Debt Ceiling and Default

Quote from dewton:

Yep.

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I am far from an expert on monetary matters, but it is my understanding that "the monetary base" can grow without printing.
On the other hand, Bernanke could be a liar! But somehow I don't think so. He'd be too easily found out. By early 2009 I believe there was a huge increase in excess bank reserves, which subsequently the fed tried to do something about. That might explain that big rise in the monetary base.
 
An interesting point by economist Paul Kasriel @ Northern Trust

...Pushing Treasury Default Beyond August 2

If the federal debt ceiling were not raised by August 2, there still would be temporary means for the Treasury to keep paying all of its bills for a while. The Treasury could pull an FDR and revalue its gold holdings. Currently, the Treasury is valuing its gold holdings at $42.22 an ounce. By revaluing its gold holdings near the current open-market price, say at $1,575 an ounce, the value of Treasury gold holdings would rise by $400.8 billion. The Fed could write up the Treasury's deposit account by that much and the bills could be paid for a bit longer even without an increase in the debt ceiling....

http://www.northerntrust.com/pws/js...c=primary/resource/1107/1310765513389_994.xml
 
Quote from joneog:

An interesting point by economist Paul Kasriel @ Northern Trust

...Pushing Treasury Default Beyond August 2

If the federal debt ceiling were not raised by August 2, there still would be temporary means for the Treasury to keep paying all of its bills for a while. The Treasury could pull an FDR and revalue its gold holdings. Currently, the Treasury is valuing its gold holdings at $42.22 an ounce. By revaluing its gold holdings near the current open-market price, say at $1,575 an ounce, the value of Treasury gold holdings would rise by $400.8 billion. The Fed could write up the Treasury's deposit account by that much and the bills could be paid for a bit longer even without an increase in the debt ceiling....

http://www.northerntrust.com/pws/js...c=primary/resource/1107/1310765513389_994.xml
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Yeah BUT IF I WAS THE US GOVERNMENT WHY WOULD I SELL GOLD? WHEN IT'S GOING UP IN VALUE? I MEAN HOW STUPID IS THAT?
 
Quote from alexandercho:

Yeah BUT IF I WAS THE US GOVERNMENT WHY WOULD I SELL GOLD? WHEN IT'S GOING UP IN VALUE? I MEAN HOW STUPID IS THAT?
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They wouldn't be selling the gold. The gold is currently on the fed's balance sheet at ~$40/oz. It would just be an accounting change marking up the assets by about $400 bil and the corresponding liabilities (the treasury account) by the same, allowing the treasury to draw on those funds.
 
Quote from Larson:

I really don't think the morons running US gov't have any idea the danger they are courting, or they have reached the point of decadent Rome, where they just don't care anymore and will sell their soul for a vote.
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That is the question really... I've lived in the southwest for half a century and they have let it become overrun with illegal aliens. I'd have to say they are a lot like decadent Roman leaders...

My hero is Alerick, He went to the Roman Leaders and said "I'm going to sack the place" and they said "if we let you do that what do we get?" and his reply was "You get to live"... [which they didn't maybe]

Regarding comments earlier about the constitution mandating printing money, the thing was that money was backed by silver and gold. Net inflation over a century was zero with that kind of currency, this s%^t we have now is play money by comparison... the ultra wealthy don't need money, they have huge tracts of forested land in the middle of Europe and retreats all over the world from the Amazon to who knows where... the money situation is just something they can manipulate and they can pull the plug on any or all of us if they really want to...
 
Quote from tradingjournals:

Do you think he is not a liar?
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Look at how nervous he is at press conference and interviews--especially when put on the spot about certain issues. He has all the telltale signs. Of course, the Fed is now levered up more than Lehman (by some estimates) and Bernanke probably knows his "Great Depression solution" to current problems is worthless. So there are probably a lot of things he's secretly nervous about.
 
I agree for the most part. The banks primarily caused financial crisis - that includes Fannie and Freddie - mortgage lenders (of course millions who lied on their loan applications went along - with encouragement). The Fed and Treasury wouldn't and still won't, do anything without passing it by GS and the banks. We bailed out the banks - the big ones - many under 10.0 billion were closed and the large banks got their assets with nearly a complete guarantee of losses in loss sharing agreements where the big banks shared 5 percent of the losses and the government's share was was 95 percent of the loss. So now the same people that ran the big banks at the time of the melt down are still running the show. Private unregulated banking is stupid - a bank is a bank.

I am sure Freddie and Fannie are not fully disclosing their losses. Of course that is why the FED bought a bunch of Fannie's bonds, to hide the credit losses; but this is only one issue. A lot of the mortgages out their either securitized as CMOs or CDOs, portfolioed in financial institutions or held by any number of investors are ARMs. So when interest rates go up the mortgage payments go up. Nine percent "reported unemployment" and other economic pressures; a lot of those homeowners won't be able to afford it.

They should have let those large banks fail, have set up a liquidity system outside of the control of the so called "too big to fail" banks. Instead the Fed and Treasury ran to Goldman Sachs and the others and said "What should we do?" Well Goldman Sachs and the others told them what to do and they did it.

The FED has the power of appearance and the power to print money. They don't control long term rates the bond market does. Sooner or later this will be demonstrated clearly. Also, its out of bullets and lost a lot of its real power. When Volker was in - he had power and he used it. No FED chairman could act like Volker did now - different era back then.

It's a mess. Regardless what happens with the debt ceiling - the crisis with the banks isn't over.


Quote from ammo:

shitcan the fed,abolish private banking,government takes over the banks ,the interest,the profits ,they have already taken over the debt, ....PROBLEM SOLVED...
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Quote from MKTrader:

Look at how nervous he is at press conference and interviews--especially when put on the spot about certain issues. He has all the telltale signs. Of course, the Fed is now levered up more than Lehman (by some estimates) and Bernanke probably knows his "Great Depression solution" to current problems is worthless. So there are probably a lot of things he's secretly nervous about.
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Total Assets ~ 2.9 Trillion
Total Capital ~ 52 Billion

Leverage ~ 55-to-1

Lehman was about 30-to-1.

The fed can mark those assets however they want though. They would also be bailed-out / fully nationalized if the balance sheet became impaired.
 
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