TEOTWAWKIAIFF

I was reading Zero Hedge yesterday when I had an epiphany of sorts. I’ve been trying to figure out why the Fed is pursuing their current policy, when it all snapped into place. Or, most of it, as the modern global economy makes about as much sense to any one person as the quantum soup of an atom.

Right now, the Fed is following a policy of steady inflation. The official number is ~2%, but the real number is ~5%.  If they maintain this policy, with small bursts of Quantitative Easing, like Operation: Twist that is not picked up by the MSM radar, then we will sit in this Japanese-style stagflation for years. Tax revenue will go down, and government spending will go up, resulting in larger and larger deficits until the whole thing implodes. These growing deficits piss off investors in government bonds – the only thing keeping our government liquid, because the near-zero returns are actually negative interest rates. As foreign investor-states (China, Japan, etc.) see their long-term profits vanish, they will counter the ZIRP (Zero Interest Rate Policy) with currency and/or trade wars. China fired the first warning shot loud and clear when the unpinned their currency from ours.

The other option the Fed has is a quick, hyperinflationary demise. Big QE, leads to big spending and higher tax revenues. Inflation will go up- way up – to 6-8% officially, but unofficially it will reach 15% or more. This pisses off our foreign investor-states by giving their current bonds a nasty inflationary haircut. At some point they will move their wealth into other vehicles that have more financial stability and the US dollar plummets in value vs. other currencies. Once the true inflation rate hits Joe Sixpack, and his welfare benefits go up, but the cost of all his food and beer go up three times faster, we will have a currency crisis. Bank runs and holidays, hoarding, black markets, etc. As confidence wanes, people will want more and more dollars for the same goods and services. Welcome to the Wiemar Republic.

The unspoken option is to take the medicine now, and to raise interest rates. The housing market will collapse, along with many, many other sectors of our economy in a semi-controlled crash. It will suck, but if we are kept informed we might have a country to call our own afterwards. Iceland did it, we can too. The question is who want’s to go down in the history books as the President or Congress that blew it all up?

Last night I managed to get away with my two best hombres for  a night out on the town. Much alcohol was consumed, and I dare say abused. It’s all good, despite the more puritanical listeners shaking their heads, we had a good night out and let off a lot of built up stress.

After coming home my buddies safely crashed on the couch and spare bed, I started reading the news of the day. I didn’t consume as much, so i was nursing a refreshing cocktail as I reviewed work e-mail along with the news. A word to the wise is NOT to post  to your blog, nor respond to e-mail when in such a state. It is much safer, and less of a CLM (Career Limiting Maneuver) to just flag which e-mails need a response requiring more brainpower than an affirmative, negative or message received for processing when sober.

That’s when I discovered S&P had downgraded us to AA+ with outlook negative, for an added “fuck you” to the ruling class of this country. The same ruling class that has pillaged the retirement accounts of everyone under the age of 55 — who have zero chance of getting a payback on the social security they paid into for umpteen years. I laughed myself to the point I might have wet my pants. (I have plausible deniability as I DID spill my iced-tea / lemonade /  Firefly sweet tea vodka beverage while in a fit of laughter.)  The images that come to mind are the Hindenburg, the Challenger, Titanic, Tacoma bridge etc. How long before China says: “Fuck you, America, I’m going to dump my bonds for whatever I can get, because anything is more than nothing.”?

Meanwhile we have at least a half-dozen kids lemonade stands being closed down because they don’t have a permit. The militarization of our police has turned our local police departments into armed thugs to be feared as much as the gangs our idiotic drug policies empower. Corporations gain tax breaks while cutting American jobs and posting record earnings. We build turtle tunnels and roads to nowhere instead of repairing our crumbling infrastructure of roadways and bridges. Every day some minimum-wage worker gets to feel up supposedly “free” Americans in order to travel within our own national borders. Every night thousands of illegals walk across our borders to tend the lawns, cook and clean for the upper middle class in the southwest.

The game is over, but do the players know the outcome is already set? That the lowly pawns, like myself, are what will rise to topple the kings and queens of the NWO? The music has stopped for us, but they think they still have time to grab one of the chairs.

This is going to be an interesting week.

The stock market’s going south – big time. Better buckle up and have some fun on this roller coaster.

Looks like the Debt Ceiling Crisis has been averted! Oh happy day! There will be a ticker-tape parade down Wall Street, free ice-cream, and  dancing jackasses and elephants. To celebrate, the FCC has licensed a new TV channel that will show re-runs of Dancing With the Stars, American Idol, and Hell’s Kitchen for a national celebration. Please check with your local news outlets for local celebrations for this great day for America.

The groundbreaking negotiations concluded Sunday, when President Obama took charge and brokered the three-way deal. The exact details of this plan are boring and of no consequence, but we have an exclusive report of the highlights.

• 917 billion of spending cuts over the next 10 years.
• A commission will be formed, led by President Obama’s Debt Czar, to investigate further opportunities for spending reduction of 1.5 trillion dollars.
• The Debt Ceiling will be raised by 2.1 trillion dollars, allowing us to avoid any more interruptions in our economic recovery from the 2008 financial crisis.
• 500 billion of this 2.1 trillion cushion is available with a simple signature form President Obama’s steady hand. With additional funds available as needed.
• No new taxes, or increases in existing taxes, are officially part of this plan.
• As part of this Great Compromise, there is language in the bill for all parties to pursue a balanced budget amendment to our Constitution.
• Spending cuts are targeted to impact the well-to-do middle-class, who are not as dependent on government spending.
• The middle class has been shrinking at a steady pace, as our planned economy rewards those who endorse the Benevolent President’s plans, and punish those troublemakers who fail to see his wisdom.

This announcement assures us that there will not be another debt crisis until January of 2013. This is further proof of the robustness of a planned economy.

The bill is on its way to the House and Senate where we are 100% certain the compromise will pass. The current leader of the opposition party to the Most Benevolent President Obama is Boehner, a tyrant who held this countries economic prosperity hostage for political gain. But with this compromise we are able to tax and spend ourselves into economic prosperity.

Defeated, Boehner made some comments to the press that are, quite frankly, not worth reporting. similarly, the Alzheimer’s patient from Texas had nothing worth reporting. His incessant tirade of doom and gloom never ceased during these delicate negotiations.

:dispatch: Ministry of Truth: 1 August 2011:

courtesy of Zero Hedge:

From an email just sent out by Morgan Stanley’s David Greenlaw:

The NY Fed just asked primary dealers to come downtown today at noon to meet with Fed and Treasury Dept officials. We expect to hear them outline a contingency plan for next week. Details to follow.

More from Bloomberg which confirms this is not the previously scheduled meeting:

• The Treasury has canceled its regularly scheduled individual meetings with bond dealers in favor of the group meeting, according to the people, who declined to be identified because the meeting hasn’t been publicly announced
• All 20 primary dealers were invited
• Treasury spokesmen in Washington didn’t immediately reply to a request for comment on what will be discussed at the meeting

Interesting times, indeed.

Buckle your seat belt!