Times are hard but they will likely get harder. We’ve covered over gaping cracks in the world economy with fiat money paper mache, but it won’t last. In fact the paper mache is disintegrating right in front of us. What Poland did to its pensioners earlier this year is an example of the underlying instability in the world economic system.
When the man who couldn’t recognize a stock market bubble says this, watch out.
Many people are mystified by the kids at the Ron Paul rallies screaming “End the Fed!”
They ask themselves, “Why should we end the Federal Reserve? The Fed helps maintain economic stability right? Every country has to have a central bank. These “End the Fed” kids are nothing but “Paulbots.” The people on CNBC and Bloomberg tell me that the Fed acts in my best interest. I think the people on Bloomberg and CNBC ought to know what’s right for me and my money. Harry Reid is right. Those hard money people and kids at the Ron Paul speeches are nothing but a bunch of anarchists!”
But the main reason many people feel this way is because they fundamentally don’t understand what the “End the Fed” people are really saying and why they are saying it.
“The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.” – The 14th Amendment to the Constitution, Section 4
This is disheartening as Poland appeared until very recently to be on the fast track to legit 1st tier European status. Sadly it has just taken a big step off of this track.
You’ll remember that he was going to make the Fed more “transparent.”
Basically what we are talking about are municipal bonds of another kind and of lower typical quality than most investment grade munis. (Though investors have not demanded that much more in yield historically.) Such bonds are often issued by government agencies in a way that helps municipalities get around restrictions on floating bonds. Kind of junk muni bonds, without the nice payout. Many think this “non-debt debt” is as legit as municipal bonds, but according to the attached article this is far from the case.
What is under the stock market? Is the market reflecting an economy which is fundamentally strong?
And if it does, who will be stuck with the bill?
I have often asked myself this question.