And if America can’t find anyone willing to finance its deficits, what then? Well, the luxury of issuing debts in the currency you also print is that you can print money to pay for them. Technically, you can never become insolvent when you enjoy this privilege. The Fed, for example, can create new money to buy debt issued by the Treasury, funding deficits ad infinitum.
November 3rd, 2009 | Dan Denning | 5 comments | ContinuedThe Americas
Commentary on American economics, politics and society by your Daily Reckoning editors in Melbourne, Australia. Still haven’t subscribed to the Daily Reckoning? What are you waiting for… sign up here, it’s free!
A chronological listing of articles is below.
What’s the Best Way to Get Through a Debt Crisis?
For at least a thousand years, the business cycle went round and round without help from central bankers or economists. It is only since these geniuses have been on the case that really serious problems have arisen.
November 2nd, 2009 | Bill Bonner | 4 comments | Continued
Feds See Every Emergency as an Opportunity
So far, the feds are the only real winners from any of these crises. Federal outlays, as a percentage of GDP have shot up from less than 20% of GDP in 2000 to more than 26% in 2009.
October 28th, 2009 | Bill Bonner | 0 comments | Continued
Bankers Betting That the Money Given by Feds Will Be Worth Less Next Year
So far the bet has gone their way. Copper has doubled. Gold is up 20%. Stocks markets all over the world are up 60%. Foreign currencies, too, have beaten the dollar.
October 27th, 2009 | Bill Bonner | 2 comments | Continued
Harding the Last American President to Deal Honestly With a Major Financial Crisis
Just look up Warren Harding on Wikipedia. The first entry you will find is not the 29th president of the United States of America, but a rock climber with the same name.
October 26th, 2009 | Bill Bonner | 12 comments | Continued
Government Debt
And that assumes there is no big increase in interest rates…and that the economy recovers as planned. If either of those things fails to happen, the situation will degrade fast.
October 26th, 2009 | Bill Bonner | 0 comments | Continued
Cash is Created When the Feds “Monetize the Debt” by Buying US Treasury Bonds
Are you kidding, dear reader? After being the single largest buyer on the planet? Imagine what will happen to the bond market when investors realize that the Fed is selling! It’s not going to happen.
October 23rd, 2009 | Bill Bonner | 5 comments | Continued
US Dollar a Sort of Monetary Brand
The dollar has been the “Coca-Cola of monetary brands,” says James Grant, editor of Grant’s Interest Rate Observer. But even the best of brands can be lousy investments.
October 22nd, 2009 | Chris Mayer | 4 comments | Continued
Dollar is Merely Retreating in Good Order
Remember the famous German general von Kluck, from whom we get the expression, ‘you dumb kluck?’ Von Kluck was chasing the French down the Marne in 1914. Victory looked like it was close at hand. The French were pulling back.
October 22nd, 2009 | Bill Bonner | 39 comments | Continued
Baby Boomers Figure They Will Have to Work Longer than Expected
A woman loses her house. She stays with friends. She sleeps in her car. She tries to find work. Eventually, she runs out of options and checks into a homeless shelter.
October 21st, 2009 | Bill Bonner | 2 comments | Continued