the coming short squeeze
Coming Soon to a City Near You...
The latest news about the dead US economy should be a wake-up call to Americans. Since the 2008 meltdown, the Federal Reserve has pumped $5+ trillion into the system. Yet, the economy shrank 2.9% during the last quarter and is continuing to shrink.
The $5+ trillion kept the big banks afloat, but at the cost of a new recession. I’d call that a failed policy.
Now we read in Bloomberg that Germany has withdrawn its demand, made two years ago, for the physical return of $140 billion of its gold bullion stored in the New York banks. The Germans reportedly insist that they have total confidence in the integrity of the US to store their gold.
But is this believable?
According to former Assistant Treasury Secretary Paul Craig Roberts, the Germans were probably told that they will never see their gold again. They have put the best face on this outrageous rip-off, to fool the public and prevent a panic.
According to Roberts, the Fed confiscated Germany’s gold and sold it off to suppress the gold price, to make the debased US dollar appear stronger than it is. The Fed had already liquidated the gold in Fort Knox for the same dubious end.
There has been a political backlash in Germany. Three former Chancellors have sharply criticized Angela Merkel’s support of President Obama’s sanctions/demonization of Russia, which is not in Germany’s best interests. We know the NSA has monitored Merkel's phone for at least 10 years. Is the US blackmailing her -- to insure that she tows the line?
The likely result of the Fed’s massive criminal activity will be the greatest short-squeeze in history. When the Fed’s desperate manipulation of the gold price finally unravels, the almighty dollar will quickly resemble the German mark in the days of the Weimar Republic.
See what happens when private bankers run the country?
I'd post a picture of der gaffen-fuehrer doing you-know-what for Putin and PCR, but that would be impolite.
MHG, Germany is complicit in this or the EU would have ceased to exist 3 years ago. You claim "the Germans are smart". Not entirely true. They have a higher debt to gdp ratio than the US, while leaning heavily on Socialist government programs.
Germany is comfortable. They are the only thing holding the EU together, and profit immensely from trade surpluses with other EU countries. There it's no reason for then to rock the boat along as long as they keep jobs in Germany. The entire EU is now following the US lead in devaluing currency to keep cost of labor low in order to compete with China.
Unfortunately, all that does is widen the gap between the rich and the poor. They will continue to devalue until the massive lower class realizes what is happening, and revolutions result. That could take 100 years. In the meantime, we will get more Socialist policies, which strangle growth and innovation, dragging down civilization with it.
all ponzi schemes must eventually explode. believing anything banksters and economists say has been shown, historically, to be a fool's faith.
After the rip off of their gold, they undoubtedly have no trust for the US, which is now run by bankers with no scruples.
The Germans understand that Merkel's support for Obama is costing them jobs and productivity. They need Russian energy resources -- and Russia needs German technology.
The Germans will probably throw out Merkel (a US stooge) in the next election -- and go their own way. A more independent Germany will mean the end of NATO -- the end of US dominance of Europe. MHG
What makes a Ponzi scheme a Ponzi scheme is that it’s a giant fraud. People think they’re investing in postal stamps. Their money is actually being invested in nothing. In Social Security, conversely, it’s perfectly clear what is going on. Every year, Social Security’s actuaries release an insanely detailed report on the system’s finances, its balance of payments, the potential problems it could face, and so on. You can read their report here. In a Ponzi scheme, the finances are a secret, and that’s central to the enterprise. In Social Security, they are, as a matter of law, public.
Indeed, Social Security has a much more obvious financing structure than, well, almost anything else in the government. Consider how the Pentagon gets funded. It has no dedicated funding of its own. No one knows exactly how it will be paid for, or at what level, 20 years from now. Instead, every year, there’s a budget. Every year -- at least recently -- that budget calls for more spending than the government is taking in in taxes. So we just borrow the extra money.
Social Security, by contrast, has its own dedicated funding source. It is currently running surpluses, though it won’t be doing so for very much longer. Those surpluses are invested in U.S. Treasuries, which are widely considered the world’s safest investment. As I’ll explain in a moment, it needs adjustments to remain actuarially sound in the future. But compared to almost everything else in the federal government, its path to financial stability is clear.
The other characteristic of Ponzi schemes is that they tend to require huge increases in the number of participants in order to stay afloat. As the Social Security Administration explains, “to pay a 100% profit to the first 1,000 investors you need the money from 1,000 new investors. Now there are 2000 ‘investors’ in the scheme, and in the second round of payouts to pay the same return to these 2,000 investors in the next round, you need the money from 2,000 new investors--bringing the number of participants to 4,000. And to pay these 4,000, you will end up with 8,000 ‘investors,’ then 16,000--and so on.” This type of geometric explosion looks like a pyramid, which is why Ponzi schemes are often called “pyramid schemes.”
Social Security doesn’t look like a pyramid. Quite the opposite, actually. Its current funding shortfall is a product of the baby boomers retiring and birth rates declining. That means more beneficiaries and fewer workers than there were when, say, the boomers were working and their parents were retiring. So Social Security has a funding gap equal to 0.7 percent of GDP over the next 75 years. We could wipe that gap out by lifting the payroll tax cap (right now, payroll taxes only apply to the first $107,000 of income) or by adjusting benefits downwards. Once it’s done, however, it’s done. Stable. Again, quite unlike a Ponzi scheme.
That essential stability is, perhaps, the most obvious refutation of the Ponzi scheme argument. The Social Security Administration puts it well on its Web site. “The first modern social insurance program began in Germany in 1889 and has been in continuous operation for more than 100 years. The American Social Security system has been in continuous successful operation since 1935. Charles Ponzi’s scheme lasted barely 200 days.”
social security may not be a ponzi scheme per se, but the federal reserve certainly is.
oh, and what about that "lock box" thingey?
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