The pages of history are littered with examples of government debt default, but more often with the public paying for debt reduction in basic price inflation. Their pensions and life savings are reduced in value so as to accommodate the costs of social welfare systems, a society living beyond its means, and even the excesses of war. The debts accumulated by many governments large and small cannot be repaid. In some cases riots, corruption, and political extremism have been malignancy offshoots encouraged by the hyper-inflation. History shows that tangible assets like Gold & Silver protect from the worst economic consequences. For the current financial crisis, only one pathway seems likely, although painful. The system cannot be remedied, only patched over. Vast inflation is the only politically viable method of repudiating these unmanageable obligations. Of key importance is the velocity of money in determining whether or not inflation turns into hyper-inflation, which requires final demand not to falter badly. Hyper-inflation requires sustained activity like an engine, which cannot stall. Higher price inflation is coming like night follows day, but probably not an extreme case. It will be painful though, since the cost structure will be the primary damage center. A great honest quote came from Jean-Claude Juncker, prime minister of Luxembourg. He recently commented with respect of the sovereign debt crisis, "We all know what has to be done. What we do not know is how to get re-elected once we have done it." It is like burning people's homes and expecting to stay in high office. The other betrayal is to creditors, who suffer losses in the principal repaid, as a result of a unilateral decision not within their participation. They see the inflation approach as a deep betrayal, and lose their willingness to offer further credit. See the Zero Hedge article ( http://www.zerohedge.com/news/when-money-dies-author-adam-fergusson-and-james-turk-discuss-hyperinflation-past-present-and-fu ).
The Fed was hit with withdrawals of $83.3 billion on November 2nd, the largest withdrawals coming from its deposit accounts. This single day yank was the largest since February 2009, and not associated with quarterly tax payments. The USFed was forced to meet $76 billion in requests apart from movement net of outlays. Details of transactions were in the USFed weekly H.4.1 report. Extraordinary measures were taken to fund the withdrawals, like the outright sale of nearly $24 billion in its USTreasury Note and Bond holdings from the System Open Market Account. After clearing, the SOMA account fell to $2.611 trillion, $43 billion below their stated target of $2.654 trillion. See the Minyanville article ( http://www.minyanville.com/businessmarkets/articles/Wall-Street-open-market-foreign-central/11/7/2011/id/37785 ). The withdrawals are being demanded by countries angered by USGovt policies, like China, Russia, Latin American, and other Asian players. It is only the beginning of a bloodletting. The syndicate running the USGovt is totally clueless what they are up against, misjudging the adversaries. A run on USTBonds is in progress, covered up by Quantitative Easing and Operation Twist, programs given innocuous names but integral to hyper monetary inflation itself.
Some additional comments are warranted. Colleague Craig McC in California made reference to the Civil War. He said, "The Confederate Dollar collapsed from the outside in. As Union forces occupied Southern states, the Confederate Dollar fled to the ever smaller remaining states. This accelerated the Confederate price inflation. The USDollar will likely collapse in a similar fashion, as countries no longer accept the USD and more dollars flood back into the United States." Aaron Krowne of the Mortgage Lender Implode website made reference to a key factor rarely discussed. He said, "See the global narcotics trade. If these cash flows move out of USDollars, the currency is finished, possibly very rapidly. Remember the IMF has admitted that this is what is keeping banks propped up. Insiders might do it and pull the plug once they hold enough Silver and Gold." My perspective is similar. One has to wonder when major nations will hasten their rejection of the USDollar. Also, the longshot risk is some states will reject it indirectly by giving it some competition, like Georgia and Texas and Utah. These states already have movements for acceptance of gold. That brings question to the USDollar quality if not validity. The deep intrigue, deception, and treachery can be traced back to the Revolutionary times and the framing of the Constitution. Thomas Jefferson once said, "I prefer dangerous freedom to peaceful slavery." How true! But Jefferson let some London banker agents into the fold, like Alexander Hamilton. Important errors were made along the way. Hamilton, whose face is on the $10 bill, although never a president, was such an agent for England and the same London bankers that the American colonies tried to escape.
John Pierpont Morgan was an agent for London bankers to a much bigger degree. He helped create the Federal Reserve, with key links and levers controlled by the Bank of England. The close relationship continues to exist in deep subterranean cooperation, including gigantic fraud programs and narco money laundering. Morgan enabled the United States to remain a colony under a formal controlled leash with hidden handlers. Franklin Roosevelt did not deal with a failed attempted Nazi coup. Over 60 years later, the takeover has been completed in a continued chapter, although hidden from view to the sleepy dumbed down American public. Their syndicate includes major important structures of the current system in place, even establishing a Gestapo after the seminal 911 events, but under another name similar to Fatherland, and exactly the KGB translation. The Fascist Business Model flourishes, but at the great cost of systemic ruin for the nation. The US banking system could not survive without the money laundering fees. Irony runs deep, since the USDollar is probably kept alive by the narco barons and their vast drug business protected by US security agencies. They run cash operations, with cash storage, and expansive investment. They purchase national industries, entire small nations like Paraguay, and even assets belonging to sovereign city states.
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