Bill H:

Let the “stupids” debate.

economics21.org/commentary/e21s-open-letter-ben-bernanke

To all; the furor today is an open letter signed by 20+ well known economists to Ben Bernanke at The Federal Reserve advising him to rescind QE 2. WOW, I could go on a nearly endless rant on this one! First off, where were these guys for the last 10 years while the Fed was blowing bubbles and putting us in a place where policy options no longer exist? Do they not understand that it is already game over? The entire financial system is hollow as assets that have little or no value whatsoever are being priced on bank balance sheets at par or more. Do these economists not understand that The Fed either buys more of this crap so that the light of day never touches them or it’s an all out panic because systemic insolvency is discovered?

Besides, who the hell do they think will be buying Treasury debt for the next 9 months? Santa Claus and the Easter Bunny? Sounds great huh, “we want to be fiscally responsible”, sorry but the time for this train of thought is long long gone! It is inflate or die and QE to infinity or the entire financial facade comes down immediately in a thud never heard before. What once was practical is no longer because this is not the 1960’s. What these braniacs have forgotten is that the Treasury is ALREADY insolvent and desperate for capital flows. The capital flow has dwindled and the supply will only rise, would they rather see a completely failed auction and the disastrous following events? So the Fed listens to you dopes and what? Who buys fresh Treasury debt? Ahh, you didn’t think of this did you? These signee’s may have wonderful pedigrees, MBA’s, PHD’s, Nobel prizes etc. but even a paperless “road dog” knows when to get out of harms way, NOW is that time!

Yields on Treasuries are rising anyway which is what I had expected because foreigners will and are using the Fed’s bid to unload their Treasury debt. In six months when yields are up 50 or even 100% from where they are now do any of these “scholars” really believe the U.S. will be able to pay even the debt service? We are already borrowing to pay the debt service so how much better will it be when rates rise? Do they not see that Bernanke no longer has ANY policy options left at all other than printing at a faster and faster pace?

The debate would be comical if it weren’t so tragic, these guys want to close the barn door on a stable that has already burned to the ground. It is like a movie set where the only thing there is is a front facade. It is now clearly a case of either the Treasury not being able to fund their needed debt or the Fed funding it through monetizing. SIMPLE! Very very sad but totally simple! Assuming I am correct which I am (sorry for being egotistic), there is only one way to protect yourselves from the stupidity (larceny) of our policymakers. BUY GOLD, SILVER and anything related.

Gold will explode for a variety of reasons but whether the U.S. actually has failed auctions and actually defaults OR defaults by destroying the value of the Dollar, it does not matter. Default is default and if you own REAL money, you win. Well, maybe not win because the world is going to be one crappy place to live but it will be much better to not be flat assed broke and rummaging through garbage cans for food! There is NO possible way to fix the current system and I do not profess to know how. What I do know is that the current system is failed and must be replaced. It will be and you can “bridge” to the next system with your wealth intact if you store it in “precious” assets. This was so predictable going all the way back to August 15, 1971 but no one wanted to listen to the most obvious of obvious facts, fiat money cannot survive and most certainly cannot be the foundation to a global economic and financial system.

I will be travelling for about a week so this commentary will be my last until middle of next week. I really do not like the hassles of travelling but I am surely looking forward to several doses of “full body scan radiation”! Regards, Bill H.