IT HAS ONLY GOTTEN WORSE!

BEST OF BILL BUCKLER
August 12, 2004
Here comes the economic clincher. Total US credit market debt (government, corporate, and individual) is $37.1 TRILLION. Debt is over 300% of GDP and still growing. Total credit market debt had reached 260% of GDP in 1929 on the eve of the Great Depression. Today, US total credit market debt has doubled over the past five years. The US Treasury Department has reported that there are $44 TRILLION in unfunded liabilities in the "Entitlement Programs". That alone is more than the net worth in the country. Added up, funded and unfunded US liabilities come to $US 81.1 TRILLION. The US net international debt position to the rest of the world stood as of March 31 at $US 5.2 TRILLION. Clearly, the USA is tapped out. It is running on empty momentum…..

Consider the pace of Fed debt "monetisation", as published by Mr. Russ Winter and taken from figures on the Fed's website:
In the year (52 weeks) which ended on May 5, 2004, average weekly Fed "monetisation" (outright buying of Treasuries with newly-created Federal Reserve Notes - aka US Dollars) averaged $US 577 million per week. In the 12 weeks between May 12 and July 21, that average weekly figure jumped to $US 1,395 million, just under two and a half times the pre May 12 level.

Over the last eight weeks of that twelve week period, the average weekly figure grew further to $US 1,532 million. Here are the clear tracks of the Fed "compensating" for the drop off in Japanese Treasury purchases. Here also is the evidence of the US Central Bank having to directly inflate its own currency through outright "purchase" of US Treasury debt instead of standing benignly by while the Japanese (and Chinese) Central Bank does the purchasing by inflating their own currency, the Yen. This is pure, unadulterated, unvarnished INFLATION by the US Fed which cannot fail, in time, to hasten the erosion of the purchasing power of the US Dollar.

But the Fed doesn't stop simply at "monetising" Treasury debt. It also has a practice which it calls "Permanent Open Market Operations". These are very low interest rate loans which it makes to "selected" financial institutions, as and when it deems them required. They are "required" whenever the Treasury markets look a little shaky, and or when there is a potential for them to look a little shaky, like just before a big Treasury auction, especially the quarterly refunding auctions. These "permanent injections of new liquidity" have been averaging well over $US 1 Billion per week since early May.

The Fed speaks of its "mission" as being one of fostering "sustainable growth" and its core task as being one of preserving "price stability". In its actions, the Fed has been creating new "money" at a pace never before equalled over the past three months while watching "growth" ebb away again. It has also advanced a long way on the path towards destroying the credibility (let alone purchasing power) of the currency of the United States. Remember that the next time you hear a speech from Alan Greenspan.
Ó 2004 – The Privateer
http://www.the-privateer.com