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But for how much longer can the Fed and the Treasury Department keep this scam going?
With the U.S. borrowing up to $100 billion through these bond auctions every week, and another bond auction happening, on average, every three days, that's a lot of opportunity for the Fed to "launder" money in this way. So far, the Fed has already used this backdoor cash swap strategy to buy back over $640 billion in toxic assets from our foreign lenders, with the tacit promise that they will in turn show up at the next bond auction and throw some of that cash back our way. (To see chart of Chinese ownership of toxic assets, go to: http://www.marketoracle.co.uk/Article17566.html)
However, by this means, American taxpayers are taking a beating twice over -- first, as all that printed money dilutes and weakens even more of our saved-up purchasing power, and second, because our Treasury now has to use our tax dollars to start paying interest on the money of ours that it borrowed back!
The Great "Recovery" Rip-Off, Part Two:
Outright THEFT, Backed by the Fed
What's the boldest "swindle" of all? It's when the Fed throws all caution to the wind and writes themselves a check, made out to "cash.' Example: just recently -- on a Thursday, last August -- agents for the Fed stepped into one of their own bond auctions and snapped up $7 billion of America's own 7-year Treasury notes!!!
And that's after buying more than $7 billion worth the day before; so it was over $14 billion in all, and they paid the tab the way the Fed always does, with freshly printed cash. That's like whipping out your Visa card to pay your American Express bill! And that wasn't the first time they've done this. (Supposedly this practice ended in October of 2009: http://www.marketwatch.com/story/fed-ends-treasury-buying-now-what-2009-10-29)
Yet early this year, the Fed actually announced that it would buy up to $300 billion worth of its own debt. This is what they call "monetizing the debt." (It's about time most Americans learn what these arcane terms mean! -- and also what the long-term implications and risks are.) http://www.dailypaul.com/node/86603
All told, says the Wall Street Journal, the Fed's looking to pump up to $1.2 trillion back into U.S. government bond purchases -- on top of the $1.25 trillion they plan to blow on buying up all the toxic mortgage-backed securities (so as to help the banks, foreign and domestic, and all the other major investors who bought this crap). But for how long can the U.S. government print monopoly money to pay its bills?
This, then, is the most blatant theft of all, because printing money to jolt the economy now, represents a cost we will all have to pay for later with interest, plenty of interest. This assumes that the US economy holds together and does not go belly up in the foreseeable future.
But is that a safe assumption? Just over the past year, our pals at the Fed more than doubled the number of paper dollars in circulation -- from $800 billion in August 2008 to $1.7 trillion a year later. And of course you know what happens when the supply of anything goes up too fast: the market value of whatever it is, goes down. http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=364x786939
Governments have always loved to pay back their debts in newly devalued currency because then they get to pay back today's debts with tomorrow's cheaper dollars. But if, as a citizen of that debtor country, you've got personal savings in the bank, or in a CD, you get stuck on the other side of the deal. Example: every $10,000 you had saved this time a year ago has already lost $211 in purchasing power. Go back five years, and you've lost $1,205; ten years, and it's $2,259.
Forget losses in the stock market. That's money that might as well have been stolen directly out of your account! And it was, in a way, because that's how governments transfer the cost of the reckless borrowing from the public to the private individual -- by sticking it to anyone unlucky enough to hold dollars, as they unleash the three stages of their well-crafted scam.
Bottom line: Washington policy makers are mortgaging our future, and our children's future, in unprecedented and devious ways. It's unsound, immoral, and unsustainable. If nothing else changes, the United States will owe 240% more than every business in the U.S. makes each year, and it will happen in less time than it takes a child born this morning to reach age 35! But what foolish lender is, for that long, going to keep lending us the money we need to keep our crazy and supremely wasteful ship of state afloat?
The source of the statistics and central points in the foregoing report:
https://reports.agorafinancial.com/fstfrd/LFSTL200/landing.html
