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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: benwood who wrote (109243)10/21/2010 11:49:44 AM
From: rr_burns  Read Replies (1) of 110194
 
I've been thinking about your comment:
"One huge wildcard held by the house in our case is the trillions of dollars of toxic financial instruments guaranteed by the Fed and the creation of debt/money out of thin air. Do you know if direct monetization occurred in the UK in the late 60s? Also, the public being forced to shift future tax receipts to benefit banking sector reckless behavior and outright fraud? Trillions of debt hidden off Federal balance sheets in the form of Freddie/Fannie black holes? Entitlement demographics are significantly different today with massively greater pressure than in the mid 60s in the UK (or anywhere)."

In the 60's a hard left wing worldview was rampant in England. There were periods where 110% taxation of personal income over certain levels occurred. It was as nuts then as the "too big too fail" bankster ethic of today. I'm not sure it matters if the craziness is on the far left, or the far right. Crazy is crazy.

Both lunatic bankers, and lunatic marxists, inevitably, must obey the laws of physics, mathematics, and the laws of supply and demand. In their extreme both lunacies are the same in that they usually lead to a politically inspired flooding of the marketplace with "money" ( paper promises to pay) in order to facilitate further exchange of goods and services.

The question may really be "How disturbed will China be if the dollar collapses?"

That China raised interest rates to slow domestic demand only this week suggests that they care ( as they took a long time to interfere in their domestic markets), but see it as inevitable. That however is maybe not an expression of concern about money owed to them.

North America needs to wake up to the reality that the welfare of 300 million Americans is a gnats fart issue in comparison to the political stink that 1.3 billion disgruntled local residents can generate.

The second question is "How non disruptive (internationally) does China want to be?"

The answer to that might be in what one thinks their particular dominant political psychosis is. Banker or Marxist? As they get stressed domestically which emerges first?
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