Presently, the national soap opera, which is to say, the debate over the debt ceiling, is providing much amusement. In order to hike the debt ceiling, the Republicans are holding out for meager "cuts" and--where have we heard this before?--no new taxes. The Democrats would like the debt ceiling to be raised more; they would also like even less significant reductions in future spending, coupled with increases in taxes, but only on the infernal rich--except, apparently, for the bankers who have been given billions of dollars in bailouts. This is to over-simplify the narrative somewhat; there appear to be at least a handful of Republicans who are seemingly serious about making actual reductions to the deficit, which hampers speaker Boehner's hope for a united front.
Missing entirely from the dog and pony show is any genuine concern for the fate of the American people. The Democrats would like to avoid having to raise the debt ceiling again before Obama attempts to win reelection. The Republicans would prefer that the American people are reminded often of Washingtonian profligacy so that blame is pinned on the president and his party. These stances make a certain amount of political sense, but they are indefensible from any other perspective.
If we consider the situation without pondering any political implications, a few things become clear. First, the United States is deeply indebted. Our ratio of debt to GDP is roughly one. It's good to be suspicious of GDP insofar as it takes into consideration government spending--government programs devoted to digging holes and refilling them would boost GDP--but the ratio between debt and GDP is a reasonable indicator of a nation's solvency. There is no magical ratio, up to which debt is tolerable, or beyond which debt is assured, but given ours at present, it is exceedingly likely that we will never be able to pay back our debt.
While it is certainly possible that I am wrong in thinking thus, it would be exceedingly imprudent to assume that U.S. solvency is assured. If default is not inevitable, it nonetheless must be considered a real possibility. Our debt problem is not new. It came into being with the creation of the Federal Reserve, the subsequent abandonment of the gold standard, and the slew of social programs which were enacted from FDR onward. The actions taken by the last several Congresses--such as the wars in Afghanistan and Iraq, legislation related to Medicare, TARP, stimuli, and so forth--have exacerbated the problem. This current Congress, then, can continue in the ignoble tradition of that venerable institution, or it can take actions which lessen the debt burden. This step would not be unprecedented, but it would be the first such action pursued in many decades.
What would such a step entail? We are told that a failure to raise the debt ceiling will ensure that the U.S. defaults. This is not true. Tax receipts are sufficient to cover interest payments on the debt with money leftover. Should the Congress fail to authorize an increase in the debt ceiling, only foolish and pernicious action by the President would lead to default.
Contrary to the nonsense emanating from Washington then, an increase in the debt ceiling makes default more likely. It is not in the interest of the American people to be burdened with more debt. Instead, the United States Congress must pass a budget which ensures that they are not dependent on debt to make ends meet. The Federal Government is projected to take in 2.1 trillion dollars in fiscal year 2011. This should be sufficient to cover our expenditures. To ensure that this is so, Congress need only do its job: make the cuts necessary to restore solvency. Instead, both parties are taking purely political positions which will do nothing to alleviate the debt crisis.
It is true that making these cuts will be difficult. Present revenues are insufficient to cover Social Security, Medicare and Defense. Hence, even if we scrap every other Federal program, we will need to trim one of the big three to eliminate the deficit. Yet, far from getting better, the problem will become more acute each and every year. Boomers will retire--senselessly I might add, given the nation's impending bankruptcy--putting more stress on Social Security and Medicare. Nor is Defense likely to be willing to take a haircut. Judging from right-wing talk radio, cuts to defense are as intolerable as tax hikes; the Democrats, meanwhile, under our Nobel Peace Prize winning president, have wars going with six countries--Afghanistan, Iraq, Pakistan, Libya, Yemen and Somalia. So the cuts will be difficult to make. Yet this, precisely the task to which our representative are supposed to be devoted, is furthest from Washington's mind.
I cannot say that I see a way out of this mess. We will certainly not grow out of it. Even supposing generous--read: dubious--rates of growth, our entitlement programs and our Empire are too expensive for an aging populace, dependent on Mexican migrants to replace aging boomers. The recession has technically ended, but it continues a world impervious to Keynesian economists.
In all probability, Washington will continue to try to avoid making any hard decisions; we will take on ever more debt, and the parties will try to blame the respective other; the Federal Reserve will purchase any treasuries the Chinese prove unwilling to take; the government will still be able to pay its bills; the people are compelled to make ends meet with depreciated dollars. So it works out for everyone, unless one happens to be a member of the American populace.
It is not the decline and fall that saddens me; as we well know, all good things come to end. No, the tragedy of the American experiment is that we have given no resistance to this great evil. Indeed, we have given it our sanction by continuing to vote for and elect people who care not a whit for us. If this indifference is not painfully obvious now, I cannot say when reality will impinge upon our splendid little fantasies. This grand experiment cannot continue if we are to be governed by those who concern themselves only with the attainment and retention of power. When one puts aside the minute political difference, this, more than anything, unites the two parties. The people are without a voice in Washington.
Wednesday, July 27, 2011
Sunday, July 17, 2011
When lies end
"It will accumulate: moreover, it will reach a head; for the first of all Gospels is this, that a Lie cannot endure for ever." - Thomas Carlyle, The French Revolution
"As indicated in today’s policy statement, the economic recovery appears to be proceeding at a moderate pace, though somewhat more slowly than the Committee had expected, and some recent labor market indicators have also been weaker than expected." - Ben Bernanke, 7/22/11 Press Conference
If one simply points out that there has been no recovery, one is liable to be taken for a biased observer. Those who believe that things are bad--as indeed they are--fail to note--or so we are told--how much worse things would have been had the Federal Reserve and the U.S. Government not acted as they did. This is intended as a serious rebuttal. Yet the very impetus for doubling the monetary base, coupled with the largest stimulus program in the history of civilization, was the fear that without such drastic measures the world as we know it would have descended into violence and chaos. It follows then, that so long as the world stands, the stimulus worked. Only when the apocalypse is upon us will we be able to second guess the wisdom of recent monetary and fiscal policy.
This is convenient for the architects and advocates for said policies, but it's hardly a persuasive argument, especially since there is no proof that the collapse of the housing market would have resulted in Armageddon. Iceland did not pursue the same policies as the Americans, but--as yet--its citizens have not resorted to cannibalism or virgin sacrifice. Whether or not economic stimulus is helpful, then, we know that civilization may continue without it. We will never know how America would have fared had our politicians not proceeded to give billions to bankers and spend borrowed money on dubious political products. All we can say is that we did those things and that the economy is still doing very poorly. We cannot empirically verify that the policies of our government caused the economy to worsen--though we could demonstrate theoretically why it may have done so--but we can emphatically insist that the recovery has not been delivered as promised.
Ben Bernanke is an academic. Recently, he has learned that the neat theoretical world of Keynesian macroeconomics is quite different from the messy world in which he finds himself head of the central bank of the United States. Yet being an academic, it is unlikely that he will alter his beliefs in the theories on which he has expounded for many years. He knows that what he did was right and that the economy should be recovering. He also knows that the economy is not performing as expected. This disparity between reality and his theoretical models can be explained by temporary factors, such as "the aftermath of the tragic earthquake and tsunami in Japan." In fact, it has to be explained in this manner, for his theories cannot be wrong.
Bernanke also points out that: "consumers’ purchasing power has been damped by higher food and energy prices." He offers no word on what may have caused the prices of food and energy to rise, which is to say, he's not about to finger the Federal Reserve as the sole vehicle of inflation. His charts show that inflation is under control, so increases in food and energy prices must be... temporary.
Bernanke's problem is that temporary is becoming more permanent. The sycophantic media believes that he saved the global economy, so they will continue to give him the benefit of the doubt. But we are still something of a Republic, so the people believe their opinion about these sort of things matters. Most Americans have not heard of Bernanke; fewer still have heard of John Maynard Keynes, the defunct economist to whom the Federal Reserve Chairman is a slave. Yet they know when prices go up. They know when jobs go away--and when they don't come back.
Since both parties are enthrall to the corporations and banks at whose behest the stimulus was passed in the first place, prospects for a drastic alteration of fiscal and monetary policy are not good. Some of the tea party candidates show indications of an independent streak, but with the Republicans set to capitulate and raise the debt ceiling in short order, it's save to say that the moneyed interests who caused the housing bubble and also benefited from its bursting, still very much rule the United States.
Which brings us, at long last, back to Carlyle. There are very real limits to how long a lie can be told. In a sit-com, the truth is propounded by the end of the half-hour episode. In the real world, a lie can masquerade as truth for much longer, yet it will eventually break under the weight of its own contradictions.
The Government cannot forever print money for billionaire bankers, thereby impoverishing the rest of Americans, all while insisting that we are on the road to a recovery. I do not say this because I think Americans as a people are extremely intelligent and thus difficult to dupe. On the contrary, in our present state of torpidity, the flicking of television sets has caused us to be duped for a considerable period of time. Yet, as Louis XVI discovered, it is an unwise policy to expect that which is dormant to remain thus forever. Poke him enough, and even the laziest of dogs will awake and attack. And, although he often gives cause to make us forget, man is nobler than any beast.
One cannot mention Carlyle and the Revolution in France without clarifying one's position regarding the prospects of another. At present, the American people, or those that pay attention to these sorts of things, are distracted by the political circus in Washington. The conservatives labor under the illusion that ousting Obama will somehow right the ship of state while the left, with equal lack of sense, believes that handing over the Executive to a Republican would render significant harm to the nation. Comparatively few realize that electoral politics are a mere diversion at this late stage of the Republic. Once the people realize that they are powerlessness to affect reform through official channels, we move one step closer to revolution.
So, for awhile at least, we will remain as we are. But the lies are mounting, moving us closer and closer to a precipice. In a subsequent post, I'll try to flesh out this idea more fully, but for the moment it pays to watch the narrative as constructed by the media to defend government policies and the reality, insofar as we can grasp it, as documented by various marginalized media outlets. The tension between the narrative and reality will become more strained as the former is exaggerated to compensate for the inability of stubborn reality to conform. The days of these particular lies are numbered.
"As indicated in today’s policy statement, the economic recovery appears to be proceeding at a moderate pace, though somewhat more slowly than the Committee had expected, and some recent labor market indicators have also been weaker than expected." - Ben Bernanke, 7/22/11 Press Conference
If one simply points out that there has been no recovery, one is liable to be taken for a biased observer. Those who believe that things are bad--as indeed they are--fail to note--or so we are told--how much worse things would have been had the Federal Reserve and the U.S. Government not acted as they did. This is intended as a serious rebuttal. Yet the very impetus for doubling the monetary base, coupled with the largest stimulus program in the history of civilization, was the fear that without such drastic measures the world as we know it would have descended into violence and chaos. It follows then, that so long as the world stands, the stimulus worked. Only when the apocalypse is upon us will we be able to second guess the wisdom of recent monetary and fiscal policy.
This is convenient for the architects and advocates for said policies, but it's hardly a persuasive argument, especially since there is no proof that the collapse of the housing market would have resulted in Armageddon. Iceland did not pursue the same policies as the Americans, but--as yet--its citizens have not resorted to cannibalism or virgin sacrifice. Whether or not economic stimulus is helpful, then, we know that civilization may continue without it. We will never know how America would have fared had our politicians not proceeded to give billions to bankers and spend borrowed money on dubious political products. All we can say is that we did those things and that the economy is still doing very poorly. We cannot empirically verify that the policies of our government caused the economy to worsen--though we could demonstrate theoretically why it may have done so--but we can emphatically insist that the recovery has not been delivered as promised.
Ben Bernanke is an academic. Recently, he has learned that the neat theoretical world of Keynesian macroeconomics is quite different from the messy world in which he finds himself head of the central bank of the United States. Yet being an academic, it is unlikely that he will alter his beliefs in the theories on which he has expounded for many years. He knows that what he did was right and that the economy should be recovering. He also knows that the economy is not performing as expected. This disparity between reality and his theoretical models can be explained by temporary factors, such as "the aftermath of the tragic earthquake and tsunami in Japan." In fact, it has to be explained in this manner, for his theories cannot be wrong.
Bernanke also points out that: "consumers’ purchasing power has been damped by higher food and energy prices." He offers no word on what may have caused the prices of food and energy to rise, which is to say, he's not about to finger the Federal Reserve as the sole vehicle of inflation. His charts show that inflation is under control, so increases in food and energy prices must be... temporary.
Bernanke's problem is that temporary is becoming more permanent. The sycophantic media believes that he saved the global economy, so they will continue to give him the benefit of the doubt. But we are still something of a Republic, so the people believe their opinion about these sort of things matters. Most Americans have not heard of Bernanke; fewer still have heard of John Maynard Keynes, the defunct economist to whom the Federal Reserve Chairman is a slave. Yet they know when prices go up. They know when jobs go away--and when they don't come back.
Since both parties are enthrall to the corporations and banks at whose behest the stimulus was passed in the first place, prospects for a drastic alteration of fiscal and monetary policy are not good. Some of the tea party candidates show indications of an independent streak, but with the Republicans set to capitulate and raise the debt ceiling in short order, it's save to say that the moneyed interests who caused the housing bubble and also benefited from its bursting, still very much rule the United States.
Which brings us, at long last, back to Carlyle. There are very real limits to how long a lie can be told. In a sit-com, the truth is propounded by the end of the half-hour episode. In the real world, a lie can masquerade as truth for much longer, yet it will eventually break under the weight of its own contradictions.
The Government cannot forever print money for billionaire bankers, thereby impoverishing the rest of Americans, all while insisting that we are on the road to a recovery. I do not say this because I think Americans as a people are extremely intelligent and thus difficult to dupe. On the contrary, in our present state of torpidity, the flicking of television sets has caused us to be duped for a considerable period of time. Yet, as Louis XVI discovered, it is an unwise policy to expect that which is dormant to remain thus forever. Poke him enough, and even the laziest of dogs will awake and attack. And, although he often gives cause to make us forget, man is nobler than any beast.
One cannot mention Carlyle and the Revolution in France without clarifying one's position regarding the prospects of another. At present, the American people, or those that pay attention to these sorts of things, are distracted by the political circus in Washington. The conservatives labor under the illusion that ousting Obama will somehow right the ship of state while the left, with equal lack of sense, believes that handing over the Executive to a Republican would render significant harm to the nation. Comparatively few realize that electoral politics are a mere diversion at this late stage of the Republic. Once the people realize that they are powerlessness to affect reform through official channels, we move one step closer to revolution.
So, for awhile at least, we will remain as we are. But the lies are mounting, moving us closer and closer to a precipice. In a subsequent post, I'll try to flesh out this idea more fully, but for the moment it pays to watch the narrative as constructed by the media to defend government policies and the reality, insofar as we can grasp it, as documented by various marginalized media outlets. The tension between the narrative and reality will become more strained as the former is exaggerated to compensate for the inability of stubborn reality to conform. The days of these particular lies are numbered.
Saturday, July 16, 2011
Newt so good with money
The loathsome Newt Gingrich has some bad news. His campaign is evidently over one million in debt. Were this an Onion article, we would get a quote from one of his campaign staff noting that this is good preparation for becoming president of a nation which is many trillions in debt. Alas, this is not satire, this is merely an establishment Republican candidate who is so inept that Fred Thompson is embarrassed.
With the notable exception of Ron Paul, none of the Republican presidential candidates have shown that they understand two very important things. First, the country cannot return to solvency by closing loopholes in the tax code and defunding Obamacare. Social Security and Medicare are both bankrupt; in the short term they can be financed through the general fund--so long as everything else is cut--but in the longer term, even this is unsustainable. Second, in addition to being extremely costly, the Empire foments hatred of the U.S., which is to say that endless wars are counter to the ends at which our country is aiming. Any candidate who professes to tackle out debt problem while leaving military cuts off the table cannot be taken seriously.
One last note. Since Ron Paul is no longer running for Congress, he could run as a third party candidate. I do not expect him to do this, as the primary intention of his campaign is to spread the message of liberty, but it is interesting nonetheless. When the idiot Republicans nominate someone else, Dr. Paul will be able to return to his home to be with his family in retirement--one that is well deserved for the only public servant for whom the appellation is not disappropos.
With the notable exception of Ron Paul, none of the Republican presidential candidates have shown that they understand two very important things. First, the country cannot return to solvency by closing loopholes in the tax code and defunding Obamacare. Social Security and Medicare are both bankrupt; in the short term they can be financed through the general fund--so long as everything else is cut--but in the longer term, even this is unsustainable. Second, in addition to being extremely costly, the Empire foments hatred of the U.S., which is to say that endless wars are counter to the ends at which our country is aiming. Any candidate who professes to tackle out debt problem while leaving military cuts off the table cannot be taken seriously.
One last note. Since Ron Paul is no longer running for Congress, he could run as a third party candidate. I do not expect him to do this, as the primary intention of his campaign is to spread the message of liberty, but it is interesting nonetheless. When the idiot Republicans nominate someone else, Dr. Paul will be able to return to his home to be with his family in retirement--one that is well deserved for the only public servant for whom the appellation is not disappropos.
Wednesday, July 13, 2011
Unsound Roman money
The difficult task of explaining with exactness the utter demoralization of the currency at the moment when Diocletian ascended the throne cannot be here attempted. Only a few outstanding features can be delineated. The political importance of sound currency has never been more conspicuously, shown than in the century which followed on the death of Commodus (180 AD)...
Although the imperial coins underwent a certain amount of depreciation between the time of Augustus and that of the Severi, it was not such as to throw out of gear the taxation and the commerce of the Empire. But with Caracalla a rapid decline set in, and by the time of Aurelian the disorganization had gone so far that practically gold and silver were demonetized, and copper became the standard medium of exchange. The principal coin that professed to be silver had come to contain no more than five per cent of that metal, and this proportion sank afterwards to two per cent. What a government gains by making its payments in corrupted coin is always far more than lost in the revenue which it receives. The debasement of the coinage means a lightening of taxation, and it is never possible to enhance the nominal amount receivable by the exchequer so as to keep pace with the depreciation. - The Cambridge Medieval History Series, Volume I, pp. 39-40
Plus ca change... The series has been rewritten and reissued periodically, but my highly used copy is about one hundred years old, which is to say that it was written before the ascendancy of Keynesianism. Hence the historian recognizes, very clearly, that debasement does not work. This holds true whether the coins are being reforged with higher percentages of cheaper metal, or if the central bank issues more fiat currency: inflation is ruinous to economies.
No doubt Krugman would have had Diocletian debase his currency even more in order to stimulate the Roman economy and avoid a liquidity trap.
The lesson repeats through history. At some point, the government incurs various expenditures which cannot be funded through taxation, so it debases the currency to makes ends meet. Rather than impose austerity measures upon itself, it debases the currency further; if it persists, the currency becomes effectively worthless. Hence Diocletian began to accept taxes in the form of agricultural products, thereby unintentionally instituting the serf system.
There is no way of knowing if the Federal Reserve will proceed until hyperinflation sets in. I have very little faith in Bernanke's restraint, but the banksters who run our country will be reluctant to allow him to destroy the currency completely, so while inflation is a good bet in the near and medium term, unlike the decline of empires who follow late Roman monetary policy, hyperinflation is by no means inevitable.
The debt ceiling
Whatever one may think of our form of government, it is by all accounts amusing. The house Republicans, fresh off an electoral shellacking of the other faction of the ruling party, is holding the line on tax increases. This is unusual insofar as the right never holds a hardline on anything, but it is charming, albeit transient. On the other side, President Obama and the Democrats lament that the mean old Republicans refuse to consider tax cuts. The narrative, as always, is that the Democrats are concerned with the poor and the middle class while Republicans only care about millionaires and billionaires. This might pass muster if the President's party hadn't spent the last two years giving trillions of dollars to the likes of Goldman Sachs and J.P. Morgan.
There is some concern that the debt ceiling will not be raised. Coincidentally, this is in accordance with the wishes of the American people. Dutifully, then, the two wings of our ruling party shall come together yet again to raise a symbolic middle finger to the citizenry, whereupon both conservatives and liberals shall blame the mysterious other for the capitulation of their own champions. They will raise the debt ceiling because they always raise the debt ceiling. Kicking the can is the one task the legislative branch seems capable of performing.
Perhaps one should not ignore the chance that the President's egomania and the incompetence of the Congress prevent the ruling class from conspiring against the people. Yet this chance is remote, a point which should not be forgotten as the commentary--and the markets--shall become much more skittish as we approach the twelfth hour, whereupon--miracle of miracles!--a deal will be reached.
It is imperative, we are told, that the government raise the debt ceiling, as to do otherwise would force the U.S. to default--this being deemed irresponsible. The real lack of responsibility is better demonstrated by a government that wages endless wars and runs pyramid schemes, but at this late stage of our republic, rank hypocrisy is scarcely worthy of commentary.
The argument in favor of raising the debt ceiling is patently absurd for at least two reasons. First, since the government has enough money to continue to pay the interest on its debt, default would not occur. Certainly this would require the Congress to re-prioritize so as to avoid stiffing our creditors. Given the character of the Congress, this is a near impossibility; but it could be done, and would be done easily were we not governed by those who possess the restraint of children.
Second, a default becomes more likely, not less, as the U.S. takes on more debt. Given the extent of our unfunded liabilities, $114 trillion at last count, default is inevitable. In that sense, the debate over the debt ceiling is utterly irrelevant, but insofar as the American republic is salvageable, the argument is totally opposed to that made by our representatives in Washington. This only seems strange if, drunk on Keynesian macro-economic theory, we forget that the laws of economics also apply to nations. To put the matter differently, if running up ever higher levels of debt is propitious for a nation, it ought to work similarly for an individual. Here the absurdity becomes manifest: if I have six maxed out credit cards, my situation is not improved by applying for another card. When Congress raises the debt ceiling, they bestow upon themselves another credit card, and make it more likely, not less, that the U.S. will default.
Once they have been given an extended line of credit, Congress will begin to spend more money. To some extent, this will be obligatory, since federal pension funds have already been raided as an accounting trick to allow the government to stumble along until August. The problem, for the Congress--and for us--is that as the U.S. heads towards default, foreigners are becoming disinclined to purchase U.S. treasuries. This will require the Federal Reserve to step in and purchase government debt, though it remains to be seen whether they will do this as part of another round of quantitative easing or whether the Fed will simply debase the currency on the sly. Since Bernanke and his magical printing press are increasingly in the spotlight, it will be difficult for him to hide, but it is nonetheless bad news for anyone who holds U.S. dollars, which is to say, the lot of us.
Since there was no economic recovery, there was no double-dip recession, but I suspect that we will hear the latter term bandied about more frequently as it becomes clear, even to the clueless commentariat, that if the unemployment numbers are ever increasing, we are not in the midst of a recovery.
There is some concern that the debt ceiling will not be raised. Coincidentally, this is in accordance with the wishes of the American people. Dutifully, then, the two wings of our ruling party shall come together yet again to raise a symbolic middle finger to the citizenry, whereupon both conservatives and liberals shall blame the mysterious other for the capitulation of their own champions. They will raise the debt ceiling because they always raise the debt ceiling. Kicking the can is the one task the legislative branch seems capable of performing.
Perhaps one should not ignore the chance that the President's egomania and the incompetence of the Congress prevent the ruling class from conspiring against the people. Yet this chance is remote, a point which should not be forgotten as the commentary--and the markets--shall become much more skittish as we approach the twelfth hour, whereupon--miracle of miracles!--a deal will be reached.
It is imperative, we are told, that the government raise the debt ceiling, as to do otherwise would force the U.S. to default--this being deemed irresponsible. The real lack of responsibility is better demonstrated by a government that wages endless wars and runs pyramid schemes, but at this late stage of our republic, rank hypocrisy is scarcely worthy of commentary.
The argument in favor of raising the debt ceiling is patently absurd for at least two reasons. First, since the government has enough money to continue to pay the interest on its debt, default would not occur. Certainly this would require the Congress to re-prioritize so as to avoid stiffing our creditors. Given the character of the Congress, this is a near impossibility; but it could be done, and would be done easily were we not governed by those who possess the restraint of children.
Second, a default becomes more likely, not less, as the U.S. takes on more debt. Given the extent of our unfunded liabilities, $114 trillion at last count, default is inevitable. In that sense, the debate over the debt ceiling is utterly irrelevant, but insofar as the American republic is salvageable, the argument is totally opposed to that made by our representatives in Washington. This only seems strange if, drunk on Keynesian macro-economic theory, we forget that the laws of economics also apply to nations. To put the matter differently, if running up ever higher levels of debt is propitious for a nation, it ought to work similarly for an individual. Here the absurdity becomes manifest: if I have six maxed out credit cards, my situation is not improved by applying for another card. When Congress raises the debt ceiling, they bestow upon themselves another credit card, and make it more likely, not less, that the U.S. will default.
Once they have been given an extended line of credit, Congress will begin to spend more money. To some extent, this will be obligatory, since federal pension funds have already been raided as an accounting trick to allow the government to stumble along until August. The problem, for the Congress--and for us--is that as the U.S. heads towards default, foreigners are becoming disinclined to purchase U.S. treasuries. This will require the Federal Reserve to step in and purchase government debt, though it remains to be seen whether they will do this as part of another round of quantitative easing or whether the Fed will simply debase the currency on the sly. Since Bernanke and his magical printing press are increasingly in the spotlight, it will be difficult for him to hide, but it is nonetheless bad news for anyone who holds U.S. dollars, which is to say, the lot of us.
Since there was no economic recovery, there was no double-dip recession, but I suspect that we will hear the latter term bandied about more frequently as it becomes clear, even to the clueless commentariat, that if the unemployment numbers are ever increasing, we are not in the midst of a recovery.
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