gunDriller
24th August 2010, 11:38 AM
I just saw this article about some professor Kotlikoff who ran through the exercise of running through all the details to determine total US debt. And $202 Trillion was the number he got.
If we accept the observation that the US Gov. is that an ongoing criminal enterprise ... given that they DO have a money printing press (actually, it's a more complex & electronic system, with the same net effect) --- does it MATTER whether the number is $50 Trillion or $200 Trillion ?
Prof. Kotlikoff's $202 Trillion is the biggest number I've heard, but I guess the answer to the question, "will the US gov. use the printing press to deal with that $202 Trillion debt" is ... DUH ! ;D
Of course they will ! They are (already using the printing press). They announced it last year ($300 Billion), they never stopped printing.
Then a few weeks ago the Fed (FOMC) had their meeting, and said, "We will use the proceeds from the sale of mortgage backed securities to purchase US Government debt".
So ... what proceeds might that be ? Those were toxic securities. The government had them in their possession because the maximum value of those assets was Zero.
Last year, when the US gov. made the announcement about "hey we be printing $300 Billion" (the Fed speaks Ebonics ?), the market jacked up 9%, about $80, then lost about 2/3 of that the next few weeks, to end up $30 from when the announcement was made.
We are now 2 weeks and 1 day post-August-FOMC announcement (which was August 10, I think). This time the market (i.e. the gold price) only upticked about $10/ 1%, in the 24 hours after the "we be selling toxic MBS' to pay for US Gov. debt" announcement.
And now, 2 weeks later, it is up from $1190 to $1230. About 3% this time, roughly $40.
So this time, although the price action has been less dramatic, it seems to have more staying power.
Of course the FOMC announcements are only one major force on the market.
Which reminds me - options expiry for Gold Comex is this Friday, August 27, which judging by recent history will create another buying opportunity.
Aren't the precious metal markets fascinating ? ;D
If we accept the observation that the US Gov. is that an ongoing criminal enterprise ... given that they DO have a money printing press (actually, it's a more complex & electronic system, with the same net effect) --- does it MATTER whether the number is $50 Trillion or $200 Trillion ?
Prof. Kotlikoff's $202 Trillion is the biggest number I've heard, but I guess the answer to the question, "will the US gov. use the printing press to deal with that $202 Trillion debt" is ... DUH ! ;D
Of course they will ! They are (already using the printing press). They announced it last year ($300 Billion), they never stopped printing.
Then a few weeks ago the Fed (FOMC) had their meeting, and said, "We will use the proceeds from the sale of mortgage backed securities to purchase US Government debt".
So ... what proceeds might that be ? Those were toxic securities. The government had them in their possession because the maximum value of those assets was Zero.
Last year, when the US gov. made the announcement about "hey we be printing $300 Billion" (the Fed speaks Ebonics ?), the market jacked up 9%, about $80, then lost about 2/3 of that the next few weeks, to end up $30 from when the announcement was made.
We are now 2 weeks and 1 day post-August-FOMC announcement (which was August 10, I think). This time the market (i.e. the gold price) only upticked about $10/ 1%, in the 24 hours after the "we be selling toxic MBS' to pay for US Gov. debt" announcement.
And now, 2 weeks later, it is up from $1190 to $1230. About 3% this time, roughly $40.
So this time, although the price action has been less dramatic, it seems to have more staying power.
Of course the FOMC announcements are only one major force on the market.
Which reminds me - options expiry for Gold Comex is this Friday, August 27, which judging by recent history will create another buying opportunity.
Aren't the precious metal markets fascinating ? ;D