Market Sniper's  Instablog

I would like to propose a solution to the multiple systemic problems now facing the United States. A solution so far, not discussed. Since this country de-pegged from gold in August of 1971, we have been on a long road to bankruptcy. The "dollar", as the world's reserve currency has been progressively abused by imprudent fiscal and monetary policy. The debt burden imposed by this on government from the national to the local level is intolerable and will never be repaid. The debt burden that the citizenry toils under is even more intolerable. Solution: declare ALL debt both public and private null and void. Complete the bankruptcy proceedings started nearly 38 long years ago. What would this mean? It means that what ever real estate you now own and owe on is free and clear of debt. It means that your credit card balance drops to zero and your credit card is cancelled. It means that your car loan is also cancelled. It means that there is no longer any sovereign US debt. Why not? The Chinese did that in 1949. The Russians have done it twice and Argentina does that every few years whether they need to or not. Means that no state government, county government or city government any longer has any debt. The downside: raises the question of moral hazard. Prudent individuals who did not take on debt would get no direct benefit. Also, lenders, both institutional and individual would be wiped out. But think of the upside, even for those prudent individuals who did not directly benefit from debt relief. Onerous tax burdens would be lifted. As a bankrupt, we would be back to cash and carry. Only see upside from that. This country in a very short period of time, became the industrial engine of the world. A feat unsurpassed in history as this country became the envy of the planet. ALL done without ONE credit card or one HELOC. Of course, there would be no money left as all "dollars" in existence (other than in coin collections!) are created out of debt. No real problem there, either. The US Mint holds in excess of 250,000,000 ounces of gold. That gold belongs to the people of this country, confiscated from them in 1933. This does NOT count any gold that may or may not belong to the people located in Ft. Knox (no audit there since President Eisenhower) or the gold "lent" to the Federal Reserve. M Zero (currency and coin in circulation) and M1 (demand accounts) would be backed by said gold belonging to the people. To ensure on going monetary and fiscal discipline, said gold currency, issued by the US Treasury, would be freely redeemable in gold specie at the conversion rate established based on the amount of gold vs. M zero and M1. Then this country could get back to work creating REAL wealth which is the production of goods and services that people want and need. Just an idea. What do you think?

In the LONG litany of losers in the derivative melt-down and subsequent bailouts with taxpayers" money, I find it more than a little odd that no attention is being paid to who are the WINNERS in these "busted" trades. Who was on the otherside of the AIG losses was commented on only in passing. Perhaps it makes sense that Merrill Lynch was forced merged with B of A. Could it be that B of A had the largest postion vs. Merrill Lynch? Wash trades between them. Does not make sense to write a check to yourself. The talking heads in the media never address this issue and make it seem that the bailout money just "disappears" into some kind of black hole which is utter nonsense. Money going thru the front door of these losers is exiting the back door to the winners. Mostly on side bets to boot. At the center, Goldman Sacks, no doubt followed closely by Morgan Stanley and JP Morgan. Methinks some shadow trillionaires are being created. Too bad they will also be just stuck with paper in the end. Meanwhile, where is the outrage? The country is being pillaged, raped and looted.

"It is well enough that people of the nation do not understand
our banking and monetary system, for if they did,
I believe there would be a revolution before tomorrow morning." -Henry Ford