June 21, 2009
by Gary North
Back in 1973, gold standard advocate John Exter made a phrase famous in hard-money circles: “Pushing on a string.” Exter argued that prices of all assets except gold (he ignored silver) would someday collapse because of the pyramiding of debt. Banks would eventually cease to lend, out of fear of default. That would cause the default.
The FED would inflate the monetary base, he said, but this would not reverse the price decline. The commercial banks would not lend. The FED would therefore push on a string. Its attempt to inflate would fail.
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Banks, Economics, Financial Crises, Inflation/Deflation Banks, collapse, debt, deflation, Economics, economy, fiscal policy, Gold, inflation, monetary policy, strategy, The Fed, US treasury
How California Could Turn its IOUs into Dollars
By Ellen Brown
Global Research, July 22, 2009
California has over $17 billion on deposit in banks that have refused to honor its IOUs, forcing legislators to accept crippling budget cuts. These austerity measures are unnecessary. If the state were to deposit its money in its own state-owned bank, it could have enough credit to solve its budget crisis with funds to spare.
California could pull its deposits out of those depository banks refusing its IOUs and put them instead in its own state-owned bank, following the lead of North Dakota, which now has the only state-owned bank in the country. Set up in 1919 to escape Wall Street predators, the Bank of North Dakota has been generating low-interest credit for the state and its residents for nearly a century. North Dakota is one of only two states (along with Montana) currently able to meet their budgets.
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Banks, Economics, Financial Crises Banks, collapse, debt, fiscal policy, The Fed
Goldman Sachs in Talks to Acquire Treasury Department
Sister Entities to Share Employees, Money
From The Borowitz Report
In what some on Wall Street are calling the biggest blockbuster deal in the history of the financial sector, Goldman Sachs confirmed today that it was in talks to acquire the U.S. Department of the Treasury.
According to Goldman spokesperson Jonathan Hestron, the merger between Goldman and the Treasury Department is “a good fit” because “they’re in the business of printing money and so are we.”
The Goldman spokesman said that the merger would create efficiencies for both entities: “We already have so many employees and so much money flowing back and forth, this would just streamline things.”
Mr. Hestron said the only challenge facing Goldman in completing the merger “is trying to figure out which parts of the Treasury Dept. we don’t already own.”
Goldman recently celebrated record earnings by roasting a suckling pig over a bonfire of hundred-dollar bills.
Elsewhere, conspiracy theorists celebrated the 40th anniversary of NASA faking the moon landing.
And in South Carolina, Gov. Mark Sanford gave his wife a new diamond ring, while his wife gave him an electronic ankle bracelet.
Banks, Humor Banks, fraud, US treasury
To My Clients:
Our accounts are up 5.7 % Y-T-D.
The Dow Jones Average is down 3.75 %
Very briefly, the administration is soon to engage in massive stimulus fiscal spending while the Federal Reserve continues its massive monetary stimulus activities. While these endeavors always take time to filter into the economy, the stock market and the bond market have recently been somewhat buoyant, not necessarily because an economic recovery is imminent, but possibly because of the monetary stimulus taking place. The U.S. Treasury is making enormous demands on the bond market with the huge amounts of debt it needs to sell to finance the fiscal spending and the Federal Reserve is accommodating the Treasury by purchasing large portions of the U.S. Debt. Read more…
Economics, Financial Crises, Markets, Portfolio Management Asset Allocation, economy, fiscal policy, monetary policy, performance, Portfolio Management, stock market, Stocks, strategy, The Fed, US treasury
