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We’re asking others to sacrifice for our ‘stimulus.’

Barack Obama has spoken often of sacrifice. And as recently as a week ago, he said that to stave off the deepening recession Americans should be prepared to face “trillion dollar deficits for years to come.”

But apart from a stirring call for volunteerism in his inaugural address, the only specific sacrifices the president has outlined thus far include lower taxes, millions of federally funded jobs, expanded corporate bailouts, and direct stimulus checks to consumers. Could this be described as sacrificial?

What he might have said was that the nations funding the majority of America’s public debt — most notably the Chinese, Japanese and the Saudis — need to be prepared to sacrifice. They have to fund America’s annual trillion-dollar deficits for the foreseeable future. These creditor nations, who already own trillions of dollars of U.S. government debt, are the only entities capable of underwriting the spending that Mr. Obama envisions and that U.S. citizens demand.

These nations, in other words, must never use the money to buy other assets or fund domestic spending initiatives for their own people. When the old Treasury bills mature, they can do nothing with the money except buy new ones. To do otherwise would implode the market for U.S. Treasurys (sending U.S. interest rates much higher) and start a run on the dollar. (If foreign central banks become net sellers of Treasurys, the demand for dollars needed to buy them would plummet.)

Don’t miss: Jim Rogers: I Would Sell All Government Bonds

In sum, our creditors must give up all hope of accessing the principal, and may be compensated only by the paltry 2%-3% yield our bonds currently deliver.

Read morePeter Schiff: The World Won’t Buy Unlimited U.S. Debt