Saturday, March 21, 2009

Is The End Nigh, Yet?

March 18, 2009, I’m marking it on my calendar. Was that the day our president admitted to a high bowling score of 129? No. It was the day the Federal Reserve announced they would begin buying Treasury Bills. In effect, we are now loaning money to ourselves. There is only one reason why anyone would do this. Nobody else will loan us the money. Like an overzealous mall rat, we are paying off one credit card with another credit card. It is the last act of the soon to be bankrupt.

Ever since Hillary’s visit, the Chinese have been making public noises about their nervousness over our debt. They’re financing quite a lot of it and they have good reason to be nervous. With the currency being inflated, they won’t be getting the returns they were expecting when they bought in. Having taken our best customer to the cleaners, can we really expect them to come back for more?

There are stories circulating that the US dollar is going to lose its reserve status. It’s a subject you’ll be hearing more about once the upcoming G20 meetings get under way. Reserve status is a huge advantage to us. Not only do other countries buy dollars for emergency use, but also having our own currency as reserve, allows for all sorts of game playing with the debt. And boy have we been playing games with our debt lately.

Other countries resented us for it before, but now they are being pushed over the edge. Any group of countries can create a currency amongst themselves, and it looks like some are going to give it a try. Russia seems to be the ringleader. There is certainly talk behind closed European doors going on.

Here's what the metals have been doing through all this. The blue line shows the day before; stable and trending slightly down. The red line shows a spike up at the time of the announcement. The yellow line is the day after.

The same with silver:

I'm not quite ready to start walking around downtown with an "The End Is Nigh" sign, but a little metal under the floorboards might be a good idea, if you don't have some already.

1 comment:

The Anon Guy said...

Well that explains the recent jump in my CDE stock.