Onward Toward Default

People are hard to please these days.  Clients, customers, and cohorts – the whole lot.  They’re quick to point out your faults and flaws, even if they’re guilty of the same derelictions.

 

The age-old art of assigning blame – in this case complemented by firm knowledge of the proper way to prosperity (see lower right corner). Jack Lew not only sees the future with perfect clarity these days, he also seems to have spent his time as treasury secretary garnering plenty of “not guilty of anything/ had absolutely nothing to do with it/ innocent as the snow is white/ just a job title, doesn’t mean a thing” points. All the bad stuff related to public debt and deficits clearly happened before and/or after him, or in other words, he dindu nuffin’ . Similar to the discoverers of the way to prosperity of yore, he does however not only know these days what ought to be done, but also what is going to happen. His timing on the former issue may be a bit off, but then again, nobody’s perfect. With regard to the latter, he should definitely try his hand at stock market trading given his new-found powers of perfect foresight. [PT]

 

The recently retired always seem to have the biggest ax to grind. Take Jack Lew, for instance. He started off the New Year by sharpening his ax on the grinding wheel of the GOP tax bill. On Tuesday, he told Bloomberg Radio that the new tax bill will explode the debt and leave people sick and starving.

 

“It’s a ticking time bomb in terms of the debt. The next shoe to drop is going to be an attack on the most vulnerable in our society.  How are we going to pay for the deficit caused by the tax cut?  We are going to see proposals to cut health insurance for poor people, to take basic food support away from poor people, to attack Medicare and Social Security.  One could not have made up a more cynical strategy.”

 

The tax bill, without question, is an impractical disaster.  However, that doesn’t mean it’s abnormal.  The Trump administration is merely doing what every other administration has done for the last 40 years or more.  They’re running a deficit as we march onward towards default.

We don’t like it.  We don’t agree with it.  But how we’re going to pay for it shouldn’t be a mystery to Lew.  We’re going to pay for it the same way we’ve paid for every other deficit: with more debt.

 

A Job Well Done

Jack Lew of all people should know this.  If you recall, Lew was the United States Secretary of Treasury during former President Obama’s second term in office.  Four consecutive years of deficits – totaling over $2 trillion – were notched on his watch.

Did he ever mention the debt ticking time bomb when he had the opportunity to do something about it?  We don’t remember ever hearing this debt bomb allusion from Lew while he was Treasury Secretary.  Do you?

We do remember, however, that as part of his job he had to place his autograph on the face of the Federal Reserve’s legal tender notes.  Did it ever occur to Lew that, in so doing, he was publicly endorsing and personally ratifying unconstitutional money with his very signature?

Most likely, it never crossed his mind.  And if it had, the illegality of the paper dollar certainly didn’t bother him enough to prompt his resignation and the pursuit of honest employment.  He did none of these things.

Instead, Lew played his part to perfection.  That is, he rolled over year after year in his quest for the expedient.  He did the job everyone wanted him to do.  He did a job well done.

Likewise, now that he’s off the clock he’s sounding the alarm on the nation’s debt problem.  According to Lew, it’s all Trump’s fault.  Not his.

As an aside, we don’t necessarily take issue with Lew’s assessment of the tax bill and the ticking time bomb metaphor.  What we take issue with is the timing of his two-faced utterances.

 

Das Jack Lew in a nutshell. Nobody really remembers Jack Lew, mainly because he wasn’t very memorable. Even G.W. Bush’s short-lived and completely inconspicuous treasury secretary Paul “Money can be ath Lethal ath a Bullet” O’Neill is remembered more widely as far as we can tell. Lew (a.k.a. “Whatshisname” to most people) was reportedly a “fat cat banker” whom Obama lured away from Citigroup. Despite his presumed professional qualifications, certain basic arithmetic operations such as addition were apparently not really his thing (see above). His main claim to fame was his strange signature, which looks like an endless row of zeros looped together and was at one point  suspected of possibly accelerating the inexorable devaluation of the US dollar. The pseudo-scientific field of graphology was beside itself with excitement, and we suppose money counterfeiters must have salivated over the prospect of being able to forge his signature with the help of a slinky. He wasn’t even very good at deflecting criticism over the fact that the IRS was misused to target political opponents of the administration. He simply asserted that this particular bureaucracy was outside his purview, which it apparently had in common with the deficit under his watch. [PT]

 

Why You Should Embrace the Twilight of the Debt Bubble Age

In truth, no one really cares about deficits and debt.  Not former Treasury Secretary Jack Lew.  Not current Treasury Secretary Steven Mnuchin.  Not Trump.  Not Obama.  Not your congressional representative.  Not Dick Cheney.

Plain and simple, unless there are political points to score like Lew was aiming for this week, no one gives a doggone hoot about the debt problem.  That’s a problem for tomorrow.  Not today.

Quite frankly, everyone loves government debt – DOW 25,000!  Aging baby boomers know they need massive amounts of government debt to pay their social security, medicare, and disability checks.

On top of that, many employed workers are really on corporate welfare.  They’re dependent upon the benevolence of government contracts to provide their daily bread.

 

Dick Cheney once said something politicians of all stripes just loved to hear. There is a problem with the idea though, despite the fact that it seems as if he was right so far (not even that is true actually, because the federal debtberg has a great many “unseen” effects – and none of them are good). [PT]

 

What’s more, in this crazy debt based fiat money system, debt must perpetually increase, or the whole financial system breaks down.  Specifically, more debt is always needed to keep asset prices inflated and the wealth mirage visible.

By providing a quick burst to the rate of debt increase, President Trump expects to get a quick burst to the rate of GDP growth.  We suspect President Trump and his followers will be underwhelmed by what effect, if any, the tax cuts have on the economy.  Time will tell.

In the meantime, don’t fret about government deficits and debt.  Political leaders may say deficits don’t matter.  But they do matter.  In fact, soon they’ll matter a lot.

We’re in the twilight of the debt bubble age.  Embrace it.  Love it.  What choice do you have, really?  There’s nothing Jack Lew – or anyone else – can do about it.

 

A couple of cartoons by Michael Ramirez on the debt tsunami bearing down on the US… as the Greeks found out to their chagrin, deficits and debts don’t matter until they do. That is the main problem with Dick Cheney’s notion – everything goes perfectly well for a long time, but that creates a completely unwarranted illusion of safety. The unknowable threshold that has to be crossed for the public debt to become a glaringly obvious problem, is only crossed once after all – at the very point at which it is definitely too late to deal with it. [PT]

 

Image captions by PT

 

MN Gordon is President and Founder of Direct Expressions LLC, an independent publishing company. He is the Editorial Director and Publisher of the Economic Prism – an E-Newsletter that tries to bring clarity to the muddy waters of economic policy and discusses interesting investment opportunities.

 

 

 

Emigrate While You Can... Learn More

 


 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA

   
 

2 Responses to “Why You Should Embrace the Twilight of the Debt Bubble Age”

  • Hans:

    J Lew has no credibility. I seriously doubt he ever
    made any similar claims, while employed on behalf
    of the Barama administration.

    There is now over 231 trillion dollars worth of debt
    worldwide and one day it will collapse under its own
    weight.

    I wonder how much of today’s economic growth can
    be attributed to the finance of debt?

    The time is now, to prepare for this colossal calamity.

  • Galactus:

    “We’re in the twilight of the debt bubble age. Embrace it. Love it. What choice do you have, really? ”

    Reminds me of the full title of Dr. Strangelove or “How I Learned to Stop Worrying and Love the Bomb”

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • The Gold Sector Remains at an Interesting Juncture
      Technical Divergence Successfully Maintained In an update on gold and gold stocks in mid June, we pointed out that a number of interesting divergences had emerged which traditionally represent a heads-up indicating a trend change is close (see: Divergences Emerge for the details). We did so after a big down day in the gold price, which actually helped set up the bullish divergence; this may have felt counter-intuitive, but these set-ups always do. Consider now the updated chart below...
  • Confronting the Dragon with Peter Navarro
      Of No Real Use A young man might go to business school believing he is obtaining some sort of academic training that will enable him to make a comfortable living.  His degree may gain him entry into a large corporation, where he can work his way up to a good income.  This may even put him on the fast track to what he envisions as success.   Don't knock it: Being useless can lead to unexpected career opportunities... [PT]   But his academic training likely won't...
  • Trouble in Paradise
      Impressive Zeal for Faded Ideals Uncompromising independence, rugged individualism, and limitless personal freedom were once essential to the American character.  According to popular American folklore, they still are.  We have some reservations.   Rugged individualists suffer mid-life identity crisis. [PT]   The principles that gave rise to the American character died long ago.  Freedom.  Liberty.  Independence.  Limited representative government. Sound...
  • The United States of Terror
      Bombs Away! Two recent articles* have again demonstrated that the greatest “terrorist” entity on earth are not the bogymen – Russia, China, Iran, North Korea – so often portrayed by Western presstitutes and the American government, but the United States itself!   This is an old cartoon, but still a good one. It perfectly describes the trigger-happy Western political class and the depth of its “thinking”. By happenstance we recently reviewed the Libya intervention...
  • Gold – Macroeconomic Fundamentals Improve
      A Beginning Shift in Gold Fundamentals A previously outright bearish fundamental backdrop for gold has recently become slightly more favorable. Ironically, the arrival of this somewhat more favorable situation was greeted by a pullback in physical demand and a decline in the gold price, after both had defied bearish fundamentals for many months by remaining stubbornly firm.   The eternal popularity contest...   The list of gold fundamentals that have improved is...
  • Capitulation and Currency Pain - Precious Metals Supply and Demand
      Waving the White Flag The price of gold rose two bucks last week, though the price of silver fell 10 cents. We have seen several analyses recently predicting big price drops, in one case by at least $500 in gold by the end of the year. Is this what capitulation looks like? It’s said they don’t ring a bell at the top, but they don’t ring a bell at the bottom either.   The give-up moment arrives... [PT]   We have also seen technical analysis arguing that...
  • Maurice Jackson Interviews Rick Rule – Investing in Natural Resources
      Contrarian Investment Opportunities in Natural Resources Maurice Jackson of Proven and Probable has recently interviewed Sprott U.S. Holdings CEO Rick Rule, a well known specialist and “old hand” in the natural resource space. This is quite a wide-ranging and interesting interview, so we decided to present it to our readers. Below you find a summary and our comments on the main topics discussed, a video/podcast of the interview,  as well as a download link to a PDF file of the...
  • Black Holes for Capital - Precious Metals Supply and Demand
      Race to the Bottom Last week the price of gold fell $17, and that of silver $0.30. Why? We can tell you about the fundamentals. We can show charts of the basis. But we can’t get into the heads of the sellers.   Other people's fiat: in the global race to the bottom, it was recently the turn of emerging market currencies to tank. [PT]   We can say that in the mainstream view, the dollar is rising. The dollar, in their view, is not measured in gold but in rupees in...
  • The True Sport of MAGA
      Chest Bumps One of the more extraordinary things that investors have seen in living memory is unfolding at this precise moment. This goes for business leaders, money managers, veteran Wall Streeters, value investors, 401(k) holders, momentum traders, FX guys, gold bugs, technical gurus, chartists, pork belly speculators, quants, astrologists, Larry Summers, put option sellers, dweebs and geeks, millennial index fund enthusiasts, and everyone in between.   Pork belly speculators...

Support Acting Man

Item Guides

j9TJzzN

The Review Insider

Dog Blow

Austrian Theory and Investment

Archive

350x200

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

Mish Talk

 
Buy Silver Now!
 
Buy Gold Now!
 

Oilprice.com