The global race to debase is heating up.
As Draghi implied over the weekend that the ECB is preparing to buy 3-year gov’t bonds to stem the Spanish debt crisis, Angela Merkel informed critics that ‘bailouts are here to stay‘.
We couldn’t agree more. The only thing yet to be decided (by the German Constitutional Court Sep 12th) is whether Germany assists in the coming bailouts, or if The Fed bails out the entire Western world single-handedly.
German Chancellor Angela Merkel told her domestic critics that bailouts are here to stay, even as her finance minister warned against placing too much faith in theEuropean Central Bank’s ability to stop the crisis.
Merkel made a foray away from crisis fighting today as she traveled to a traditional political gathering in a packed beer tent in southern Germany to confront anti-bailout critics in her government coalition. Countries such as Greece “deserve our solidarity” as long as they meet commitments for overhauling their economies, she said
“We need Europe, but we need a strong Europe,” Merkel told members of her Bavarian Christian Social Union sister party in the town of Abensberg, northeast of Munich. “We can’t take up so much debt that tomorrow we won’t have anything left and we’ll be at the mercy of the financial markets.”…
Read more:
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/images/live/s_silv.gif)
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/images/live/s_gold.gif)
Things are getting under pressure with the Euro and I believe that the Euro will fail first instead of the US dollar. Tomorrow, I’ll try exchange my Euros for junk silver to see if my local coin shop accepts Euro coins.
There is no chance Dame Dracmerkula will sacrifice her country’s 3.5 trillion economy by buying more crap junk Spainish bonds that assume the glide ratio of a lead brick.
Bailouts? Hogwash.
Not with German money. Maybe ours, or China or some other dumb bunny country with more money than good sense
Anyone who’s thought through the foundational structure of the world’s currency scheme knows damned well that ‘bailouts are here to stay’, because currency creation for payment of interest … on the currency … is theoretically infinite in duration. If it stops, defaults will spread like wildfire until the entire planet is financially immolated.
The ONLY solution is to ‘harden’ all the banknotes in their residual, depreciated purchase power,as originally expressed in physical form. In the case of the American banknote that equates to a 10 gram copper piece. One can say that’s a ludicrous difference of ‘value’, until a visit to coinflation.com to discover that melt value of the current ‘dollar’ coin is ALREADY 6 cents!
The immensely larger point is not what the trade piece is composed of or what it’s ‘value is in hugely over-valued Plantation Scrip, but that the conversion ends the constantly accruing interest on the banknotes that can be devoted to cleaning up this thoroughly insane debauchery of what was once a solid financial framework.
No way are the German people going to give up their cash. All of these folks are crazy and making life terrible for way to many people. More likely we will give them money because that is what Uncle B does.
Buy as much metal as you can and sit tight. Prices are definitely going up soon at a place near you.
Pat I am not sure I follow your logic. mainly because I still don’t grasp the fundamentals of currency creation for payment of interest. In light of the PIIGS being unable to make payments on the interest of the debt, and interest rates going to 6-7% in Spain and Italy, no to mention the 20-25% rate in Greece and Portugal. Creation of currency and interest rates are a good philosophical approach but in light of the Germans running out of money, patience and an economy that will support another $5-10 trillion in GDP of economies that surround Germany. German know the way of debt and economic degradation in the Wiemar republic. Merkel may talk a good line to try to keep the Euro together, there are forces beyond their control. The German court will rule on the ESM Sept 12. Italy and Spain have to provide 30% of the ESM funding—money they do not have. Spain is running out of money and bank capital.
I am probably missing the larger picture that you speak of in the welter of ongoing disasters in Europe. It seems like Germany will have to save itself from strangling debt loads as its economy goes into recession, even as much as it would like to keep the export markets to the southern tier in good shape, a situation that won’t continue as these economies are dropping like a rock. And China weighs heavily on the Euro economy as the exports from the major European countries are also falling off dramatically as China goes into a hard landing.
Second section. I just read the post from the economic collapse blog and the situation in Europe is even worse that I was outlining. The many terribly serious situations that will come to a head in the next 3 months may be beyond any bailout particularly if the German court rules against Germany’s part in the ESM That may be the pivot point since the ECB, EFSF and IMF are out of any substantive funds to even handle Bankia bail out and the Spanish bank runs running at about $80 billion a month
AGXIIK, you’d said “I am not sure I follow your logic. mainly because I still don’t grasp the fundamentals of currency creation for payment of interest.”
If you completely remove all the noise and distractions of post creation exchanges, the fact is that for banks to initially ‘create’ currency, governments first ‘create’ bonds (‘backing’ the currency). All circulating currency thus carries indirect interest from its inception. Keeping in mind that those bonds are ‘created’ at face … principal amount. The interest service currency accruing on bonds doesn’t exist yet. So, if one governmet issued one million banknote bond, collecting the million back in tax to accomplish redemption it’s STILL short the accrued interest. The bank is the sole issuer of the currency, so the government has no alternative but to borrow AGAIN to ‘create’ the interest service funds. Currency incurs debt … compelling NEW currency … incurring MORE debt … ad infinitum.
This process of currency ‘creation’ is replicated in the ‘private sector’ as well, with mortgages, car loans, etc., but if an acute refusal to incur debt arises (debt saturation) then the onus falls BACK on governments to ‘create’ the currency necessary to offset the interest accruals or else the application of floating currency to principal AND interest … deflates … that float and defaults begin like a domino cascade.
Someone just posted the results of a study illustrating the parabolic currency inflation since the 1920′s that pictures the phenomenon perfectly. That isn’t a result of ‘human action’. It’s the result of the currency scheme itself.
If the fed bails them out the US dollar will be debased that much more. With rising inflation (my grocery trip today cost me $170, I compared prices to last months trip and some were up 5-20%) this is just going to put the first nail in the coffin to bury the US dollar early.
The articles are floating around that the Fed bailed out Europe last time. I don’t recall the amounts but it was big. It looks like these guys are all in so they may very well try it again at our expense. We have to shut the Fed down fast. Gold and silver will be the only money standing.
Allin You are correct I heard it was $4-5 trillion when the mini audit of the Fed was produced a few years ago. That pushed off the day of reckoning since the first bailout paid off the Europe investments in our junk bond subprime mortgage tranches that went to zero value. But the euro zone problems still exist and in worse form than 2008-09.
Pat I think I get what you are saying. It takes a bit to gain understanding since the background and foreground clutter and noise that is the ongoing fiscal disasters is very distracting. The present day financial disasters appear to have come about in currency creation with the attendant interest attach at its creation This is unsustainable, irrefutable and irremediable now and into the future.
Even the attempt to Live a life personally free from counterpart risk does not remove the overarching counterparty risk of currency creation and debasement from its source. So the whole edifice will eventually and certainly come crashing down even as more debt is created to pay the interest imputed at the day of the currency creation. Tax receipts and their presence and lack thereof will not solve anything since the interest is a stand alone enterprise. No amount of taxes will pay this and it will accrued to the end of time unless something worse happens in the intervening time period.
The best we can hope for is being somewhat outside the periphery of the damage zone with large stacks of precious metals. Or so it seems