The United States of America is broke. You do understand that – don’t you?
We’re not talking about ” a little bit of a cash flow problem” or a short-term need for a “loan” no no no…..we’re talking about 100% flat-out broke, robbing Peter to pay Paul type broke, applying for a new credit card as fast as the applications can be filled out, scrounging around the living room, searching for loose change under the couch type broke.
Totally….and absolutely – flat busted.Zip.Nada.Zero type broke.
You do understand that right?
The idea of a “debt ceiling” is a complete and total “fabrication” serving no “real world” purpose, and as ridiculous as the idea of recovery in itself. The U.S debt ceiling will be raised, then raised again, then again and again…then again as there is no such thing! It’s debt to the moon as the entire economic model is built on debt!
I worry at times that people are still of the mindset that “oh well…..these things will work themselves out” or “it’s just a rough patch – everything is going to be just fine”.
You aren’t one of “those” are you?
Do you understand the net effect of these “zero percent interest rates” over time? You’ve got it right? You understand the objective here?
Seniors and anyone who may have worked their entire lives to save enough money to retire, now find their bank balances being drained like never before! 0% interest actually has a standard bank account “losing money” day-to-day as the cost of goods just keeps going higher, and there’s not a single point of interest given on savings. Factor in “fees” and you’ve got yourself and entire generation of Americans being stripped of their savings, and “forced” to seek yield in much riskier assets like……….The stock market of course! Yes yes! Take your hard-earned nest egg ( or perhaps even apply for a high interest loan) and put your money into the stock market!!
That’s what your banker or broker will tell you no?
The level of desperation appears so obvious and blatant to the outside observer, I’m seriously dumbfounded that Americans have yet to “rise up” and “speak out” of the “fleecing” currently under way. This “massive bag of debt” will in turn, be handed off to the next generation unable to survive without at least a couple of credit cards of their own….saddled with the burdens of their grandparents now sitting in cold dark rooms with little to eat – drowning in health care premiums.
I can’t even get started with Obama Care ( or is it just a further extension of the “police state”? ) and of course, now we’ve got renewed talks of “humanitarian interests in Syria” and of course “more trouble in Iran”.
It’s about Oil and the preservation of the Petro Dollar people! You know that right?
Gees…….bury head back in sand please.
More on this….ALOT MORE ON THIS to follow.
This reminds me of trying to understand the level of $85B/month QE (or has this now been tapered down to $75B/month?) – how much that really is.
(As an aside: Germany last year asked for their 300 tons of gold to be given back. “Yep, sure – that will take 7 years”. Huh? Why 7 years – why not “Yep, sure, next week, we’ll put it on a couple of planes”? Conclusion: the gold is not there).
Now, just to put this 300 tons of gold in perspective: that is “only” ~$11B at today’s gold price (give or take). And, uhm… the QE means easing by… over 6x as much…. every month?? So the Fed is printing (sorry – QE’ing) – by…..$75B/month, or ~60,000,000 oz of gold (60 million!), or nearly 2,000 tons of gold…. every month…..
And yes, the media does a great job of plastering over the real issue (because, probably, they don’t understand themselves what’s really going on).
There is no gold for Germany – plain and simple, and the 85 billion QE number is exactly that – a number that soley manifests as a computer / data entry on the computers of the Fed’s cronies on Wall St. There’s no real money – I’ts just fractional reserve banking now on steroids.
The real number ( in my view ) is waaaay larger with respect to propping up the economy / ponzi a little longer. The taper ( if anyone really thinks it “is”) was just a media spin to further “snow the public” that Fed is on track.
It’s past any understanding at this point, as we’re left wondering “which blunder / fiasco” will be the one that finally goes to far?
War in Syria sounds like the “fad topic” once again…and I’m again positive that Russia will have none of that.
Hey Dr. Kong……. lovely piece, you have hit the nail on the head….. I need not say more….. a very simple yet excellent summary of the current status of things…. Very difficult times ahead not only for the US but everyone tired to the US…. those countries making move to cut or shorten their connection as much as humanely possible over the last 5 years if not longer & continue to do so will be that much better off and ahead of everyone else……. once the flood of US dollars starts coming come to it’s home base – watch out…… the Inflation rate will be nothing we have seen ever in history…..
Again very nice post IMO – good for your trying to reach/teach those who visit this site daily….. I am sure many already understand what’s really going on as people here are not your average investors from what I have experienced…..
All the best Schmed!
Schmed – thank you sir!
Sometimes I cringe a bit when writing some of this..imagining the American readers / audience “not to pleased” with it but…it is what it is.
I don’t make this stuff up so I guess if people don’t like it well….as suggested – they can bury their heads back in the sand.
Thanks again Schmed
I hope your trading is going well.
dumped the Aussie trade – sold my bbry yesterday…. will re-enter soon… took on short Tesla again… long NG & PM’s….. they have not fired off yet…. stuck in a range for now….. no currency trades – on the side-lines for now….
Schmed! Oh man!
Only now you dumped AUD long? Ouch….I’d be a touch concerned about what “short term action” you need to see in order to “abort” on your long term? As….a weekly candle can house several 100 pips of hourly / 4 hourly movement and not really reflect “much”.
Following your posts / trades I’d have it that wow…..you really must of had some kind of “fundamental view” perhaps in holding so long?
Maybe it wasn’t reflected too bad in AUD/USD but AUD/JPY is now -150 pips since yesterday.
Liking the yen action already! The green is for the money and the gold is fo tha honeys
He he he …….
Right on JSkogs – things have been moving our way ( all be it rather slowly )
Yen is as stubborn as I’ve ever seen a given currency at a given time but……nothing moves in a straight line “forever” ( although it feels like it )
The pump job out of both U.S as well Japan on the markets and inversely the currencies is really something else.
Nice call again today and tonight. On gbp and aud. I was already short aud/jpy and covered probably early. Hopefully some of my gbp/jpy will hit overnight that 173 mark keeps coming around
Kong – I’m fairly new to this site, and would like to ask your opinion about the Canadian $. (I read your comments about it on Jan. 19th – yes, it has been getting blasted.)
I put some US$ into a Canadian bank a few years ago, when it was about .77 to the US$. Along the way I have transferred 1/3 of it back to the states when it was much higher. With the CAD sinking as it has been, I’ve thought about moving some more “home,” before all of my profits are gone. However, my original intention was to have some cash outside the US. Do you think I should do it now? I have not started trading on Forex yet.
Thanks for any thoughts you can give me. I won’t hold you responsible for my decision! Diana
Your original intention was a very wise one, but unfortunately has a much longer term profit horizon.
Consideration of having money located outside the U.S is one of the most forward thinking and responsible things “anyone” living in the states could do, and the Canadian dollar will be just fine.
Unfortunately – not for today, as we’ve been seeing safe haven / risk off type activity in currency markets where safe havens are sought and risk related currencies are sold.
My suggestion would be to ride out this “hit” that CAD is currently taking – with thought in mind of what you’ll have afforded yourself in the future – as USD enters “full crisis mode” and is drastically reduced in value.
These things take longer to play out than we’d imagine – but make no mistake having money outside the U.S is a very, VERY wise and prudent plan.