Darrell

Q3 GDP: Obviously Fictional

The reason the Indian Policy Wonks gave for buying 200 tons of gold was they thought our economy will collapse so, to be safe, they want to reduce their dollar holdings; obviously the Indian Policy Wonks read your postings.

Foreign dollar holders currently have over 50% of the dollar supply; our policy wonks think that tax revenues will come in a tidal stream once these dollars are spent on American made goods, services and/or assets. These tax revenues will be used to pay down the government’s huge debt load. And once the debt load is paid off, the smoke screen numbers they gave will not even be a footnote in history books.

And once again our political leaders will be in control of events.

President Obama and Congress will revise the bankruptcy laws so that individuals can use legal means to get out from under their debt load.

And the above is the scenario that will supposedly play out in the coming months and years.

U.S. vs. China: Has Trade War Begun?

My take is that China and all the other nations in our global commerce community cannot continue to accept the dollar as legal tender, as a medium of exchange for their goods, services and/or asset, without placing severe controls on the number of dollars that can be placed in circulation for use.

For way to long we have been prolonging our false prosperity by exchanging a valueless currency for goods, services and/or assets that continues our false prosperity; as people have stated for far too long: we have been kicking the can down the road.

Right now central bankers are acting as the black hole for excess dollars, dollars that are not needed to conduct global commerce. China is using some of their dollar stockpile to buy commodity assets all over the world with the warning that they think the dollar is valueless and it is part of a flawed global currency system.

China, France, Japan, Brazil, India, and other nations have been developing a new global currency system that will replace the existing system,

Central bankers are committed to changing the current global currency system so it is now just a matter of time before the dollar is no longer accepted as legal tender for the purposes of global commerce.

The only remaining question is will the dollar’s demise be the result of investors, institutions, central bankers, etc. manically abandoning the dollar or will the dollar’s demise be the result of planned transition.

Your guess is as good as mine.

And I agree with TheresaE, China thinks their political system is far superior to ours. And, I disagree with China’s viewpoint, the fact that we can share our views and grow and change from our ethical lapses, is the hallmark of democracy.

Will 'Self-Preservation' Work After Decades of Fiscal Suicide?

Jeff is correct, America is fast approaching the point where central bankers will no longer accept the dollar as legal tender; once this happening occurs, our policy wonks will no longer be in charge of their own destiny, their focus will be on getting the best deal possible.

Before the dollar goes from a global currency to a national currency, I expect interest rates to go up dramatically, budget management a priority, and the Americans to finally understand that it is earnings, and not money production, that creates wealth and fuels prosperity.

U.S. Debt Burden: Negotiate, Inflate or Repudiate?

Our government debt is dominated in dollars so all the Federal Reserve has to do is issue more dollars and use them to buy back the debt; for sure, if the dollar holders decide to spend their dollars holdings rather than save or invest it, then we will experience hyperinflation.

I think the FR calls this buyback procedure qualitative easing.

For the Corporation with too much debt, they simply declare bankruptcy, and the stockholders loses, while the debt holders wins; the debt holders has several options: they can exchange their debt for new shares in the company; they can liquidate the company and collect the proceeds. Or whatever other options they can think up.

The debt holders are making the decisions, and they will select the option that will make them whole. In any outcome they select, the debt holders comes first, the shareholder comes last.

For the individual with more debt that their income can support, they simply declare bankruptcy. Their first action, once they decide on bankruptcy, is to visit a bankruptcy lawyer and empower the lawyer to take control of their bankruptcy.

In any excess debt situation, our laws have evolve in a manner that resolves excess debt problems in a rational manner; I would not worry about excess debt burdens destroying the ability of our economy to function effectively.

Much of our current debt problems is the result of our brokerage firms being able to securitize debt, have rating agencies give it a high rating, and then sell it to unsuspecting buyers. Most of these buyers were retirees, institutions and others that wanted an ongoing income stream.

Did these buyers of securitized debt, understand that they would lose their income stream and their capital that created the income stream?

If any thing our bankruptcy laws should be expanded so that these debt holders have the right to sue the sellers of securitized debt and take what ever profits they gained.