Posts Tagged ‘US Treasury’
by Tyler Durden
08/03/2011 14:50 -0400
The Treasury’s Borrowing Advisory Committee, chaired by such luminaries as JPMorgan and Goldman Sachs, which according to some (and by some we mean anyone who cares about such things) is the brains behind the decision-making process of US debt issuance has released its quarterly minutes, in which it has issued one of the most stark warnings about the fate of the US Dollar to date. While it is now a daily occurrence for China and Russia to bash the dollar, for the most part still powerless to provide an alternative (but rapidly gaining), the same warning coming from Jamie and Lloyd has to be taken far, far more seriously. Which is precisely what happened today. As Bloomberg reports, “The Treasury Borrowing Advisory Committee… said the outperformance of haven currencies and those from emerging nations has aided in the debasement of the dollar’s reserve status, according to comments included in discussion charts presented ahead of the quarterly refunding. The Treasury published the documents today. “The idea of a reserve currency is that it is built on strength, not typically that it is ‘best among poor choices’,” page 35 of the presentation made by one committee member said. “The fact that there are not currently viable alternatives to the U.S. dollar is a hollow victory and perhaps portends a deteriorating fate.””
But, wait a second… Isn’t Ben Bernanke debasing the dollar precisely for the benefit of the members of the TBAC? And considering that he has done such a tremendous job, is it a little hypocritical to be taking the USD devaluation in one hand, and complaining about it with another? Perhaps someone less jaded than us can answer. As for another important question looming over the US, namely the so called imminent US downgrade, the TBAC has spoken: “None of the members thought that a downgrade was imminent.” Which means that both S&P and Fitch have now been bribed with enough peas to keep their mouths shut. The status quo wins again.
Some other interesting observations:
- Primary Dealers expect a much smaller fiscal deficit in 2011 than either the CBP or OMB, at $1358BN compared to $1480BN and $1645BN respectively. Which means, if wrong, that Dealers will be on the hook to purchase up to $300 billion more debt than currently modelled. Will they be able to handle this extra load?
- PDs expect 2011 Marketable Borrowing to be between $980 and $2055 Billion. A rather wide range
- Bills as a percentage of the portfolio have plunged to decade lows, while coupons are at decade highs
- From the previous bullet point, the PDs expect the average maturity of debt to continue to increase. We disagree considering the hundreds of billions in Bills that will have to be reissued to make up for the 2 month non-rolling fiasco
- There is $1.8 trillion in debt refinancing needs in 2011; Just over $1.4 trillion in 2012, and just under $1.1 trillion in 2013. Good luck rolling all of this debt.
The TBAC’s conclusion is actually rather spot on:
- The benefits of extension do not come for free. Historical analysis suggests that shorter term funding has at many times been both cheaper and the volatility costs have not been high
- Recent cycles of rising rates have not lasted long enough for maturity extension to pay off
- It is possible, however, that “this time is different” because
- Nominal rates are much closer to the zero bound than previous periods
- Deficits are very high historically and rising interest expense less acceptable
- Concentrated foreign ownership creates less reliable demand
- The benefits of funding attributable to being the reserve currency may be fading
- While this presentation has focused exclusively on average maturity, a topic for future study is the impact of the distribution of maturities on total interest expense
That indeed would be an interesting analysis
Full must read presentation:
Read the entire article HERE.
by Brian Sylvester
The Gold Report
July 29, 2011
The Gold Report: You recently wrote that these are not normal times. Perhaps the current macroeconomic picture is the new normal?
Jay Taylor: The new normal is being shaped. We haven’t seen the final product yet. The new normal will be a world in which most Americans do not enjoy the standard of living that they have enjoyed in the past. I think this directly results from a situation in which the people who are able to create money out of nothing wrestle wealth away from those who create it. The miners, the manufacturers, the investors, the farmers—people who actually do things that are good for people—are not getting their fair share because the banking class attached to the politicians has control of the system. This is one of the reasons that I think we should go back to a gold standard. The new normal will be a decline in the general standard of living for most Americans. And I don’t think we’ve seen the bottom of that yet.
TGR: Your Inflation/Deflation Watch (IDW) chart is up about 53% since you launched it on Jan. 31, 2005. However, you believe that the chart’s current neutral direction suggests that the market is running on speculative money, not growth. Can you explain your rationale for that?
JT: By “neutral,” I mean that it is just a momentum gauge. We actually saw a decline in the IDW, or a real deflation, for a few months after the Lehman Brothers crash in 2008. Huge amounts of money, trillions and trillions of dollars of stimulus pumped into the economy, have managed to get it back up to the positive 50%-plus you noted. Now, it seems that we could be topping out. What we’ve seen is a rise in commodity speculation and games played by Wall Street—not a substantial rise in the real economy globally.
TGR: Recently, companies like Apple, Morgan Stanley and AT&T have all posted really strong earnings. That sounds like growth to me.
JT: Look at the economic statistics. Look at the unemployment numbers. I’m not saying that that top 20% isn’t going to do better. They are. Quite frankly, we have a fascist economic system and it’s becoming more and more so because the people who are really calling the shots are getting stronger.
TGR: Do you worry about marginalizing yourself by labeling this system a fascist economy?
JT: Go to the definition of fascism: government and corporate entities in bed together. What about the bankers getting bailed out at the expense of the poor? Is that good for poor people? Is that good for middle-class people? You might think it is. That’s the game. That’s the propaganda that we’ve been fed. I don’t buy it. The top banks, those that are “too big to fail,” know full well that they can enter into the next risky business and always get bailed out.
TGR: You had a conversation with Ian McAvity, the author of the Deliberations on World Markets newsletter, who suggested that we are in a secular bear market that dates back to 2000. He believes the Dow Jones Industrial Average will ultimately fall below its March 2009 lows. What do you make of Mr. McAvity’s projection?
JT: I think we are in a secular bear market. I’m not absolutely sure that we’ll see the nominal lows of 2009. In fact, if you look at what the equity market has done via gold, you’ll see that we are in a heck of a bear market right now in terms of the Dow Jones. In terms of purchasing power, there’s going to continue to be a decline in the wealth of the Dow.
TGR: What will be the impact of all this on gold and silver? There’s certainly been an unusually good run in July.
JT: I focus on the bigger picture. I look at the long-term secular moves. There have been 10 straight years of bull markets in silver and gold. I don’t know how much longer it’s got to run, but I think that it will keep running as long as the global economic picture remains unstable. The whole global system is in disarray right now. We have a system that’s broken. That’s why I don’t care whether the economy goes into a hyperinflation or deflation—gold has to be the cornerstone of a portfolio to preserve wealth. Investors want to own real money. They want to own what the markets have determined to be money over centuries: gold and silver. Fiat currencies have always failed. The U.S. dollar will eventually fail. This is a perfect storm for gold and silver.
TGR: Your model portfolio recently consisted of about one-third speculative mining equities. Why do you dedicate such a large position to one of the riskiest sectors of the market?
JT: I don’t think it is one of the riskiest sectors in this market. During the last 10 years, we’ve had triple-digit gains very frequently in those kinds of securities. Yes, we’ve had a soft patch in gold and silver stocks, which have not kept up with bullion markets. But they will. I remain very bullish on this sector because the majors need the juniors to replenish their resources and reserves. The large companies produce many millions of ounces of gold per year. They are not very good at replacing those ounces.
I caution my subscribers not to back up the truck and buy one or two of these stocks, but to spread out their portfolios and limit their allocation to about 5% of any one name. Taken as a basket, these types of companies will enhance returns very significantly, as they have over the last 8 to 10 years.
TGR: Another financial collapse could force some mining companies lacking adequate cash reserves to go out of business. You suggest searching for companies with plenty of cash, low burn rates and good management.
JT: I prefer companies that are project generators or prospect generators. Riverside Resources Inc. (TSX:RRI), Millrock Resources Inc. (TSX.V:MRO) and Yale Resources Ltd. (TSX:YLL) are very careful about how they spend their money. Yale uses its intellectual capital to find good prospects. Then it lets other companies take those risks and put money in the ground to pull out these deposits.
I like the new producers that are producing cash flow. Dynacor Gold Mines Inc. (TSX:DNG) is a new producer doing custom milling for companies in Peru. It is selling at about three times cash flow, but has lots of growth potential. It also has some exploration potential that looks extremely good.
Among the silver mining companies, Alexco Resource Corp. (TSX:AXR; NYSE.A:AXU) in the Yukon is earning very nice profits with huge upside right out of the gate. It has exploration and production potential.
Great Panther Silver Ltd. (TSX:GPR; NYSE.A:GPL) is also cash flow positive.
TGR: Great Panther is a company that would see immediate benefits from a rise in the silver price. It recently acquired new concessions near its existing mines in Mexico. Do you have any idea how long it might be before it starts drilling those?
JT: I’m not absolutely sure what the company’s plans are right now. I do like the management though. They do a great job of executing and lowering costs. The big things there are underground mines and there are some limitations on how much ore can be pulled out. If the company is able to pull up some more ore in that vicinity, it could bode very well for longer term profits.
Another company that is ready to take off is San Gold Corporation (TSX.V:SGR). It’s a long-term favorite of mine. It has a new management team that is really starting to execute its business plan of under-promising and outperforming.
It’s taken awhile for the company to get the operational side of its business in place, but it is going to drill. The new chief executive, who was a top operating guy at Placer Dome Inc., said that it is the most aggressive drill program he’s ever seen on a single project. The company can finance all this from cash flow, so it doesn’t have to dilute shareholder interest any further.
Timmins Gold Corp. (TSX.V:TMM) is another new producer with good cash flow and the ability to grow; it has great exploration potential.
These are new gold producers that have the opportunity to grow organically.
TGR: Do you know anything about Merrex Gold Inc. (TSX.V:MXI)?
JT: Merrex is a good exploration company. I have a very high opinion of it. The management is outstanding. IAMGOLD Corp. (TSX:IMG; NYSE:IAG) owns about 11% of Merrex’s stock. However, I like the fact that its management owns something like 15% of the stock, too.
Merrex has the Siribaya Gold Project in western Mali. Its latest NI 43-101 resource number is 315,000 oz. (315 Koz.). However, I could see that growing to 500 Koz. with a very extensive drill program; if that is the case, it could have upwards of 5 Moz. Moreover, we’re looking at 3 g/t. I’d caution that this is really forward-looking. Nobody knows until the company drills it out. However, the possibility for a very high-grade, open-pit deposit is certainly what attracted IAMGOLD, which is earning 50% interest by spending $10 million to fund this exploration.
The stock has not done well since I put it in my newsletter. We recommended it at nearly $0.60 and it’s down to $0.49—and there are more shares outstanding than there were before. I just think this is an excellent exploration program. IAMGOLD is very successful. This stock is certainly worth a couple of percentage points of a portfolio because it could come up really big. If the markets were to perceive that possibility of 500 Koz., it could lift share prices considerably.
TGR: Is Siribaya near any other noteworthy gold deposits?
JT: A couple of other properties nearby are in production: the Sadiola Gold Mines and the Loulo Gold Mine. Geologically, they are considered to be very similar to the Siribaya.
TGR: Another company you’ve discussed in your newsletter is Crocodile Gold Corp. (TSX:CRK; OTCQX:CROCF). The guidance there for 2011 is between 85 Koz. and 100 Koz. Do you think that it’s going to meet those expectations?
JT: I think it will. Last year was a bit of a disappointment. The share price has come down significantly. I recommended the stock at $1.56, and it’s at something like $0.68 now. It’s not one that I like to brag about. But fundamentally, the company is in a position to grow over the long term. It is a high-cost producer at around $875/oz.–$975/oz., but with gold selling at $1,600/oz., that still creates a pretty nice margin. The company is going into an underground mine with higher grades; that should help them bring their costs down as well.
Crocodile had its wettest rainy season in many decades last year, and that virtually halted its open-pit production. Mother Nature was the company’s biggest enemy last year. It did try to stockpile ahead of time, but no one had any idea that it would be such a wet season.
If the company is able to produce 85 Koz. to 100 Koz. as expected this year, it will generate enough cash flow to possibly allow the company to start producing.
TGR: Are there any other names that you’re excited about?
JT: Northern Gold Mining Inc. (TSX.V:NGM) has the potential to come up with a multimillion ounce, open-pittable deposit. The Garrison Project is in the Timmins Gold Camp, located along the Destor-Porcupine fault system. The Garrcon property within the Garrison claim area is a bulk-mineable target that would definitely appear to have open-pit, multimillion-ounce potential. Its Jonpol deposit is a high-grade underground target. The company has come up with a couple of very spectacular drill intercepts. It has enormous upside potential.
TGR: Vishal Gupta at Dundee Securities thinks the resources at Garrcon and Jonpol could go from about 1.1 Moz. to between 3 Moz. and 5 Moz. Do you agree?
JT: That would seem to be in the cards, but you never know until the truth machine tells you. I think that’s very well within reason, however, and it could possibly be much bigger than that over the long term.
TGR: Any parting thoughts on a macro level?
JT: We are in a bull market of a lifetime for gold mining companies, caused by the macroeconomic situation, the loss of confidence in fiat money, the deleveraging that needs to take place in the credit markets and the need to go back to honest money rather than the fake stuff that we’ve been conned into using by the policymakers. Gold has gone from $250/oz. to $1,600/oz. within the last 10 years. This is probably the sixth major credit-deleveraging episode over the past 300 years, with the first four being U.K.-centric and the fifth being the U.S. in the 1930s. In deleveraging cycles, what an ounce of gold will buy rises dramatically. That’s good news for gold mining profits.
Before Lehman Brothers’ demise, an ounce of gold would have bought 17% of the Rogers International Raw Materials Fund, which is a fund that has all manner of commodities in it. By March 2009, an ounce of gold would have purchased 44% of the Rogers International Raw Materials Fund. Now it’s around 40%. The real price of gold is up dramatically and that is not a fluke. That is the overriding theme that makes me extremely bullish—we are in a secular bull market of a lifetime for gold mining companies.
TGR: That sounds great, Jay.
Read the entire article HERE.
By David Galland
June 10, 2011 4:20pm GMT
I just had a conversation with constitutional lawyer and monetary expert Dr. Edwin Vieira. I first became acquainted with Dr. Vieira, who holds four degrees from Harvard and has extensive experience arguing cases before the Supreme Court, at our recent Casey Research Summit in Boca Raton, where he spoke on how far off the constitutional rails the nation has traveled. Here is a summary of what he told me…
Dr. Vieira and I covered a lot of ground in our lengthy conversation, most of it related to the U.S. monetary system – its history, nature, and likely fate. But in between the details and analysis of how it is that the nation’s fiscal and monetary affairs have deteriorated to the current dismal state – and how the global sovereign debt crisis is likely to be resolved – a couple of deeply concerning truths emerged.
Concerning because, taken together, these truths have set the stage for a full-blown police state.
The first of these two truths has to do the nature of today’s money. To set the stage, I present the following excerpt from Dr. Vieira’s paper A Cross of Gold related to the original Federal Reserve Act.
Section 16 of the Act provided that:
Federal reserve notes, to be issued at the discretion of the Federal Reserve Board for the purpose of making advances to Federal reserve banks are hereby authorized. The said notes shall be obligations of the United States, and shall be receivable by all national and member banks and Federal reserve banks and for all taxes, customs, and other public dues. They shall be redeemed in gold on demand at the Treasury Department of the United States, or in gold or lawful money at any Federal reserve bank.
Observe: From the very first, Federal Reserve Notes were denominated “advances” and “obligations”—that is, instruments and evidence of debt. True “money”, however, is the most liquid of all assets, not a debt that might be repudiated, and certainly not a debt that has been serially repudiated.
And if Federal Reserve Notes were from the start to be “redeemed in gold or lawful money”, they obviously were never conceived to be either “gold” or “lawful money”. So, because by definition the only “money” the law recognizes is “lawful money”, by law Federal Reserve Notes were never (and are not now) actual “money” at all, but at best only some sort of substitute for “money”.
The monetary conjurers’ trick has been, slowly, steadily, and stealthily, to reverse this understanding in the public’s mind. That is, to make the substitute pass for the real thing, and then remove the real thing from the operation.
This subterfuge was not overly difficult to put over. After all, in the term “redeemable currency”, which is the noun and which the adjective? When people deal with a “paper currency redeemable in gold”, the natural uninstructed inclination is to treat the paper currency as “money” and the gold as something else. The paper currency, as the saying goes, is merely “backed” by gold—but of course is not itself gold. And because the currency is not itself gold, the money-manipulators can remove the gold “backing” farther and farther into the background, without affecting the nature of the paper as “currency” (at least nominally).
Thus, a “redeemable currency” can be converted into a “contingently redeemable” or “conditionally redeemable” currency, through temporary suspension of specie payments (as happened repeatedly during the Nineteenth Century); and then into a full-fledged “irredeemable currency”, through permanent suspension of specie payments, as with Federal Reserve Notes after 1933 domestically and 1971 internationally.
Yet, to the average citizen (whose most serious liability is mental inertia), even though a paper currency’s promise of redemption has been dishonored, it nonetheless remains “currency”.
Thus one grasps that the so-called “right to redemption” attached to any paper currency is actually a liability, inasmuch as it exposes the holders of that currency to repudiation, because they possess only the paper, not the gold.
Even in the best of times, the holders of redeemable paper currency are not economically and politically independent. Rather, they depend upon the honesty and the competence of the money-managers.
This is why America’s Founding Fathers, realists all, denominated redeemable paper currency as “bills of credit”. They knew that such bills’ values in gold or silver always depended upon the issuers’ credit—that is, ultimately, the issuers’ honesty and ability to manage their financial affairs.
The unavoidable trouble with “bills of credit”, though, is that they can (and usually do) turn out to be “bills of discredit”, when the holders discover that the money-managers are dishonest and incompetent—or worse, as is the situation today, highly competent at dishonesty. Then the holders of the paper currency (if they are sufficiently astute) realize how unwise it is to allow the gold to be held by the very people with the greatest incentive, and the uniquely favorable position and opportunity, to steal it.
But when the money-managers refuse to redeem their currency, what can the holders of that currency do to protect themselves? Well, what were they able to do in 1933 and in 1971? Nothing. If the holders of Federal Reserve Notes had enjoyed an effective, enforceable “right” to the gold that the Federal Reserve System and the Treasury of the United States promised to pay in redemption of those notes—that is, if the currency had been “redeemable” in the only meaningful sense that redemption was absolutely assured as a matter of law and especially fact—the gold seizures of 1933 and 1971 would never have happened.
Thus, the ostensibly “redeemable” character of paper currency of the pre-1933 and pre-1971 type did not protect the holders of that currency. Instead, it turned out to be the very device used to deceive, defraud, divest, and dispossess them of gold—proving in the most palpable manner that a society’s acceptance of “redeemable currency” is the product of confusion and the invitation to inevitable economic and political disaster.
In our conversation, Dr. Vieira ticked off eight specific ways in which the current monetary system is unconstitutional. While I won’t go into the specifics here, the important thing to understand is that, as currently operated, the federal government has managed to manipulate things to avoid any constitutional restrictions on its ability to spend.
This, of course, gives the government free rein to reward favored voting blocs with expensive social programs, buy fleets of limousines, launch expensive overseas adventures, bail out well-connected donors, and otherwise spend the country into ruin.
To understand why this is so important as a precedent to the evolution of fascism, view the matter in reverse by considering how different things would be if the constitutionally mandated requirement that the government’s currency be redeemable in good money – gold or silver – was still enforced. In that case, the government’s ability to spend would be effectively limited by what it collected in revenues. That, in turn, would have greatly curtailed its ability to grow into the bloated juggernaut it has.
In other words, the American ideal of a limited government would have been hard wired.
As it stands, though, exactly the opposite has been allowed to evolve – unchallenged by anyone, including the Supreme Court. Why has the nation’s highest court chosen not to tackle this clear breach of the Constitution?
According to Dr. Vieira, it is likely because if they were to void the current system as being unconstitutional, they would effectively blow apart the U.S. and global economy. But as they have no authority to even suggest an alternative system, they are faced with the reality that while they have the power to do great damage, they have no power to cushion the blow. And so, the Supreme Court does nothing.
As a result, the ability of the federal government to continue its insane spending and rolling out new initiatives designed to win over voters continues with no legal restraints – the latest example being the health-care initiative.
Put another way, in cahoots with the Fed, the federal government is able to wage war, bail out the banks, foster socialism, and otherwise bankrupt the nation – to do whatever it wants – largely thanks to its continued operation of an unconstitutional monetary system.
It Gets Worse…
The second fundamental truth is that the Supreme Court has been a co-conspirator and instrument of the government’s degradation of individual liberty.
Dr. Vieira and I spent a fair amount of time on this topic – of how the nation’s highest court could let stand the egregious excesses of recent decades; the Patriot Act, Guantanamo, institutionalized torture and renditions, domestic spying, eminent-domain abuses, warrantless searches, etc., etc. In his view, there can be only one of two reasons that the Supreme Court has been so accommodating – one is that the justices are incredibly incompetent, and the other is that they are working within the context of an unseen agenda.
Ruling out the first, his final conclusion is that they are operating with an unseen agenda in mind. In his view, that agenda revolves around the rising potential for widespread social unrest emanating from the nationwide monetary Ponzi scheme. Doing its part to prepare, the Supreme Court has been establishing the precedents necessary for the government to cope with that unrest.
Too radical a thought? Returning to Dr. Vieira’s point – ask yourself how else to explain the Supreme Court’s actions. Are they collectively of low intelligence, or otherwise so stupid as to be unable to understand the Constitution? Or do they now view the Constitution and the Bill of Rights as dead letters, freeing them up to respond to the government’s overheated demands for new and previously unimaginable new “emergency” (read “fascist”) powers?
Is there an alternative explanation?
On this general theme, Dr. Vieira correctly points out that, in order for a fascist state to exist does not require the government to actually arrest anyone – but only that they can arrest anyone. Do you think you broke a law over the past week? I can assure you that every one of you dear readers broke a lot of laws. Sure, you may not have realized you were breaking a law – but, as the old saying goes, “Ignorance of the law is no excuse.”
The Stage Is Set
Unrestricted in its growth by any constitutionally mandated limits on its ability to create and manipulate money – the official currency now being nothing more than IOUs redeemable in nothing more tangible than coins made out of base metal alloys with inflated face values – and supported by a Supreme Court that has unequivocally demonstrated a willingness to ignore or sign off on egregious tramplings of the Constitution, the stage is set for the U.S. government to evolve into something far more dangerous on the domestic front.
All it requires now is a triggering event, and it would be naïve to think that such an event won’t occur. Maybe not tomorrow, maybe not this decade – but when it inevitably does, the federal government already has all the precedents it needs to do “whatever it takes.” This absence of legal restrictions on its actions is the very foundation of fascism.
When I asked Dr. Vieira how the nation has progressed on a scale from 1 to 10 towards becoming a police state, with 10 being a full-blown version, he put us currently at about 7.
There really is no investment angle to be derived from this situation – well, at least nothing new. Owning tangible investments that will hold up in the face of a continued currency debasement continues to make sense – but with the caveat that FDR’s unconstitutional gold confiscation of the 1930s was let stand and there is zero reason to think that the accommodating Supreme Court wouldn’t go along with it again. One would hope to see straws in the wind before any moves toward confiscation would begin. Until those straws start flying, the precious metals – as well as other tangibles – belong as part of your portfolio.
And I’d be remiss if I didn’t mention the importance of politically diversifying your life and your money as one of the few steps you can take to avoid the serious risk that comes from being “all in” in a single jurisdiction.
Some readers have berated me for often writing on what might be considered gloomy topics. To which I would respond: If you are sitting in a theater and see a fire breaking out, would you fail to make others aware of it, because you didn’t want to interrupt their entertainment?
Well, we can see a fire blowing up – the kindling for which has been piled up deep by a series of out-of-control governments. Unless and until there is something akin to an “American Spring.” this fire is going to spread and consume even more of the accumulated wealth of the broader public – and maybe worse.
Do what you can to protect yourself and your families – then get on with your life. You may not be able to do much about the bigger-picture trend, but you can certainly take steps on a personal level to mitigate the ill effects.
Hope for the best, plan for the worst… but then live life to the fullest.
Read the entire article HERE.
Submitted by Tyler Durden
05/16/2011 09:45 -0400
It’s official: the US credit card has officially been maxed out, just as we predicted on Wednesday, and througout Q1 and Q2. The United States is expected to reach the legal limit on its debt later on Monday and will start dipping into federal retirement funds to give the country more room to borrow, a Treasury official said. As Reuters reports further, The U.S. Treasury will settle $72 billion in maturing bonds on Monday, which will push the country right up against its $14.294 trillion borrowing cap, the official said. To all those who thought only the insolvent government of Ireland will plunder pension funds, our condolences.
Full release (no pun intended):
As US Reaches Debt Limit, Geithner Implements Additional Extraordinary Measures to Allow Continued Funding of Government Obligations
Today, the United States has reached the statutory debt limit. Secretary Geithner sent the following letter to Congress this morning alerting them to actions that have be taken to create additional headroom under the debt limit so that Treasury can continue funding obligations made by Congresses past and present. The Secretary declared a “debt issuance suspension period” for the Civil Service Retirement and Disability Fund, permitting Treasury to redeem a portion of existing Treasury securities held by that fund as investments and suspend issuance of new Treasury securities to that fund as investments. He also suspended the daily reinvestment of Treasury securities held as investments by the Government Securities Investment Fund of the Federal Employees’ Retirement System Thrift Savings Plan. For more information on these measures, please read this FAQ.
Last Friday, Secretary Geithner also responded to an inquiry from Senator Bennet regarding the fiscal and economic consequences of failing to increase the debt limit. That letter can be found here.
Secretary Geithner continues to urge Congress to raise the debt limit in a timely manner in order to uphold the full faith and credit of the United States.
The Honorable Harry Reid
United States Senate
Washington, DC 20510
Dear Mr. Leader:
I am writing to notify you, as required under 5 U.S.C. § 8348(l)(2), of my determination that, by reason of the statutory debt limit, I will be unable to invest fully the portion of the Civil Service Retirement and Disability Fund (“CSRDF”) not immediately required to pay beneficiaries. For purposes of this statute, I have determined that a “debt issuance suspension period” will begin today, May 16, 2011, and last until August 2, 2011, when the Department of the Treasury projects that the borrowing authority of the United States will be exhausted. During this “debt issuance suspension period,” the Treasury Department will suspend additional investments of amounts credited to, and redeem a portion of the investments held by, the CSRDF, as authorized by law.
In addition, I am notifying you, as required under 5 U.S.C. § 8438(h)(2), of my determination that, by reason of the statutory debt limit, I will be unable to invest fully the Government Securities Investment Fund (“G Fund”) of the Federal Employees’ Retirement System in interest-bearing securities of the United States, beginning today, May 16, 2011. The statute governing G Fund investments expressly authorizes the Secretary of the Treasury to suspend investment of the G Fund to avoid breaching the statutory debt limit.
Each of these actions has been taken in the past by my predecessors during previous debt limit impasses. By law, the CSRDF and G Funds will be made whole once the debt limit is increased. Federal retirees and employees will be unaffected by these actions.
I have written to Congress on previous occasions regarding the importance of timely action to increase the debt limit in order to protect the full faith and credit of the United States and avoid catastrophic economic consequences for citizens. I again urge Congress to act to increase the statutory debt limit as soon as possible.
Timothy F. Geithner
Identical letter sent to:
The Honorable John A. Boehner, Speaker of the House
The Honorable Nancy Pelosi, House Democratic Leader
The Honorable Mitch McConnell, Senate Republican Leader
cc: The Honorable Dave Camp, Chairman, House Committee on Ways and Means
The Honorable Sander M. Levin, Ranking Member, House Committee on Ways and Means
The Honorable Max Baucus, Chairman, Senate Committee on Finance
The Honorable Orrin Hatch, Ranking Member, Senate Committee on Finance
All other Members of the 112th Congress
Read the entire article HERE.
Friday, April 29, 2011
By Terence P. Jeffrey
Mainland China has decreased its holdings of U.S. Treasury securities since last October, according to a report updated today by the U.S. Treasury Department.
Since September 2008, when they eclipsed Japan, entities in mainland China have been the largest foreign owners of U.S. government debt. But, as indicated by the Treasury Department chart linked here, Chinese ownership of U.S. Treasury securities peaked in October 2010 and has declined in each of the four most recent months reported by the Treasury Department.
At the end of October 2010, China owned 1.1753 trillion in U.S. Treasury securities. That dropped to $1.1641 trillion by the end of November, $1.1601 trillion by the end of December, $1.1547 trillion by the end of January, and $1.1541 trillion by the end of February 2011.
February is the latest month for which the Treasury has estimated foreign holdings of U.S. debt.
Back in February 2001, according to historical data reported by the Treasury, the mainland Chinese owned only $63.7 billion in U.S. debt. In the ensuing decade, the Chinese massively increased their holdings of U.S. Treasury securities, and especially in the past five years. In February 2006, China owned $318.4 billion in U.S. debt and Japan owned $656.4 billion.
In September 2008, the Chinese moved ahead of the Japanese in their U.S. debt holdings. At the end of that month, the mainland Chinese owned $618.2 billion in U.S. government debt and the Japanese owned $617.5 billion.
In the two years between September 2008 and September 2010, China increased its U.S. government debt holdings by $533.7 billion—from $618.2 billion to 1.1519 trillion. By the end of October 2010, China’s holdings of U.S. government debt had increased to their peak of 1.1753 trillion.
After that, mainland Chinese holding of U.S. government debt declined for four straight months.
Entities in Hong Kong have also been decreasing their ownership of U.S. government debt. Hong Kong ownership of U.S. Treasury securities peaked at $152.4 billion in February 2010. By the end of February 2011, that had dropped to $124.6 billion.
In fiscal 2010—which ended on Sept. 30, 2010—the U.S. Treasury needed to redeem $7.206965 trillion in maturing U.S. Treasury securities. In order to cover the principle on those securities and borrow the money needed to cover government expenses that exceeded government revenues, the Treasury needed to turn around and sell $8.649171 trillion in U.S. Treasury securities during that fiscal year.
So far in fiscal 2011—which began on Oct. 1, 2010—the U.S. Treasury has needed to redeem $4.176308 trillion in maturing Treasury securities and sell $4.769522 in new Treasury securities.
At the end of February, according to the Treasury, the total U.S. debt was $14.194764 trillion of which $9.565541 trillion was publicly traded Treasury securities. Of those $9.565541 trillion in public Treasury securities, foreigners owned $4.4743 trillion—or almost 47 percent.
The $1.1541 trillion in U.S. debt owned by the mainland Chinese as of the end of February equaled about 12 percent of the publicly held portion of the U.S. debt and almost 26 percent of the publicly held portion of the U.S. debt that was owned by foreign interests.
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Read the entire article HERE.
September 6th, 2010
After a huge public relations campaign, engineered by the foreign central banks, the Federal Reserve Act of 1913 was slipped through Congress during the Christmas recess, with many members of the Congress absent. President Woodrow Wilson, pressured by his political and financial backers, signed it on December 23, 1913.
The act created the Federal Reserve System, a name carefully selected and designed to deceive. “Federal” would lead one to believe that this is a government organization. “Reserve” would lead one to believe that the currency is being backed by gold and silver. “System” was used in lieu of the word “bank” so that one would not conclude that a new central bank had been created.
In reality, the act created a private, for profit, central banking corporation owned by a cartel of private banks. Who owns the FED? The Rothschilds of London and Berlin; Lazard Brothers of Paris; Israel Moses Seif of Italy; Kuhn, Loeb and Warburg of Germany; and the Lehman Brothers, Goldman, Sachs and the Rockefeller families of New York.
Did you know that the FED is the only for-profit corporation in America that is exempt from both federal and state taxes? The FED takes in about one trillion dollars per year tax free! The banking families listed above get all that money.
Almost everyone thinks that the money they pay in taxes goes to the US Treasury to pay for the expenses of the government. Do you want to know where your tax dollars really go? If you look at the back of any check made payable to the IRS you will see that it has been endorsed as “Pay Any F.R.B. Branch or Gen. Depository for Credit U.S. Treas. This is in Payment of U.S. Oblig.” Yes, that’s right, every dime you pay in income taxes is given to those private banking families, commonly known as the FED, tax free.
Like many of you, I had some difficulty with the concept of creating money from nothing. You may have heard the term “monetizing the debt,” which is kind of the same thing. As an example, if the US Government wants to borrow $1 million ó the government does borrow every dollar it spends ó they go to the FED to borrow the money. The FED calls the Treasury and says print 10,000 Federal Reserve Notes (FRN) in units of one hundred dollars.
The Treasury charges the FED 2.3 cents for each note, for a total of $230 for the 10,000 FRNs. The FED then lends the $1 million to the government at face value plus interest. To add insult to injury, the government has to create a bond for $1 million as security for the loan. And the rich get richer. The above was just an example, because in reality the FED does not even print the money; it’s just a computer entry in their accounting system. To put this on a more personal level, let’s use another example.
Today’s banks are members of the Federal Reserve Banking System. This membership makes it legal for them to create money from nothing and lend it to you. Today’s banks, like the goldsmiths of old, realize that only a small fraction of the money deposited in their banks is ever actually withdrawn in the form of cash. Only about 4 percent of all the money that exists is in the form of currency. The rest of it is simply a computer entry.
Let’s say you’re approved to borrow $10,000 to do some home improvements. You know that the bank didn’t actually take $10,000 from its pile of cash and put it into your pile? They simply went to their computer and input an entry of $10,000 into your account. They created, from thin air, a debt which you have to secure with an asset and repay with interest. The bank is allowed to create and lend as much debt as they want as long as they do not exceed the 10:1 ratio imposed by the FED.
It sort of puts a new slant on how you view your friendly bank, doesn’t it? How about those loan committees that scrutinize you with a microscope before approving the loan they created from thin air. What a hoot! They make it complex for a reason. They don’t want you to understand what they are doing. People fear what they do not understand. You are easier to delude and control when you are ignorant and afraid.
Now to put the frosting on this cake. When was the income tax created? If you guessed 1913, the same year that the FED was created, you get a gold star. Coincidence? What are the odds? If you are going to use the FED to create debt, who is going to repay that debt? The income tax was created to complete the illusion that real money had been lent and therefore real money had to be repaid. And you thought Houdini was good.
So, what can be done? My father taught me that you should always stand up for what is right, even if you have to stand up alone.
If “We the People” don’t take some action now, there may come a time when “We the People” are no more. You should write a letter or send an email to each of your elected representatives. Many of our elected representatives do not understand the FED. Once informed they will not be able to plead ignorance and remain silent.
Article 1, Section 8 of the US Constitution specifically says that Congress is the only body that can “coin money and regulate the value thereof.” The US Constitution has never been amended to allow anyone other than Congress to coin and regulate currency.
Ask your representative, in light of that information, how it is possible for the Federal Reserve Act of 1913, and the Federal Reserve Bank that it created, to be constitutional. Ask them why this private banking cartel is allowed to reap trillions of dollars in profits without paying taxes. Insist on an answer.
Thomas Jefferson said, “If the America people ever allow private banks to control the issuance of their currencies, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their prosperity until their children will wake up homeless on the continent their fathers conquered.”
Read the entire article HERE.
1) Lord Jacob de Rothschild, Globalist
2) His son, Nathaniel Rothschild, Rising Globalist
3) Baron John de Rothschild, Globalist
4) Sir Evelyn de Rothschild. (Wife is Lynn Forrester), Globalist
5) David Rockefeller, Globalist
6) Nathan Warburg (Family was instrumental in creating the Federal Reserve), Globalist
7) Henry Kissinger, Globalist
8] George Soros, Globalist
9) Paul Volcker, Globalist and economic adviser to Obama
10) Larry Summers, Globalist and economic adviser to Obama
11) Lloyd Blankfein, CEO of Goldman Sachs banking behemoth, Globalist
12) Ben Shalom Bernanke, Current Federal Reserve Chairman and Globalist