Saturday, December 22, 2012


Most intelligent writer we are lucky to have access to Doug Noland

"I included the above quotes back in a March 2000 CBB titled, "John Law and Alan Greenspan - The Great Inflationists." I could not have imagined at the time that his successor would make Mr. Greenspan appear a most responsible central banker. The monetary theorist John Law introduced paper money to France in the early eighteenth century. As an historic monetary expansion and speculative Bubble ensued, Mr. Law was revered. But when he lost control of the experiment - when his Mississippi Bubble scheme and the French economy later collapsed - Law was run out of the country. The effects of this monetary fiasco lingered for decades. I have argued for years now that the U.S. and world are trapped in another historic monetary experiment run amuck. I believe this framework helps to explain a lot"

As our politicians argue, bargain on the "fiscal cliff" , we continue to hurtle towards the land of no return. The value of our currency is being debased by the continued running of the printing presses to just pay for the interest payments on the "CURRENT" accumulated debt, NOTHING to address total "unfunded" liabilities of SS and MC some say equal $70 TRILLION....not making this up.

SO as "THEY" the dumb and dumber crowd debate how to manage the coming CLIFF, at BEST all it will do is maybe put a cork in the $200B plus in interest payments alone that is part of budget. The military spending is 25% of total receipts coming in, we CANNOT continue down this path.

A debt is monies owed to someone, this is funded by floating notes, Treasury Bills, the FED prints money to buy most of these bills along with a willing, so far Foreign Gov't and investor contingent. Currently floated with historic low interest rates. Let the fun begin.....

See MUSICAL CHAIRS, HEAR THE MUSIC....the music will STOP....the HORDE will make for the exits....and there WILL ne a narrow opening.

You play long when the policies are in your favor, YES rates can continue low for ahwile longer, but at some point the trade of century will be SHORT TREASURIES, might be too early but after VOLKER crushed inflation by raising short term rates to near 18%..Bonds have been in Bull mkt ever since. NOTHING LAST FOREVER.


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