Wednesday, October 27, 2010

It's official: world's most powerful financier calls the Obama-Pelosi-Reid spending spree the most brazen Ponzi scheme ever

Since Nancy Pelosi took over the federal purse-strings in 2007 and promised 'no new deficit spending', the Democrats have added $5 trillion to the national debt.

And investor Bill Gross believes America's debt-financing days may be nearing an end. Only he doesn't say it that nicely.

One more thing: Gross runs Pimco, the world's largest bond house. It oversees assets totaling more than $1 trillion. Yes, with a 't'. So he is arguably the world's most powerful financier.

Wednesday is the day when the Fed will announce a renewed commitment to Quantitative Easing – a polite form disguise for 'writing checks.' The market will be interested in the amount (perhaps as much as an initial $500 billion)...

...the American people should recognize that Wednesday, even more than Tuesday, represents a critical inflection point in determining our future prosperity. Of course we’ve tried it before, most recently in the aftermath of the Lehman crisis, during which the Fed wrote $1.5 trillion or so in “checks” to purchase Agency mortgages and a smattering of Treasuries. It might seem a tad dramatic then, to label QEII as "critical," ...

...Check writing in the trillions is not a bondholder’s friend; it is in fact inflationary, and, if truth be told, somewhat of a Ponzi scheme. Public debt, actually, has always had a Ponzi-like characteristic. Granted, the U.S. has, at times, paid down its national debt, but there was always the assumption that as long as creditors could be found to roll over existing loans – and buy new ones – the game could keep going forever...

Now, however, with growth in doubt, it seems that the Fed has taken Charles Ponzi one step further... One and one-half trillion in checks were written [by the Fed] in 2009, and trillions more lie ahead. The Fed, in effect, is telling the markets not to worry about our fiscal deficits, it will be the buyer of first and perhaps last resort. There is no need – as with Charles Ponzi – to find an increasing amount of future gullibles, they will just write the check themselves. I ask you: Has there ever been a Ponzi scheme so brazen? There has not. This one is so unique that it requires a new name. I call it a Sammy scheme, in honor of Uncle Sam and the politicians (as well as its citizens) who have brought us to this critical moment in time...

...The Fed wants to buy, so come on, Ben Bernanke, show us your best and perhaps last moves on Wednesday next. You are doing what you have to do, and it may or may not work. But either way it will likely signify the end of a great 30-year bull market in bonds and the necessity for bond managers and, yes, equity managers to adjust to a new environment.

Which is precisely why we must elect Constitutional conservatives -- who will stand for limited, fiscally responsible government.

We must slash the unconstitutional federal bureaucracies, we must outlaw public sector unions, and we must begin spending within our means.

But we must start on Tuesday. If not, I fear the great American experiment may be near its end.


Anonymous said...

Well said, I was saying the same prior to many saying we should all lay down for Nancy Pelosi, Harry Reid, Hillary Clinton, Barney Frank, etc., prior to 2006.

They were engaged in a little temper tantrum, not realizing they were ready to enable the very worst.

PONZI indeed, probably just like Bill Clinton's new Foundation hiding as a big charity.

Not certain about the preference of Constitutional Conservatives. I like it, support it, but even moderate Republicans aren't this bad. They simply are not the best, but most are not for bankrupting the USA - and frankly the vast majority of the GOP has a very impressive Record. Reagan is a fine example, but so was Dole, Kemp, Gingrich, etc. Bush Jr. gave us essential tax cuts, and even after 9-11 - fighting the GWOT, had the deficits shrinking and under control prior to the Democrats taking control in 2006.

Ironically, if we went back to the Republican Majority policies prior to 2006, we wouldn't be in this mess. There was definitely room for improvement, but it will never be perfect, and certainly we should work to reduce spending and cut programs, entitlements, and bureaucracy.

It is impressive to see the real Conservative revolution in NJ, as Christie again shows great leadership:
"In the first of what could be a nationwide spate of austerity-prompted spending cuts, New Jersey Gov. Chris Christie on Wednesday canceled an over-budget $9-billion-plus commuter train tunnel between his state and Manhattan - shrugging off the Obama administration's efforts to save it."

This was another Democratic Party 'BIG DIG' of UNION payoff scheduled for NJ, which is why the Democrats are screaming foul.

They will lose BILLIONS in taxpayer funds, intended to be grafted via the UNION Interests. NJ does not need another tunnel at this time.

Christie was never considered a fashionable 'constitutional conservative'. The fashion favored Lonegan, who is impressive. Lonegan probably would not have been elected. Also, framing Christie as a RINO was completely absurd.

No doubt, thankfully Christie is doing wonders. No doubt we want the best candidates. But the sale of the Republican Party is overtly negative.

Thank you.

Anonymous said...

We are going to have to regain control of our currency before we can regain control of our country.

No matter how much honest money people can raise to build their county the way they want there are those that can just fire up the fiat money presses and print up what ever they want to see to it they get their way.

Maybe this will help make the danger of fiat money clear.

Imagine you and me are setting across from each other. We create enough money to represent all of the world's wealth. Each one of us has one SUPER Dollar in front of him.

You own half of everything and so do I.

I'm the government though. I get bribed into creating a Central Bank.

You're not doing what I want you to be doing so I print up myself eight more SUPER Dollars to manipulate you with.

All of a sudden your SUPER Dollar only represents one tenth of the wealth of the world!

That isn't the only thing though. You need to get busy and get to work because YOU'VE BEEN STIFFED with the bill for the money I PRINTED UP to get YOU TO DO what I WANTED.

That to me represents what has been happening to the economy, and us, and why so many of our occupations just can't keep up with the fake money presses.