"If investors chose not to purchase a sufficient volume of new Treasury securities, the United States would be required to pay the principal on maturing debt, and not merely the interest, out of available cash. Yet the Treasury would be unable to make these principal payments without the continued confidence of market participants willing to buy new Treasury securities."
we need new suckers to pay off the old "investors," roger that.
bernie m. would be proud.
Essay, While I agree with your basic idea about the Ponzi scheme the counter question is "whose debt will investors buy if not the USA?" Whose debt is more secure?
If we have a panic then the whole world will have one. That simple idea may be what's keeping the stock market up. Ultimately, we are still the largest, most trusted nation in the world. Where will investors run to if our markets tank? I don't think there is anyplace with a big enough economy and stock market to handle all the cash out there. It does not look like the Euro will be it.
One disclaimer - I don't know much about Chinese currencies. Would it be possible for them to overtake the dollar as a safe haven for investors? God forbid that I have lived long enough for China's credit to be worth more than the "full faith and credit of the United States of America." I don't doubt that is their goal, but I don't believe they are there yet.
quantitative easing is exactly what has kept the markets propped up, and i wouldn't be surprised if the chinese can keep their scheme going longer than we can keep ours at this point. no sane investor would want to own the debt of a politically paralyzed country being strangled by the cronyism of "too big to fail" with the terrible economic picture that implies, and oh they're intentionally devaluing their currency to boot? peep this, http://www.zerohedge.com/article/fed-halts-sales-toxic-aig-sludge-u...
"The Federal Reserve Bank of New York is halting its sales of mortgage bonds acquired in the rescue of American International Group Inc. "Given prevailing market conditions” for residential mortgage-backed securities, “we do not anticipate any sales of bonds in the near term or until such time as the New York Fed deems it will achieve value for the public," Jack Gutt, a New York Fed spokesman said in an e-mail." Uh, what prevailing market conditions: a Nasdaq which has ripped over 100 points in one week (granted on no volume and on unprecedented market manipulation but so what). Regardless, this is a huge slap in the face for the Fed, which has just proven that even in a surging market it can not unwind an amount from its book that is less than 1% of its total asset holdings without actually crashing the market."
german debt? swiss debt? aussie, canadian...? all probably safer and more profitable, imo. i know i'd sleep better with those than u.s. treasuries, for sure.
we're doing it man, there's no other real option. inflate or die. we have to devalue the debt while keeping interest rates low. we can't raise rates to get out in front of inflation because we blow up our balance sheet. inflation's been our primary export for a while now.
also, i think this debt ceiling thing is being demagogued by both sides but i am far more sympathetic to the conservatives. we can service the debt and keep essential functions going just on the money coming into the treasury every month, but also bear in mind that the libbies will be the ones who decide what gets paid and what doesn't.
Through another blog I received the attachment regarding leases and how to answer FAQ from the opposition...the doc is without source or title, author etc....I thought I would put it under Rumors but I have contributed to the economics threads so I thought I would put it under Ponzi's
The doc is apparently from Ohio/Southern Ohio and related to their shale - Utica Shale/Formation
Since GoHaynes...has more leasors and real people than out here I wanted your guys' thoughts on it. I don't reference gasland or split estates...I usually go for "There will be blood" since it was based on our early Californian days of wildcaters.