Saturday, March 21, 2009

Thursday, March 19, 2009

Debt Monetization has consequences

Posted by Karl Denninger in Monetary at 15:31

Actions Have Consequences


So The Fed thinks it can print its way out of this eh?


MOSCOW, March 19 (Reuters) - China and other emerging nations back Russia's call for a discussion on how to replace the dollar as the world's primary reserve currency, a senior Russian government source said on Thursday. Russia has proposed the creation of a new reserve currency, to be issued by international financial institutions, among other measures in the text of its proposals to the April G20 summit published last Monday.

Calls for a rethink of the dollar's status as world's sole benchmark currency come amid concerns about its long-term value as the U.S. Federal Reserve moved to pump more than a trillion dollars of new cash into the ailing economy late Wednesday.

Russia met representatives of China, India and Brazil ahead of the G20 finance ministers meeting last week, as the big emerging powers seek to up their influence on decision-making globally. Their first ever joint communique did not mention a new currency but the source said the issue was discussed.

Oops.

By the way, if you want to see lots of "fun" in our currency markets along with a near-immediate bond dislocation, get the oil producers along with China and Russia to agree on a new reserve currency and......

That'd be "goodnight Uncle Sam."

Congress might want to rethink their concept of spending more than they make, thereby effectively calling for "Quantitative Easing" and similar shenanigans.

Yes, I know that contracting spending to tax revenues would be extraordinarily painful and end the stupidity of doing things like granting unlimited "free" medical care in hospitals to illegal aliens.


But if you think an announced change in Social Security, Medicare and similar programs would be bad, how bad do you think one would be that occurs as the consequence of forced action if our bond market was to implode?
Welcome to crazy-town Mr. Bernanke!

Monday, March 16, 2009

What is Bubba Effect?