As hopelessly insolvent albatrosses are facing a collateral shortage the likes of which make an increasing supply of U.S. Treasuries imperative, that the means of increasing leverage be facilitated, there positively is no possibility whatsoever a formal U.S. Treasury default will be ventured here. Having failed to win a bid to explode Treasury issuance directly backing fundamentalist cannibals in Syria, it appears the scam du jour has Venetian lap dogs playing up risk of a Treasury default attempting to gut the social safety net, thereby opening the back door to a larger share of qualified collateral securities with which still greater leverage can be mustered in vain effort to forestall the banking system's collapse. Whether inciting a stampede out of U.S. Treasuries plays into this charade, or whether a manufactured exodus soon comes to fruition, an attempt to provoke a crisis appears to be the aim, with consequent, negative implications at the bottom of the capital structure likely resulting.
Right on cue Team Fraud's boy at Treasury was all over the growing risk today. Yet there evidently wasn't enough servile obeisance to the criminal enterprise driving the U.S. Treasury into the ground conveyed in the six pages of "Potential Macroeconomic Effect Of Debt Ceiling Brinkmanship" produced by a cowering Treasury Department. Our jellyfish Treasury Secretary took time for a swim on the Fox Business network to display his spinelessness in the midst of what otherwise is an extraordinary opportunity to dish out the fruits of Lincoln's defense of the Union made manifest in the U.S. Constitution's 14th amendment. Confirming that, this will to subvert the U.S. Constitution is a White House pandemic was National Economic Council director Gene Sperling, saying the President can't use the 14th Amendment to unilaterally borrow.
Well, here is what Article II, Section 3 of the U.S. Constitution has to say in response to these spineless, incompetent hacks:
"[The President] shall take care that the laws be faithfully executed"There's no higher law than the U.S. Constitution, whose 14th amendment makes very clear a Treasury default is not an option. The White House has no choice but change its tack, while Congress might consider dragging both Lew and Sperling before appropriate committees seeking clarification of their stated positions, which if remaining unchanged could demand their impeachment. Such action, more or less serving to strengthen the executive branch's position, in all probability would bury the Tea Party and relegate it to the dustbin of history.
Out of one side of the President's mouth are endless indictments of a feckless Congress, and out of the other side, via cabinet officials, is insistence Congress deal with the debt ceiling. All well and good for the moment, but all the better if Congress were to kill two birds with one stone. First, fortify the executive insisting it faithfully execute the laws, and second, isolate the Tea Party forcing a return to the normal legislative process.
Political drips in the Executive branch attempting to lead from behind, effectively are acquiescing to a drive toward "compromise" intending to weaken the means by which the general welfare of the nation is promoted. More critically, we see how a widely acknowledged "fragile recovery"—political euphemism for a dead cat bounce in a depression—is a purposeful state of affairs. This is how jellyfish are made formidable exponents of a subversive enterprise that, otherwise ought rightly be banished from its perch dominating today's political scene. How can this be done? Seize the Fed!
Eventually, we will have to face the fact the trans-Atlantic banking system is hopelessly insolvent. This need not be a messy affair. Yet it's obvious there are some who wish to make it so. Were there any serious intent to cease perpetual crises reaching straight up to the U.S. Treasury(!) true leadership would act. True leadership would see to it the Fed meet its employment mandate in a mere matter of months, exhorting a political consensus compelling the Fed to marshal credit to finance the build out of an economic platform worthy the 21st century. True leadership would communicate the utter importance of defending the value of the U.S. dollar and display acumen in the one and only means of doing so: facilitating the means by which the capital stock of the nation is increased in all its forms, human and material. Toward this end credit is essential.
The current drive to increase supply of U.S. Treasury securities could explain the rise of the British pound and the fall of the U.S. dollar since July. A BoE selling off its U.S. Treasury reserves would do the trick. Meanwhile the Fed has been implementing a reverse repurchase agreement program to the same effect: effectively increasing supply of qualified collateral securities in the private market.
So, why didn't the Fed taper, reducing its purchases of U.S. Treasuries and thereby increasing their supply available to the private market? Did the BoE insist it be allowed to meet the banking system's need while the Fed continues its Treasury purchases and props up the open market value of Treasury securities? Is the BoE voting with its feet, effectively taking a hard line on the Fed's permanent policy of debasing the U.S. dollar, and being given capacity to front run the rest of the world? If so, the vote of no confidence this represents portends a far greater increase in the supply of qualified collateral securities than is currently being bargained for! An exodus of historic proportion soon could be in the offing. If the Fed subsequently were to persist with its insane QE policy propping up a dead banking system, a negative feedback loop of Wiemar proportions would be set into motion, and the dollar on course to spiraling into the abyss.
Other than being a slick means of forwarding political surrender to the austerity regime, the threat of a Treasury default might be a [wildly irrational] shot across the BoE's bow as much as it is a bid to hasten an increasing supply of qualified collateral securities in the private market. Then again, if there's an agency abundantly aware a U.S. Treasury default is constitutionally illegal, it would be the Bank of England. Who knows, maybe advancement of the prospect of a Treasury default, rightly judged unreal, is intended to hold rates down while the BoE further unloads.
We should take a moment here to ponder just what the 14th amendment has done to increase confidence among central banks across the globe holding U.S. Treasury securities in reserve. Thus, the U.S. Treasury Secretary's suggestion today that, the President has no plans of invoking the Constitution's 14th amendment represents a real demonstration of anthropogenic climate change whose likes we can all agree. This is hot air: pure fantasy, no doubt a staple from Treasury these days. Truth is the President either upholds the U.S. Constitution or faces impeachment. It's that simple.
Confetti's departure as Fed Caesar is a big, big deal and we can be mighty certain it has everything to do with a Fed policy whose effect is debasing the purchasing power of Treasury securities central banks are holding in reserve. With the government shutdown and looming debt ceiling breach the U.S. ruling class in effect is poising to travel further down the road embracing European style fascism whose likes these days features a prostrate state obeisant to a hopelessly insolvent economic wrecking machine. Thus, the moment has arrived where there's no other choice but seize the Fed and turn it into a Hamiltonian national bank issuing credit to finance a state-of-the-art physical economic platform whose increased efficiencies advance a wealth creating economic powerhouse capable of sustaining all legitimate debts. If the exchange rate value of the U.S. dollar is to be defended, there is no other workable option, because unimaginable chaos on the home front awaits all other alternatives.
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