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The Federal Reserve has printed over $1 trillion for foreign banks
Since the dollar continues to be the world reserve currency, and since the mega banks float like clouds over the entire planet paying little attention to borders, we shouldn’t be surprised. But that the Fed has essentially given away $1 trillion to non-American banks is pretty amazing . (Not that American banks are any better than the foreign ones of course.)
What happens when the global banks don’t get their sugar? QE, despite what some may argue (though rarely in public) can’t go on forever. It will have to end at some point.
A few days ago I heard something about Bernanke and company trying to engineer a “soft landing” post QE. When I hear talk of “soft landings” my blood pressure usually lifts a bit as soft landings rarely occur, and are even more rarely “engineered.”
If the entire world is addicted to what the Fed is pushing (and we have long known that it is) the whole world is going to feel a coordinated withdrawal too as QE “ends.”
View full post on AgainstCronyCapitalism.org
The US debt “at $65 trillion outstrips the economic output of the entire planet.” (Video)
Always good to have a little perspective. But debt and deficits don’t matter we are told. So don’t worry.
View full post on AgainstCronyCapitalism.org
Gold and Silver • Coming Soon: $10 Trillion Of Yearly QE & Fantastic Gold Char
Continue reading the Egon von Greyerz interview below…
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that has one of the best gold & silver purchase & storage platforms
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“The cash deficit every year is currently running at $1.5 trillion, but if you include unfunded liabilities, the accounting deficit totals $6 trillion each year. How can they ever stop QE? You look at the banking system, they can only survive by valuing their toxic assets at phony values.
Even student loans now total above $1 trillion, and the default rate currently amounts to 23%. Some colleges have a default rate as high as 60%. As youth unemployment increases, default rates will average 50% in my view. If you look at Social Security, there are over 125 million on benefits, including food stamps.
I wouldn’t be surprised to see at least 150 million people in need of government assistance or standing in front of soup kitchens in the next few years. All the while the Fed will be signaling the end of QE. So there is nothing in the US that’s pointing to any improvement or anything that would allow for QE programs to cease.
One thing that’s worried me and it continues to worry me is the divide between the rich and the poor. It’s increasing continuously in the US and in the rest of the world. The poor in the US and Europe are having trouble making ends meet, and this is a very, very dangerous trend for the world.
Interestingly enough I was at a family office conference recently and this confirmed that the rich are still very rich, and they are buying all of the conventional assets, stocks, property, private equity, wines, art, etc. But very few of them had any significant exposure to gold. There will be a massive wealth destruction because many of the assets which have been financed by credit bubbles around the world, they will plummet massively in real terms.
If we move to the eurozone things are just getting worse. The European Commission admitted that what they expected to be growth in 2013 is not going to be happening. But optimists as they always are, they now say it will happen in 2014. Well, Eric, there is absolutely no chance there will be growth in Europe in 2014.
The problems in Europe are still massive. When you look at Spain as an example, the financial system is crumbling. Bankia, which is the bank that was created by all of the mergers in 2010, and subsequently saved by the government, is about to announce its biggest loss ever. They are not even valuing their assets at real market value. There are 3 million empty houses in Spain as an example.
We also just had the second biggest bankruptcy ever announced in Spain. So with unemployment at 27% overall, and roughly 60% for the youth, Spain is in an absolute mess and is not going to improve. The government’s borrowing rate should be 50% or more, and yet they are still able to borrow at 5%. In fact, they couldn’t borrow any money without the ECB’s help.
You have a very similar situation in Italy, Greece, France, and the UK will be next. The ECB had been upbeat about the expected repayment of the LTRO, but the repayment was only half of what they expected because the reality is the banking system is still under tremendous pressure.”
Greyerz had this to say regarding gold: “The gold market will very soon begin to reflect the money printing that is guaranteed to happen in 2013. I could easily see the Fed moving from $85 billion each month to a number ten times that amount in coming years. This number could well grow to $850 billion each month from the Fed over the next few years, and that’s just on the US side.
When we discuss gold going up dramatically in a short period of time, most people think it can’t happen. We’ve talked about the next targets of $4,000 to $5,000, and people in the mainstream media would say that’s crazy. But below I am showing a chart of the 1979 to 1980 gold price action.
In 1979, in April, gold was $240, and in January of 1980 the price extended above $850. Gold went up roughly 3.6 times in price in a matter of months. So it is very possible that once this market starts moving that we will see a very fast move. I could see this type of move being repeated in the next twelve months in terms having a very explosive move to the upside.
After gold had that speculator move, Volcker came in and dramatically increased interest rates because inflation was spinning out of control, and subsequently the gold price fell. But that is very unlikely to happen this time because it would bankrupt the government. The market will eventually push interest rates up.
Investors just need to be patient. This move will happen. We have been in a 17-month consolidation and this is quite normal in bull markets. All this type of action does is build massive energy for the next move. So investors simply need to sit tight and hold on to their positions in gold and silver. Time is on the side of the longs, and solidly against the bears.”
© 2013 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
KWN has now released the audio and all three parts of the Maguire writtens interviews. You can read the written interviews by CLICKING HERE. You can listen to the eagerly anticipated audio interview by CLICKING HERE.
The interviews with Andrew Maguire, Marc Faber, James Turk, Bill Fleckenstein, Egon von Greyerz, Felix Zulauf, John Hathaway, Gerald Celente and Eric Sprott are available now. Also, be sure to listen to the other recent KWN interviews which included Art Cashin, MEP Nigel Farage, Michael Belkin and James Dines by CLICKING HERE.
Eric King
KingWorldNews.com
To return to BLOG click here.
Coming Soon: $10 Trillion Of Yearly QE & Fantastic Gold Chart
Today Egon von Greyerz stunned King World News when he stated that the Fed may increase QE a shocking ten times in coming years. Greyerz, founder of Matterhorn Asset Management, also provided a tremendous chart. Here is what Greyerz had to say in this remarkable and exclusive interview: “Eric, as we discussed last week I was expecting gold to make a low this week. So far we had a closing low on Wednesday at around $1,564. We will see if that holds. As always, in these cases where we have some kind of cycle low there is always price action that cements that low. ”
http://kingworldnews.com/kingworldnews/ … Chart.html
Statistics: Posted by yoda — Sun Feb 24, 2013 3:52 pm
View full post on opinions.caduceusx.com
American • The coming pension crisis: States face a $3 trillion fundin
The coming pension crisis: States face a $3 trillion funding gap. Only about 10 percent of Americans now covered by pensions.
Posted by mybudget360 in pensions
Many Americans look at the crisis in Greece and shake their heads wondering how it is possible for an entire country to derail the future of its younger generation. One big problem in Greece was massive government liabilities funding very generous pensions. Yet this came at an enormous cost. The US is facing a different crisis but the markets have already responded over the last few decades. In the early 1980s, roughly 60 percent of private sector workers had a pension. Today, it is down to 10 percent in the latest data and will likely continue to decrease. For young Americans entering the workforce, the self-funded 401k is likely the only path to having a nest egg and any sort of retirement. This is why so many people get angry when they hear about some in California that retire in their early 50s pulling in annual pensions of $100,000. Over 20 to 30 years this can range from $2 to $3 million of payouts. And we wonder why states face a $3+ trillion funding gap with pensions. Are we simply ignoring another looming crisis?
The shift away from pensions
While the stock market inches closer to a previous peak, the shift with pensions has been rather dramatic:
Only about 10 percent of private sector workers have the opportunity for a pension. This of course is likely lower given the trend above. While many might think this is an issue to deal with in the future the crisis is very real:
“(The Atlantic) In addition, states have funded only about 80 percent of their pension liability, leaving a $3.32 trillion funding gap. Ohio and Rhode Island are in the worst shape, having underfunded their pensions by almost 50 percent of their gross state product. Other liabilities, such as retiree health and dental insurance, also are underfunded. City governments similarly are plagued by underfunded pensions, with Los Angeles underfunding its public pension liabilities by $3.53 billion, with an additional $2.43 billion owed for other employment benefits such as healthcare. As of June 2009, New York City public pension programs had liabilities that exceeded their assets by $39.9 billion with an additional $65.5 billion owed for other benefits.
So both the private and public components of the U.S. pension system are under severe strain, as the Great Recession combined with pre-recession patterns of rising inequality and a diminishing social contract have taken their toll. With fewer workers covered by pensions, this leg of the three-legged stool of retirement security is too short — and growing shorter.”
This is incredible. Guess who will cover this gap? The taxpayer. And of course, we are talking about massive payouts for many. In California, over 18,000 people collect pensions of over $100,000. Given that the income figures, this is very generous:
This of course will cause many Americans to become furious at the current situation given that most are left to the whims of the stock market to save up any sort of nest egg. Most will depend on Social Security deep into retirement. Yet for many younger Americans, many realize that the estimated benefits will be cut (we already know that only a 75 percent payout will be had after 2033). For someone in their 20s or 30s, that is reality.
You even have some collecting at much earlier ages:
“(MarketWatch) My two friends on the PATH train would have their blood pressures rise when they hear about stories such as this one from the St. Augustine Record about a 43-year old retired firefighter who will receive a $58,000 pension after 25 years of public service . To achieve this for a private sector worker, they’d have to have nearly $1.5 million dollars in their retirement account. And that doesn’t take into consideration the health benefits that many public service employees will also have.”
Think about that. Someone at 43 receiving $58,000 a year. Someone working in the private sector would need a nest egg of $1.5 million to make up for this. This is why it is unsustainable. Even at $50,000 payouts given the early age of retirement, these payouts will amount to well over one million dollars. In other words, it is like lottery payouts for many. And this is why the $3 trillion underfunding problem is a big issue.
Keep in mind the pension wasn’t designed to be some sort of lottery winning. The idea that coupled with Social Security, a pension, and your own savings that many retirees would have a modest life after their working years. Yet you have an entire portion of Americans receiving well beyond the median household income into their retirement years for 20, 25, or even 30 full years. Think about that.
$50,000 x 20 years = $1,000,000
$50,000 x 25 years = $1,250,000
$50,000 x 30 years = $1,500,000
I’m surprised how little coverage is being given to this. Of course, when the assumption was that we were going to be at DOW 30,000 then all of this would have gotten swept under the rug. But instead, we have this:
The stock market is back to where it was in the late 1990s even after the incredible rally from the lows of 2009. So obviously those in the private sector have had a hard time building up their wealth in their 401ks. Yet pensions have always had extremely generous built in assumptions.
A $3 trillion unfunded liability is big. This is baked into the cake. This is going to hit one way or another. Of course, many of those receiving giant pensions right now would probably disagree. Something tells me that they did not pay $1 or $2 million over their working life however. Consider this another big issue we will contend with while many younger Americans are left fighting to stay afloat and are entering a world where the safety net is no longer visible.
http://www.mybudget360.com/pension-cris … #more-4619
Statistics: Posted by yoda — Sun Feb 10, 2013 3:57 am
View full post on opinions.caduceusx.com
American • If Obama Can Just Create A Trillion Dollar Coin, Then Why
If Obama Can Just Create A Trillion Dollar Coin, Then Why Do We Have To Pay Taxes?
By Michael, on January 7th, 2013
If Barack Obama can "solve" the debt ceiling crisis by printing up some trillion dollar coins, then why does the federal government need our money? As another debt ceiling showdown approaches, many in the liberal media are suggesting that if Congress does not raise the debt ceiling that Obama should just have the U.S. Treasury create a trillion dollar platinum coin and use it to pay our bills. It sounds crazy, but many notable voices (including Paul Krugman of the New York Times) are supporting this idea. But if the federal government has had the power to create trillion dollar coins out of thin air all this time, then why do we have to pay taxes? Not only that, why do we have a national debt? If the federal government can just create money whenever it wants, then why does the federal government ever have to borrow it from others? The U.S. Constitution actually grants Congress the power to "coin money", so why is the Federal Reserve doing it? Those are some very important questions. Most Americans don’t even realize that the U.S. government never actually needed to borrow a single penny from anyone else. The U.S. Congress has the authority to create debt-free money whenever it wants to. Conceivably, the entire federal government could be funded without ever borrowing a single dollar and without ever receiving a single dollar from any of us in taxes. Just imagine that – a nation without a single penny of national debt, no income tax and no IRS. What a wonderful world that would be. Of course there would be other potential dangers under such a system (such as runaway inflation), and those dangers would have to be addressed. But the truth is that we don’t have to have an income tax or 16 trillion dollars of government debt. We only have those things because we have chosen to have those things.
Sometimes, a crisis can illuminate options that most people had not considered previously. As another debt ceiling crisis draws closer, many are looking for ways for the U.S. government to be able to continue to pay its bills if Congress does not authorize an increase in the debt ceiling.
If a debt ceiling agreement is not worked out, the U.S. government will soon only be able to pay about half the bills that are coming due after interest payments on the national debt (which will almost certainly be prioritized) are made.
That is why a lot of people on the left are pushing the "trillion dollar coin" alternative. So how would this work exactly? The mechanics were recently explained by Jim Pethokoukis on his American Enterprise Institute blog…
There are limits on how much paper money the U.S. can circulate and rules that govern coinage on gold, silver, and copper. BUT, the Treasury has broad discretion on coins made from platinum. The theory goes that the U.S. Mint would create a handful of trillion dollar (or more) platinum coins. The President would then order the coins deposited at the Fed, who would then put the coin(s) in the Treasury who now can pay all their bills and a default is removed from the equation. The effects on the currency market and inflation are unclear, to say the least.
In my opinion, if anyone in the federal government is going to be creating money out of thin air, it should be the U.S. Congress. After all, according to Article I, Section 8 of the U.S. Constitution, it is the U.S. Congress that has been granted the authority to "coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures".
But those that are pushing Obama to create a "trillion dollar coin" point to a law that Congress passed that allows the U.S. Treasury to mint platinum coins. The following is from a recent CNN article…
Normally, the Federal Reserve is charged with issuing currency. But U.S. law, specifically 31 USC § 5112, also grants Treasury permission to "mint and issue platinum bullion coins and proof platinum coins."
This section of law was meant to allow for the printing of commemorative coins and the like. But the Treasury Secretary has the authority to mint these coins in any denomination he or she sees fit.
But it wouldn’t quite be that easy. According to a recent ABC News article, some elements of the coin design would have to be determined by legislation…
The more difficult part comes sometime after the decision is made to coin the platinum and before the Mint gets to work in sculpting the pieces.
At that point, the American people must decide whose face will adorn the trillion dollar trinket. The process to determine the “specs” of the coin, U.S. Mint Public Affairs Specialist Genevieve Billia warns, must be “determined by legislation,” creating the potential for another congressional impasse.
So we would likely end up back at square one.
But if printing up a "trillion dollar coin" does not work out, Paul Krugman of the New York Times has come up with another option…
Don’t like the platinum coin option? Here’s a functionally equivalent alternative: have the Treasury sell pieces of paper labeled “moral obligation coupons”, which declare the intention of the government to redeem these coupons at face value in one year.
It should be clearly stated on the coupons that the government has no, repeat no, legal obligation to pay anything at all; you see, they’re not debt, and therefore don’t count against the debt limit. But that shouldn’t keep them from having substantial market value.
Of course there is a very, very low probability that any of these wild ideas will ever be tried, but this debate has raised some very interesting points.
The truth is that we do not have to have a system where more money is only created when more debt is created. We could have a system where the federal government directly creates debt-free money that is spent directly into circulation by the federal government.
In fact, this has happened before.
As I have written about previously, during the presidency of JFK a limited number of debt-free United States Notes were issued by the U.S. Treasury and spent by the U.S. government directly into circulation without any new debt being created. In fact, each bill said "United States Note" right at the top.
Unfortunately, after JFK’s presidency no more debt-free United States Notes were ever issued.
But even before JFK, there were times when debt-free United States Notes were being used. According to Wikipedia, United States Notes were first used during the Civil War….
They were originally issued directly into circulation by the U.S. Treasury to pay expenses incurred by the Union during the American Civil War. Over the next century, the legislation governing these notes was modified many times and numerous versions have been issued by the Treasury.
So why are we using debt-based Federal Reserve Notes today instead of debt-free United States Notes?
If the Federal Reserve did not exist and the U.S. government directly created money instead of borrowing it, it is conceivable that we could have a national debt of $0.00 today instead of $16,432,707,263,449.56.
Which option do you think our children and our grandchildren will wish that we had opted for?
In a system where the government directly created money, it is also conceivable that we could completely do away with the income tax and the IRS completely. The U.S. once prospered greatly without an income tax, and it could do so again.
And the truth is that our system of taxation is broken beyond repair. If you doubt this, just read this article.
So what would the downside be to such a system? Well, of course rampant inflation would be a huge danger. Allowing Congress to print up money whenever they wanted to would be playing with fire. That is why it would be imperative for there to be a hard cap on what the federal government could spend. For example, you could set the cap on spending by the federal government at 20 percent of GDP. That way we would hopefully never end up looking like the Weimar Republic.
And the current federal debt could be paid down a little at a time using newly created debt-free currency. This would have to be done slowly to keep inflation under control, but it could be done.
Of course if you wanted to continue to fund the federal government through taxation, there are other options that would still allow you to do away with the income tax. For example, one of the ways that our founders intended for the federal government to be funded was through tariffs, and we could definitely raise a lot of money that way. Plus, that would have the added benefit of making American companies much more competitive again and it would reduce the flow of American jobs out of the country.
So am I in favor of having Barack Obama create a trillion dollar coin to get around the debt ceiling crisis?
Most definitely not. If it does not violate the letter of the Constitution (which I believe it does), it sure does violate the spirit of it.
But if the U.S. Congress decided to shut down the Federal Reserve and the IRS and they decided to abolish the income tax, and instead they started directly issuing debt-free currency directly into circulation, that is something I would very much be in favor of.
Yes, that system would not be perfect either, but it would be far more preferable to what we have today.
http://theeconomiccollapseblog.com/arch … -pay-taxes
Statistics: Posted by yoda — Mon Jan 07, 2013 11:21 pm
View full post on opinions.caduceusx.com
If Obama Can Just Create A Trillion Dollar Coin, Then Why Do We Have To Pay Taxes?
If Barack Obama can “solve” the debt ceiling crisis by printing up some trillion dollar coins, then why does the federal government need our money? As another debt ceiling showdown approaches, many in the liberal media are suggesting that if Congress does not raise the debt ceiling that Obama should just have the U.S. Treasury create a trillion dollar platinum coin and use it to pay our bills. It sounds crazy, but many notable voices (including Paul Krugman of the New York Times) are supporting this idea. But if the federal government has had the power to create trillion dollar coins out of thin air all this time, then why do we have to pay taxes? Not only that, why do we have a national debt? If the federal government can just create money whenever it wants, then why does the federal government ever have to borrow it from others? The U.S. Constitution actually grants Congress the power to “coin money”, so why is the Federal Reserve doing it? Those are some very important questions. Most Americans don’t even realize that the U.S. government never actually needed to borrow a single penny from anyone else. The U.S. Congress has the authority to create debt-free money whenever it wants to. Conceivably, the entire federal government could be funded without ever borrowing a single dollar and without ever receiving a single dollar from any of us in taxes. Just imagine that – a nation without a single penny of national debt, no income tax and no IRS. What a wonderful world that would be. Of course there would be other potential dangers under such a system (such as runaway inflation), and those dangers would have to be addressed. But the truth is that we don’t have to have an income tax or 16 trillion dollars of government debt. We only have those things because we have chosen to have those things.
Sometimes, a crisis can illuminate options that most people had not considered previously. As another debt ceiling crisis draws closer, many are looking for ways for the U.S. government to be able to continue to pay its bills if Congress does not authorize an increase in the debt ceiling.
If a debt ceiling agreement is not worked out, the U.S. government will soon only be able to pay about half the bills that are coming due after interest payments on the national debt (which will almost certainly be prioritized) are made.
That is why a lot of people on the left are pushing the “trillion dollar coin” alternative. So how would this work exactly? The mechanics were recently explained by Jim Pethokoukis on his American Enterprise Institute blog…
There are limits on how much paper money the U.S. can circulate and rules that govern coinage on gold, silver, and copper. BUT, the Treasury has broad discretion on coins made from platinum. The theory goes that the U.S. Mint would create a handful of trillion dollar (or more) platinum coins. The President would then order the coins deposited at the Fed, who would then put the coin(s) in the Treasury who now can pay all their bills and a default is removed from the equation. The effects on the currency market and inflation are unclear, to say the least.
In my opinion, if anyone in the federal government is going to be creating money out of thin air, it should be the U.S. Congress. After all, according to Article I, Section 8 of the U.S. Constitution, it is the U.S. Congress that has been granted the authority to “coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures”.
But those that are pushing Obama to create a “trillion dollar coin” point to a law that Congress passed that allows the U.S. Treasury to mint platinum coins. The following is from a recent CNN article…
Normally, the Federal Reserve is charged with issuing currency. But U.S. law, specifically 31 USC § 5112, also grants Treasury permission to “mint and issue platinum bullion coins and proof platinum coins.”
This section of law was meant to allow for the printing of commemorative coins and the like. But the Treasury Secretary has the authority to mint these coins in any denomination he or she sees fit.
But it wouldn’t quite be that easy. According to a recent ABC News article, some elements of the coin design would have to be determined by legislation…
The more difficult part comes sometime after the decision is made to coin the platinum and before the Mint gets to work in sculpting the pieces.
At that point, the American people must decide whose face will adorn the trillion dollar trinket. The process to determine the “specs” of the coin, U.S. Mint Public Affairs Specialist Genevieve Billia warns, must be “determined by legislation,” creating the potential for another congressional impasse.
So we would likely end up back at square one.
But if printing up a “trillion dollar coin” does not work out, Paul Krugman of the New York Times has come up with another option…
Don’t like the platinum coin option? Here’s a functionally equivalent alternative: have the Treasury sell pieces of paper labeled “moral obligation coupons”, which declare the intention of the government to redeem these coupons at face value in one year.
It should be clearly stated on the coupons that the government has no, repeat no, legal obligation to pay anything at all; you see, they’re not debt, and therefore don’t count against the debt limit. But that shouldn’t keep them from having substantial market value.
Of course there is a very, very low probability that any of these wild ideas will ever be tried, but this debate has raised some very interesting points.
The truth is that we do not have to have a system where more money is only created when more debt is created. We could have a system where the federal government directly creates debt-free money that is spent directly into circulation by the federal government.
In fact, this has happened before.
As I have written about previously, during the presidency of JFK a limited number of debt-free United States Notes were issued by the U.S. Treasury and spent by the U.S. government directly into circulation without any new debt being created. In fact, each bill said “United States Note” right at the top.
Unfortunately, after JFK’s presidency no more debt-free United States Notes were ever issued.
But even before JFK, there were times when debt-free United States Notes were being used. According to Wikipedia, United States Notes were first used during the Civil War….
They were originally issued directly into circulation by the U.S. Treasury to pay expenses incurred by the Union during the American Civil War. Over the next century, the legislation governing these notes was modified many times and numerous versions have been issued by the Treasury.
So why are we using debt-based Federal Reserve Notes today instead of debt-free United States Notes?
If the Federal Reserve did not exist and the U.S. government directly created money instead of borrowing it, it is conceivable that we could have a national debt of $0.00 today instead of $16,432,707,263,449.56.
Which option do you think our children and our grandchildren will wish that we had opted for?
In a system where the government directly created money, it is also conceivable that we could completely do away with the income tax and the IRS completely. The U.S. once prospered greatly without an income tax, and it could do so again.
And the truth is that our system of taxation is broken beyond repair. If you doubt this, just read this article.
So what would the downside be to such a system? Well, of course rampant inflation would be a huge danger. Allowing Congress to print up money whenever they wanted to would be playing with fire. That is why it would be imperative for there to be a hard cap on what the federal government could spend. For example, you could set the cap on spending by the federal government at 20 percent of GDP. That way we would hopefully never end up looking like the Weimar Republic.
And the current federal debt could be paid down a little at a time using newly created debt-free currency. This would have to be done slowly to keep inflation under control, but it could be done.
Of course if you wanted to continue to fund the federal government through taxation, there are other options that would still allow you to do away with the income tax. For example, one of the ways that our founders intended for the federal government to be funded was through tariffs, and we could definitely raise a lot of money that way. Plus, that would have the added benefit of making American companies much more competitive again and it would reduce the flow of American jobs out of the country.
So am I in favor of having Barack Obama create a trillion dollar coin to get around the debt ceiling crisis?
Most definitely not. If it does not violate the letter of the Constitution (which I believe it does), it sure does violate the spirit of it.
But if the U.S. Congress decided to shut down the Federal Reserve and the IRS and they decided to abolish the income tax, and instead they started directly issuing debt-free currency directly into circulation, that is something I would very much be in favor of.
Yes, that system would not be perfect either, but it would be far more preferable to what we have today.
So what do you think? Should we keep our current system of debt-based money, or would a system of debt-free money be better?
Please feel free to post a comment with your opinion below…
View full post on The Economic Collapse
Gold and Silver • Art Cashin On The Trillion Dollar Coin Alchemy
Art Cashin On The Trillion Dollar Coin Alchemy
http://www.zerohedge.com/news/2013-01-0 … in-alchemy
Submitted by Tyler Durden on 01/04/2013 09:34 -0500
Art CashinDebt CeilingNew York Fed
It would appear that even the venerable Art Cashin had to rub his eyes in incredulity at the recircling of the idea of the Treasury minting a "Trillion Dollar Platinum Coin" to solve the debt-ceiling ‘problem’. His brief discussion on the idea is summed up perfectly in his final six words "anybody got an ebook on alchemy?"
Via Art Cashin: The Mayans Weren’t The Only Ones With Strange Ideas
With a debt ceiling battle about to resume, a rather bizarre idea from last year’s debate has resurfaced. It appeared on a couple of blogs and concerned the minting of a "trillion dollar platinum coin". Under section K of Federal law, the Treasury Secretary appears to have carte blanche on the design and issuance of platinum coins.
The Treasury normally writes checks against the taxes it collects. When the tax receipts run out, they borrow money (bonds) to write checks against. That borrowing can run up into the debt ceiling, resulting in the looming confrontation.
The thesis claims that Geithner should authorize the coin, deposit it at the New York Fed and write checks against it, rather than selling more bonds.
Anybody got an eBook on alchemy?
Only those who have no clue about the money creation process in a fractional reserve economy could be vacuous enough to suggest that an idiotic "fix" such as this has any hope of working. All the proposal does, in effect, is suggest a devaluation of the currency relative to an absolute precious metal asset, which in itself is nothing new, and most recently was conducted, with great "success" by FDR in the 1930s.
..
Can a $1 Trillion Coin End Debt Ceiling Crisis?
By Charles Riley | CNNMoney.com – Fri, Jan 4, 2013 12:53 PM EST.. .
.
The lights of the U.S. Capitol remain lit into the night as the House continues to work on the "fiscal cliff" legislation proposed by the Senate, in …more
..
What if the threat of a voluntary default by the United States could be erased by simply turning one tiny scrap of platinum into a coin?
That’s right. No debt ceiling problem. No bickering in Congress. No market jitters. The only thing needed is for the Treasury Department to mint a platinum coin with a face value of $1 trillion.
Of course, this is not going to happen. Creating money out of thin air is hardly a solution. It could lead to even more concerns from those worried about inflation. Critics of the Federal Reserve’s monetary easing programs would likely be apoplectic if the Treasury Department trumped Ben Bernanke’s "helicopter drop" by minting a trillion more new dollars.
The influential New York Times columnist Paul Krugman has already dubbed the talk a "gimmick." But here is why some people think this bizarre strategy could work.
Last week, Treasury Secretary Tim Geithner made it official: Federal borrowing has reached the $16.394 trillion debt ceiling.
Treasury, which runs the government’s debt-issuance operation, is busy creating about $200 billion of headroom by employing what it calls "extraordinary measures." That should cover about two months’ worth of borrowing.
When the two months expire, Treasury will no longer be able to pay the country’s bills — that is, it won’t be able to borrow more money to pay for spending already authorized by Congress.
If Congress does not act to raise the debt ceiling, the U.S. will default on its debts. Not good. But this is where the platinum coin comes in. Normally, the Federal Reserve is charged with issuing currency. But U.S. law, specifically 31 USC § 5112, also grants Treasury permission to "mint and issue platinum bullion coins and proof platinum coins."
This section of law was meant to allow for the printing of commemorative coins and the like. But the Treasury Secretary has the authority to mint these coins in any denomination he or she sees fit.
With a $1 trillion coin in hand, Treasury could deposit the money into Fed accounts, and pay its debts in that manner, instead of relying on bond issuance.
And none of this requires Congressional consent. Talk about an elegant solution.
The White House unsurprisingly hasn’t commented on the idea. But Rep. Jerrold Nadler is on board. "I’m being absolutely serious," he told Capital NY. "It sounds silly but it’s absolutely legal."
Trillion Dollar Coins: The Ultimate Debt Ceiling End-Around?
http://abcnews.go.com/blogs/politics/20 … nd-around/
With President Obama having kicked off debt ceiling negotiations by vowing not to negotiate over the debt ceiling, a new option for paying off the nation’s considerable tab is gaining momentum with cheeky fiscal and monetary wonks.
It goes like this: Should Congress fail to extend the U.S. debt limit — reached again on Dec. 31 — the president could ask the Treasury to begin printing trillion dollar coins (in a process explained mostly seriously by Jim Pethokoukis on his American Enterprise Institute blog), a number of which could then be put toward fulfilling debt obligations in the event new legislation stalls in Congress.
While there are laws in place to regulate how much paper, gold, silver or copper currency can be circulated by the government, there is nothing so clearly stated when it comes to platinum. That door open, the Treasury could have the U.S. Mint melt and mold a few trillion dollars of it, then ship the goods over to the Federal Reserve for safekeeping until the time comes to pay the bills.
The more difficult part comes sometime after the decision is made to coin the platinum and before the Mint gets to work in sculpting the pieces.
At that point, the American people must decide whose face will adorn the trillion dollar trinket. The process to determine the “specs” of the coin, U.S. Mint Public Affairs Specialist Genevieve Billia warns, must be “determined by legislation,” creating the potential for another congressional impasse.
Also to note: The likeness sculpted into its side must belong to a dead person, ruling out early favorite Ikea Monkey, but boosting the candidacies of Ronald Reagan and John Maynard Keynes.
Obama to pay US debt with trillion-dollar coins?
http://rt.com/usa/news/trillion-dollar-debt-coin-353/
Published: 04 January, 2013, 20:27
With the fiscal cliff averted for now, it’ll be a few weeks until the debt ceiling debate is the next major money issue in Washington. Luckily, some economists say that crisis can be curbed as well, and all it will take is one very valuable coin.
By February, the United States will once again reach its maximum borrowing amount from foreign nations — the debt ceiling — and the House of Representatives and Senate will be stuck deciding if it’s worth raising it once again or rallying for another solution. In recent days, an alternative approach — one that is almost all too perfectly bizarre — has been tossed around. It would involve minting a few trillion dollar platinum coins, and although it’s an unlikely answer, it’s all too legit.
The United States can’t just print paper money all willy-nilly every time it exhausts its borrowing options, but the US can, however, have a figurative field day when it comes to some types of coin.
As analyst Chris Krueger from Guggenheim Securities’ Washington Research Group explains to the American Enterprise Institute, “There are limits on how much paper money the U.S. can circulate and rules that govern coinage on gold, silver and copper. BUT, the Treasury has broad discretion on coins made from platinum.”
“Although the Treasury can’t just create money out of thin air to pay its bills, there is a technicality in the law that says the Treasury has special discretion to create platinum coins of any denomination, and the thinking is that [Secretary of the Treasury] Tim Geithner could make the coin and walk it over to the Federal Reserve and deposit it in the Treasury’s bank account,” adds Joe Weisenthal of Business Insider.
Although the idea seems outrageous, it’s been discussed repeatedly in the media since the start of 2013, and has even been brought up by an influential member of Congress.
"It sounds silly but it’s absolutely legal,” Rep. Jerrold Nadler (D-New York) tells New York Capital this week. "There is specific statutory authority that says that the Federal Reserve can mint any non-gold or -silver coin in any denomination, so all you do is you tell the Federal Reserve to make a platinum coin for one trillion dollars, and then you deposit it in the Treasury account, and you pay your bills.”
More than 1,000 people have already petitioned the Obama administration to order the minting of a coin on the White House’s We the People webpage, and New York Times economist Paul Krugman considered the option himself this week. Of course, doing as much is easier said than done. Designing the actual look of the coin would be up to Congress, and asking the House and the Senate to agree on the face adorning a one-trillion-dollar coin would likely lead to all sorts of Capitol Hill bickering.
Chris Krueger adds to the American Enterprise Institute that this option has a “VERY low probability” of ever happening, and Business Insider’s Weisenthal willingly says it’s a silly route to take, in his own opinion.
“But what’s sillier is a rich nation having a debate on whether it will pay what it owes, which is what the debt ceiling fight is all about. So in the face of such silliness, this unfortunately may be required,” he says.
Statistics: Posted by DIGGER DAN — Sun Jan 06, 2013 10:27 am
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Health • $1 Trillion Obamacare Tax Hike Hitting on Jan. 1
$1 Trillion Obamacare Tax Hike Hitting on Jan. 1
On January 1, regardless of the outcome of fiscal cliff negotiations, Americans will be hit with a $1 trillion Obamacare tax hike.
Obamacare contains twenty new or higher taxes. Five of the taxes hit for the first time on January 1. In total, Americans face a net $1 trillion tax hike for the years 2013-2022, according to the Congressional Budget Office.
The five major Obamacare taxes taking effect on January 1 are as follows:
The Obamacare Medical Device Tax: Medical device manufacturers employ 409,000 people in 12,000 plants across the country. Obamacare imposes a new 2.3 percent excise tax on gross sales – even if the company does not earn a profit in a given year. In addition to killing small business jobs and impacting research and development budgets, this will increase the cost of your health care – making everything from pacemakers to artificial hips more expensive.
The Obamacare Flex Account Tax: The 30-35 million Americans who use a pre-tax Flexible Spending Account (FSA) at work to pay for their family’s basic medical needs will face a new government cap of $2500. This will squeeze $13 billion of tax money from Americans over the next ten years. (Currently, the accounts are unlimited under federal law, though employers are allowed to set a cap.)
There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are several million families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. This Obamacare tax provision will limit the options available to these families.
The Obamacare Surtax on Investment Income: This is a new, 3.8 percentage point surtax on investment income earned in households making at least $250,000 ($200,000 single). This would result in the following top tax rates on investment income:
Read more: http://atr.org/trillion-obamacare-tax-h … z2GTJiniUk
Statistics: Posted by yoda — Sat Dec 29, 2012 1:44 pm
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Gold and Silver • Embry – $67 Trillion Shadow Banking System & $10,000 Gold
Embry – $67 Trillion Shadow Banking System & $10,000 Gold
http://kingworldnews.com/kingworldnews/ … _Gold.html
Today John Embry spoke with King World News about the the $67 trillion shadow banking system, $10,000 gold, and how this will all end. Here is what Embry, who is chief investment strategist at Sprott Asset Management, had to say: “I’m a big admirer of Keith Barron because I was big player in his company, Aurelian. I think he’s a very smart guy and he understands the business extremely well. I agree with him that gold production is headed for a big decline going forward.”
“You have to remember that until the 1980s, virtually all of the mining in the world was underground mining, and the grades were a lot higher than they are now. This is because a lot of the gold that was easy to mine has already been mined and we are having to go deeper and deeper.
Then we had heap leaching which was the revolution in the 1980s. So consequently, a lot of these close to the surface, very low-grade ore bodies were able to be exploited by heap leaching. This led to a very large increase in the amount of production….
“The whole dynamic of the industry changed for a while. The problem now is that the easy to exploit heap leaching opportunities around the world have already been exploited. So a lot of the developments that started back in the 80s and 90s are running out.
The industry is faced with the daunting challenge of replacing all of these sites which are going out of production in the next few years. I don’t believe we are going to be able to find enough new ore bodies to exploit, in order to replace the production going offline.
So I totally concur with Keith Barron on the idea that gold production could fall quite significantly over the next five to ten years, irrespective of what the gold price does. To be fair, if the gold price were to go to $10,000, which is possible, then down the road you might be able to get some increased production.
But that’s something that’s in the future. We are just talking about what’s reasonable in the next five to ten years, and in my opinion gold production is going nowhere but down. Keith could be right that production will collapse.
What’s important to understand, Eric, is that the gold price has been seriously suppressed. One of the reasons gold stocks have been under pressure is the fact that they are reporting terrible results. They are reporting terrible results because the gold price is too low and the costs related to mining have gone up a lot.
Even though the price of gold has gone from $250 to $1,700, it’s still an uneconomic business. We probably need $3,000 gold based on current costs to get a really robust rate of return. Gold mining deserves a really robust rate of return because it’s an extremely hard and risky business.
I find it fascinating that they just beat the heck out of all of these gold stocks because there have been some lousy earnings reports. I’ve always believed that stocks are discounting mechanisms, and I believe gold prices are going dramatically higher. So investors should be looking at the earnings potential of these things down the road, not worrying about what they are doing now.
I think the most recent correction in the mining stocks was preposterous, and it has created an even better buying opportunity. But most people, because they don’t understand the fundamentals, are getting spooked out of them.
So Keith Barron is correct because the problem is twofold: Existing production is going to go down a lot. So for the major mining companies, to achieve growth, not only are they going to have to replace existing production, which will fall significantly, but they will have to replace that plus even more development.
The problem is that with the current gold price and what has taken place in the share environment, I don’t see any possibility of that taking place. One of the great pieces of misinformation that has been spread by the agents of the people suppressing the price of gold, is that at these higher gold prices we would experience a boom in gold mining. Nothing could be further from the truth.”
Embry also added: “If you stop to think about it, Eric, the fact that the gold price is currently $170 lower at the end of August of one year ago, given what has gone on with respect to QEs, wars, and financial implosions, it’s preposterous that the gold price is where it is.
But it shows the power of paper, and that’s the reason we have all of these derivatives because you can control markets quite effectively, until you can’t. At that point the price of gold is going to go crazy. Thing about the fact that the shadow banking system is $67 trillion, and the leverage that creates in the system. I just think that the ‘end’ of this is going to be horrific.”
Statistics: Posted by DIGGER DAN — Wed Nov 21, 2012 12:29 am
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Gold and Silver • Re: USA Banking Cabal Cover Up: $39 Trillion Securities Vaul
Billions in bearer bonds could be lost due to Hurricane Sandy: sources
By MICHAEL GARTLAND
Last Updated: 12:10 PM, November 18, 2012
Posted: 1:23 AM, November 18, 2012
http://www.nypost.com/p/news/local/manh … WbYgSIoflJ
It’s the biggest mystery on Wall Street.
Hurricane Sandy floodwaters inundated a 10,000-square-foot underground vault downtown, soaking 1.3 million bond and stock certificates — including bearer bonds that function like cash — and putting them in danger of turning to mush.
A contractor working for the vault owner, the Depository Trust and Clearing Corp., is feverishly working to restore the paper.
But the value of the threatened notes under 55 Water St. remains unknown to all but the innermost circle of Wall Street bankers.
One source said $70 billion in bearer bonds were in jeopardy.
Bloomberg
LIQUID ASSETS: Thousands of bearer bonds — which could be worth as much as $70 billion — are now in danger of turning to pulp after Hurricane Sandy flooded the downtown vault that had been storing them.
DTCC — a depository controlled by the biggest financial firms on Wall Street — won’t say exactly what was in its vaults, how much the notes are worth, and who owns what.
Most of its member firms, including Deutsche Bank, JP Morgan Chase, Bank of America, UBS and Citi did not return calls.
The exception was Goldman Sachs, whose spokesman Michael DuVally confirmed Friday to The Post that his firm stored bearer bonds in the DTCC vaults. He acknowledged they would be nearly impossible to redeem if destroyed.
Yesterday morning, DuVally elaborated, and said the value of the Goldman bonds was “less than $1 million.” An hour later, he called back to say, “The market value of bearer bonds potentially impacted is less than $10,000.”
DTCC spokeswoman Judy Inosanto would say only that “a variety of equities and bonds” were damaged. “I can’t go into details. We do not provide values for security reasons.”
Even a contractor who bid on the cleanup and recovery job — the notes were drenched in diesel- and sewage-tinged water that filled 55 Water Street’s three sub-basements — clammed up when asked about the damage.
“It’s nobody’s business,” he said. “The public doesn’t need to know what’s in that vault. It’s between them and their customers.”
What is known is that for decades the vault housed millions of bearer bonds — worth many times that amount in dollars. In 1990, two-thirds of the 32 million notes in the vault were bearer bonds, DTCC records showed. Even as bearer bonds matured and the notes were removed, the vault continued to hold 5.4 million bearer bonds at late as 2003.
Experts say the only hope for saving the stacks of bonds would be to freeze-dry them in a cold vacuum chamber. As the air pressure in the chamber is reduced, and heat is increased, moisture in the documents would evaporate.
Security would have to oversee a tight chain of custody during the procedure, and the entire process could cost upward of $2 million.
Belfor, a Texas-based recovery firm rumored to have won the job, had a trailer parked outside 55 Water St. yesterday. When asked about a contract with Goldman to recover $70 billion in bearer bonds, Belfor spokeswoman Alex Gort said, “We have very strict confidentiality.”
Belfor workers at the site yesterday described a “complete restoration job” under “very high security,” but claimed to know nothing about the bonds.
“There are three vaults,” a hardhat said outside the building. “I wasn’t in the vault where the bonds are. Security is very tight down there. I know they were all under water. Billions of dollars’ worth, soaked. I know they are trying to pack them up.”
Bearer bonds are paper certificates, usually issued by governments, that are redeemable after a prescribed term. The bearer submits an attached coupon to receive payment. Because they are typically unregistered and can be used like cash, they were commonly used by those wishing to hide, and not pay taxes on, assets. They were banned in 1982.
But those that haven’t been fully redeemed remain in circulation.
Andrew Kintzinger, a securities lawyer, said that if a Wall Street firm were holding bonds as a custodian for investors, there would be electronic records documenting payments that would provide investors with proof of ownership.
But if Goldman or the other banks owned the damaged bonds themselves, redeeming them could be “a problem,” he said.
Additional reporting by Mark DeCambre and Kevin Fasick.
Statistics: Posted by DIGGER DAN — Tue Nov 20, 2012 1:33 am
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