By: Tom Chatham
Gold and silver have suffered a beating this past week. Silver has broken below support levels and at this time the bottom is uncertain. One thing that is certain is that the manipulation taking place behind the scenes is providing a prime buying opportunity. While investors are having another bad day, stackers are enjoying every minute.
It is common belief that the destruction of the currency by unfettered printing should cause a rise in PM’s but the manipulation taking place has made pricing PM’s a guessing game for the past ten years. Only the final destruction of the fiat empire will usher in the unrelenting rise of gold and silver to their natural free market levels. This takedown may be the final gasp of the currency manipulators before the printers lose control and gravity takes over.
John Embry recently stated that silver is one of the few lifeboats that will be available to people when this Ponzi scheme comes apart. He also stated that from the Austrian perspective there remains only two possible outcomes and the most likely one is that they will print as much money as necessary and that will lead to hyperinflation at some point.
Last year the DHS insider told Doug Hagmann that a prelude to the end game would be a massive takedown in the price of metals. With the price of silver breaking below the $18 resistance level, it is possible we are seeing that move now.
Jim Rickards, who has been providing financial threat and asymmetric warfare advice to the nations intelligence services, is now expecting a great depression that will last 25 years. He expects the losses of the next market collapse to be in excess of 100 trillion dollars. He also believes it will begin within the next six months. He has also stated that the government has already implemented what they call the day after plan for this collapse which involves evacuation of government leaders to areas called site A, site B and site R.
John Williams of Shadow Government Statistics is still calling for hyperinflation in the U.S. and he believes it will begin by the end of 2014 or early 2015.
Jonathan Cahn, author of The Harbinger, believes that based on biblical text and dates that another devastating market crash may happen by September 2015, with a high likelihood around Sept. 13, 2015.
In any event, people will have to judge the current world events and warnings of others and make their own decisions as to what will come and prepare accordingly.
The current cost of silver in fiat dollars is well below production cost and cannot last for any significant amount of time because physical shortages will develop at some point. That makes it a very good vehicle to store any excess funds you have for the future.
When you think about how to save for the future you must consider the actual value of assets and commodities and how they will be affected by a major disturbance in the normal state of commerce.
The value of something is relative. It depends on the one who has the item and the one who wants it. To complete a transaction, the two must come to some mutually agreed upon terms. These terms define the current value of the item.
Even if the world wakes up on the wrong side of the bed one morning and money as we know it no longer has any value due to the circumstances, at some point you will still need some way to save for the future.
One of the reasons we need a medium of exchange that will hold its value over time is so that you can save your excess production now so that it can be used later if you cannot produce enough later in life to live day to day. That is the whole point of saving for retirement. To pay for things you need when you can no longer physically produce enough.
There are many that will say it is a waste of time to save or plan for commerce in the future if everything collapses but it is a necessary action of humanity and will be necessary no matter how bad a collapse is. Those that do plan for some type of commerce in the future may decide that skills will be their savings to draw on in the future rather than physical assets such as precious metals. The reasoning behind saving at least some PM’s is the fact that they have a 5,000 year track record that transcends the past mistakes made by humans.
In the future if you are fortunate enough to still be productive after some world changing event and someone needs something you have, you will either have to give it to them for free or take something in exchange for it. If you take something in exchange for it, what would you prefer that something to be?
By: Tom Chatham
As global currencies wage a race to the bottom, citizens of the world are kept distracted by insignificant things to keep them calm right up to the end. The end will be the destruction of many world currencies and the savings of those invested in them. When that happens those who have lost everything will panic, and for good reason. The conspiracy theorists and sound money people will be proven to be prophets but none of that will matter by then.
All of the savings that people think they have was long ago looted by the bankers and now they must destroy those ledger entries that people think they have. Much like the phantom gold that no longer exists in vaults but only on paper, those ledger entries must be destroyed before the banks are required to give that money back to its rightful owners. It is not only the savings but the promised payments from government entities that must be eliminated. The government has made promises it cannot keep and now it must find a way out while maintaining “plausible deniability”.
That is the crux of the unwinding we will see in the near future. The people have been robbed of their wealth and their futures and now it is time to perpetrate the cover up so the guilty parties can sail off into the sunset with their ill gotten loot. It almost sounds like a movie plot but unfortunately the people will have to stick around after this show and deal with the aftermath. That is something most people do not see coming and are ill prepared to deal with emotionally, physically or financially.
There are many things that people will disagree on when it comes to the future but there are some things those following events will agree on.
There will likely be a catastrophic event in conjunction with a monetary crisis.
Most people will be completely unprepared for the events.
Only those that hold hard assets and the means to protect them will come through this with any wealth in tact.
The government will increase their control of the population.
Basic resources like food, water and energy will be expensive or difficult to get. This is especially true for imported goods.
People will lose the homes they cannot afford and their retirement savings.
Government payments will be cut off or severely cut back.
There will be armed resistance against the government as they reduce freedoms that people are accustomed to.
Roving gangs will likely be a problem at least in the short term following the crisis.
The country will look much different in ten years than it does now, and likely not for the better.
People will need a different strategy for retirement than they now hold.
Healthcare will become more expensive and less available to the average citizen.
The U.S. will likely become a third world nation as far as living standards are concerned.
These items point out the direction we are headed as a nation. Those that ignore the reality we now live in will suffer greatly and will be immobilized with fear and uncertainty as to what to do. The government they looked to in the past for guidance and safety will be at odds with their very existence in the future. Those things they took as a given will no longer exist.
This list defines what you as an individual must be prepared to deal with in the uncertain future ahead. Only by addressing these issues will you have any peace of mind in the coming days as events play out on a global scale. It has been said many times before but must be repeated because many still do not hear the message.
You must be prepared to provide basic necessities to your family for a prolonged period of time. This includes clean drinking water, nutritious food, shelter, sanitation, security, clothing, health care and any excess funds should be used to buy precious metals or some other wealth preservation tool. Any transportation and communication assets you have will greatly enhance your survival position.
Beyond these basic items you will also need to think about some way to produce income in the years ahead. Having special knowledge or capitol equipment to produce needed goods will insure you can continue to care for your family long term. The ability to produce food, water, clothing or energy and provide medical help or capitol goods will insure you have a product to sell that will be in demand.
In a dysfunctional world the business opportunities are many. Basic supplies that were once taken for granted will be sought after by everyone. Herbal remedies, meat production, paper goods, cleaning agents, tools, building supplies and such mundane things as blocks of ice and footwear will have to come from somewhere. Something as simple as an absorption freezer powered by a homemade power source like bio-gas can provide frozen meat and ice to sell the year round.
You must also be cognizant of many possible dangers that an uncertain world can present. These include natural disasters, the threat of war, disease, nuclear dangers such as fallout and contamination and chemical threats from malfunctioning plants and storage sites.
The ability to plan for the future is more imperative now than ever. It is a sad thing that people spend more time planning a summer vacation than they do for their future. That lack of planning will insure a difficult future for them and their children as the world unwinds at an ever faster pace taking their standard of living to ever lower levels until reaching the bottom of this unknown new world. You need to prepare now like your life depends on it, because it does.
By: Tom Chatham
When you look at the chaos and destruction going on in the Mid-East today you are looking at the future of America. This is not by mistake or incompetence but by design.
After WWI the British and French created new countries out of the area in the Mid-East and in doing so created future states that would be unstable and ultimately fail to have national cohesion. The unnatural boundaries of these states thrust together people of different beliefs and set the stage for generations of turmoil.
When you look at the things going on in America today it is easy to see the similarities with this plan. To the south, our borders are open and a mass of humanity is flooding in and changing the demographics of the southwest. Further to the north our northern states are being flooded with Muslim refugees and changing the demographics there. At the same time, patriotic Americans are being demonized by the government and along with Christians and veterans are being pushed toward civil war by Government actions.
When you consider the Mid-East and look at the U.S it becomes easy to see the plan unfolding to create chaos here and prevent Americans from uniting against the forces that want to prepare us for subjugation.
Why would anyone want to create a failed state? It became the conclusion of the British elite many years ago that a a failed state was the easiest to control. With the internal population always warring against one another, outside forces could do as they please in the country with little hindrance from a disunited population.
With the U.S. overrun with people from other countries that do not share the same values as Americans and instead practice their own beliefs and continue to speak their own language, it is only a matter of time before America becomes chaotic and infighting begins. This will give cover to others to subjugate and control America that would not be possible by any other means.
Unchecked immigration is the only way to dilute the American demographics enough to cause fighting among diverse groups and make subjugation easier. There has always been animosity among some groups in America but not enough to start a war as most Americans could see that would destroy the good life they were leading. Many Americans know the government is trying to instigate civil war in this country but cannot understand why. Now you see the reasons in a different light and may understand a little better what is happening now.
A united America is the only thing holding back the subjugation of this nation and it is being undermined with many types of subversion that will tear the fabric of this nation and send it on its way to chaos. Everywhere you look, various groups are being pitted against one another, whites against blacks, blacks against Hispanics, liberals against conservatives, Christians against Muslims, homosexuals against heterosexuals, gun owners against gun controllers and cops against citizens just to name a few. It is all orchestrated to bring about one thing, a dysfunctional country that is easy to handle. Its hard to unite and fight the government and bankers when you are busy fighting your neighbors every day.
Many understand the global ponzi scheme of fiat currencies will collapse soon thrusting most people back onto their own resources. During this collapse, global interests cannot risk the potential of citizens to come together under nationalism and work for their own best interests. Citizens must be divided and fighting one another to insure the globalists can sweep in and take total control of populations and resources. A united America with lots of weapons will make this plan impossible. Hence the need for gun control and division.
This is the plan now unfolding in America and the more people that realize it the more control we will retain as things become chaotic. If these groups would understand how they are being used it would be easier to prevent open hostilities that would benefit a select group in the future and ultimately destroy the nation we now know. With the masses under the influence of mainstream media, it is a good bet that many will fall into this globalist trap. The only thing we can do now is prepare for the worst.
By: Tom Chatham
It hurts to think it. It hurts to say it. But there it is. We have passed the point of no return as a nation and only something drastic and destructive will change things. The nation continues to be bled to death by a social class that not only consumes more than they produce but also more than others produce as well. The massive misallocation of wealth by these people is like a parasite sucking its host dry.
This class of people is incapable and unwilling to be educated on the destruction they are causing. They are blind to the fact that the free ride must end sometime. Their only understanding of economics is the amount of the check they receive every month.
The entitlement class does not care that they are killing the goose that lays the golden eggs. And just to be clear, the entitlement class exists at both ends of the spectrum. The very poor and the very rich are equally guilty. The financial pressure felt by our economy, and the middle class producers, is causing it to shrink. As business owners get squeezed they lay off employees to cope with tighter budgets. These actions reduce the tax base that provides the core of entitlement spending. As these people demand more, they are reducing the profits of the business class and reducing spendable income among the working class. At some point this will end as the economy seizes up and stalls.
Only after this happens will the purge of the entitlement class begin. Those that have nothing to offer the economy will wither and die as the resources they need are cut off. It will be loud. It will be messy. It will be bloody. But it must happen at some point in order to purge the system of all of the fat that has built up over the years and caused the lifeblood of the nation to stop flowing.
It is not only an economic war these people wage on this nation but a moral one as well. The excesses these people feel a right to is a result of a deeper rooted problem. They lack the moral underpinnings that have been the foundation of this nation for four hundred years. The intolerance and obscene lifestyle they live has resulted in the destruction of a nation that was created from scratch by godly people to become the world leader and most prosperous in history.
The moral values embedded in this nation were the bedrock that maintained a stable family life and provided the seeds of greatness. These seeds have been slowly poisoned over the years and now the bitter fruits of entitlement are all we are left with. If this nation is to survive and prosper once again it first must be cleansed of the essence of evil that has invaded it at every level.
There are those that reflect on bible prophecy and note the apparent absence of America in the last days according to prophecy. This may be by design and it may be for our benefit when the world is turned upside down. In any WWIII scenario where America is still a major power, it is unlikely we would not be involved in the fighting and not be spared total destruction from nuclear weapons in an all out war. The lingering effects of radioactive contamination would be devastating for years to come. It would make survival and rebuilding difficult if not impossible for the few survivors. If America were embroiled in an internal struggle when WWIII gets under way, it would likely preclude any serious involvement by America and save America from any serious long term destruction from nuclear weapons. We would be a mere backwater and sideshow to the larger conflagration going on in the world.
The festering scabs that entail modern society must be removed before the healing can begin. According to a prophecy by George Washington, America will be invaded and destroyed in what he termed the third great peril. There would be a great struggle against superior forces and eventually victory and peace would return to America after the intervention of heaven. No town, village or city will remain standing in the wake of this conflict. This will be the great cleansing of America in the future if prophecy is correct.
According to the fourth turning, things will get continuously worse until they peak around 2020. As such, Americans should plan for a lengthy period of destruction and deprivation lasting from about 2014 until about 2025. This is the time horizon for short term survival.
It is bound to happen at some point and we should be asking not if it should happen but what we can each do to stay out of the way and insure we are in a position after it happens to help rebuild a rational and sustainable nation again. Things such as our moral underpinnings and work ethic need to be reevaluated. The way we educate our children and conduct business needs to revert to proven systems that in the past helped build a strong nation. The ability to hold a stable medium of exchange that cannot be compromised by a chosen few must be restored. The rational use of our natural resources that provides a sustainable future needs to be explored.
The west line has moved to China and that means the epic growth America once experienced is gone and will never return to previous levels. We must now learn to live with a smaller more sane business model. Just as the nations before us lost the advantage as the west line passed them by, we too must now learn a new social dynamic to survive and prosper in the future. The only alternative is to be permanently impoverished and suffer from our shortcomings as a nation. This would insure the domination and manipulation by outside forces that would treat us as another third world nation to be mined of all resources.
Many times when a building is demolished, the best parts are salvaged to be used again in the new structure. The best parts of America need to be salvaged and used to rebuild a nation the people can once again be proud of. The removal of the sick, lame, lazy and corrupt is at hand and it will not be pretty. It is the normal course of nature to destroy and rebuild over time and our time has come. How we end up after this coming world disaster will depend entirely on us. It cannot be stopped, only dealt with at this point. Are you prepared for that?
By: Tom Chatham
With the world situation getting more chaotic and dangerous by the day, it is normal for an alert person to consider the potential dangers ahead and plan to deal with them. When everything goes wrong, what will you need to get by? It is imperative for you to think about that now while you have the ability to think clearly and determine what you may need and how you will get it before something happens.
The recent tensions in the Ukraine are a harbinger of things to come. It is no surprise that China has sided with Russia in the recent actions. Russia needs the port facilities at Sevastopol and China has leased millions of acres of farmland in Ukraine that they do not want to lose use of. No matter what the west decides to do Russia and China may use this opportunity to dump their U.S. treasuries and collapse the dollar. This is even more likely if you believe Obama is working with Putin at this time. The recent economic data shows the economy is much worse than everyone is promoting. Another banking collapse could be in the near future. The ability to blame the demise of the dollar on Russia and China while deflecting blame away from the real culprits, the bankers and politicians, would allow the government to act as a savior to the people when everything collapses and maintain absolute control. If this comes to pass, it will mean dire hardship for those ill prepared to live through it.
It is easy to make a list of potential items but you must have a list of items that is tailored to your specific situation and needs. Only you can know what will be most important to you when all resources are cut off or destroyed in some type of disaster or hostile action. This is the time to think in the extreme. You must analyze your current situation and decide what is most important and necessary to you. You should make a list and seek to stock those items as soon as possible. What are the top ten items you would need or want if you were cut off from stores in an emergency for an extended time? What would be in your top thirty items?
Here is a sample of what someone in a rural area might list as important.
1) Food supply ( canned goods for 180 days)
2) Wood stove
3) Seasoned wood pile
4) Wood cutting tools
5) Hand pump for well
6) Weapon and ammo for self defense and hunting
7) Fuel supply for truck ( homemade fuel production unit for long term)
8) Open pollinated seeds
9) Canning supplies
10) Absorption freezer with 90 day fuel supply
This list is not absolute and may be very different from one family to another but it gives you an idea what to think about. An urban family will stock differently than a suburban family who will stock differently from a rural family. There are some items that may be the same such as food items but they will differ in many ways. A rural family with access to a good heat supply such as a wood stove will be able to cook many types of foods that a city apartment dweller cannot due to lack of fuel. All of these things must be taken into account.
When thinking about specific tasks you must visualize yourself doing the task and identify the items you will need to complete it. How will you get water to mix with the dry foods you have? How will you heat it? How long will your fuel supply last to cook the things you have? What sanitation supplies will you need? How much water will that task require? Will your toilet still flush? What alternate method will you have if the sewer system backs up? The answers to these things will differ depending on where you are and the resources you have.
The world is changing at an ever faster rate and soon the unprepared may find themselves in desperate want of simple everyday items they could have easily stocked if only they had thought about the future. No one knows what the future will actually be like but paying attention to current events can provide a good indication of what is to come. When resources stop flowing and society begins to fail, you must be prepared to take care of yourself. In a national breakdown the cavalry will not be coming any time soon. The size of the population guarantees that. When all else fails, it is up to you. Will you be ready?
By: Tom Chatham
The Chinese have made no secret of their discontent with the massive money printing by the U.S. that is threatening to diminish their massive holdings. They are currently on a massive buying spree to get every ounce of gold they can as fast as they can. The U.S. interests are holding down the price of PMs in an effort to fool the average person into believing that everything is just fine. This manipulation is playing right into the hands of China as they continue to buy.
The amount of gold moving from London to the east is creating a drain on vaults in the west and it is only a matter of time before they go empty. When that happens, the price of physical will skyrocket and no amount of paper will be able to stop it. The end of the line for paper gold and silver is getting close. With China buying over 1,000 tons of gold every year for the past few years plus what they mine themselves, their vaults are filling up fast. Once they have a sufficient amount, they will complete the destruction of the Dollar with massive dumping of their U.S. bonds.
China has already signaled the end of the dollar when it recently announced it would start invoicing all of its oil imports in Renminbi. It has also announced it will no longer be adding any more foreign reserves to its holdings. This is an indication that China will begin to build up its own middle class to absorb much of its production just as the U.S. did in the last century. This is a clear signal that the loss of reserve currency status for the U.S. is not far off.
As if to make an even bolder statement, China is working on an agreement with Nicaragua to build a canal that rivals the Panama Canal. China is also talking about operating their own oil futures market that will be priced in Yuan. At least half of the OPEC nations have expressed interest in the endeavor.
As if life were not difficult enough in the U.S. right now, the loss of reserve currency status will hit like a financial tsunami that will push Americans over the edge before they know what hit them. This will cause all of our imports to increase in price until we can no longer afford them. This is a fact that few Americans know or understand. Most like to pretend everything will be fine and keep their head in the sand to stop any negative information from getting through but this crisis is going to run up and bite them in the ass whether they want to know or not. This is why so many will lose everything they have in the coming months. They can ignore reality but they will not be able to ignore the consequences of ignoring reality.
There are going to be rough times ahead and most Americans refuse to admit it and prepare for the worst. There has usually been someone or some thing to step in in the past and cushion the fall for most but this time there will be no one there to stop the pain. The death of the dollar will be one of those times in life that everyone will remember for many years to come.
By: Tom Chatham
The government shutdown may be a good time for states to reestablish the authority they have slowly lost over the years. With the federal government in a dysfunctional stupor, the states have the opportunity to step up and take a leadership role that can undermine the federal authority in a number of areas where states should have complete authority. Not only can they regain their constitutional power but it may be a good time to take it one step further.
With all of the misinformation and shenanigans coming out of D.C. this may be the ideal time for states to look seriously at secession. When the federal government finally runs out of money, it will act like a dieing animal and strike out at anything that it can in a desperate act to keep alive. It will become despotic toward the people and the state
governments in an effort to stay in control.
When the federals cease to send out the checks that everyone depends on, the state and local governments will have to deal with the fallout of all of the unsustainable policies embraced at the federal level. For that reason it would benefit the state governments to ready a plan now for taking charge after the federals collapse.
– Establish a state bank in each state
– Convert all state money to gold and silver coinage
- Prepare to assume control of all federal property in the state
- Prepare to assume control of all federal programs the state wants to keep
- Prepare to declare all federal laws null and void
- Coordinate gold and silver valuations with other states
- Prepare national guard units for any federal pushback
- Insure critical infrastructure will continue to operate
The act of storing coinage now will give the state the ability to continue payments to individuals keeping commerce flowing. By stockpiling gold and silver now and doing a revaluation of goods to 1940 levels after a federal failure, the state should have sufficient funds for operations. That means that all prices will need to be revalued to 1940 levels including gold and silver. Someone making $1,000 a year will be making a living wage and gold and silver will be traded at their constitutionally set values. The undervalued PM prices at this time will enable state governments to leverage their funds and actually have more money in a revaluation allowing them to operate until the new economy stabilizes and tax revenues are reestablished at reasonable levels.
The best tax scheme at this juncture would be a sales tax to provide all revenues for the state. A large percentage would go to the county where collected and a smaller portion would go to the state for operations. The county would be responsible for all of its operating costs and government programs and would be limited to its tax receipts. All other taxes would be repealed. This is the most equitable way to finance government.
With state governments in control, the federal government could eventually be reestablished under state supervision and would only have authority over federal military units and ICE agents to insure a protected border and the authority to mint national coinage for circulation. The federal authority would only have funding through tariffs and customs duties as a source of operating revenue.
This idea is a long shot but is possible if sold to the American people in the proper manner. A great deal of education would have to occur to properly inform the populace but nothing is impossible. If the state governments preempt the federals before they declare an emergency, the states would be in a controlling position. It’s nice to dream but we should not let this crisis go to waste. Any power that can be wrestled from the federals at this time is worth the effort.
By: Tom Chatham
Virus – 1) venom, as of a snake. 2) Any of a group of ultramicroscopic infective agents that cause various diseases, as smallpox; specif., a filterable virus. 3) An evil or harmful influence.
There are many things that a government can be called but a virus is the most accurate. It invades a host. It multiplies uncontrollably and degrades the host as it does so. It weakens the host until eventually the host dies. Then it finds a new host to infect. In the end only one can survive.
If people learn only one thing this year, that should be it. When a virus invades your body you must fight it with everything you have or else succumb to the inevitable. The human race is now in an epic battle with the most destructive virus ever created. A mutation that has occurred and is destructive to the whole. A harmful influence that wants to assume complete control. A destructive force that seeks nothing more than to multiply and destroy. That is the essence of government today.
There is a choice. We have a choice. We can lay down and die a horrible death or destroy the virus that seeks to destroy us. Every virus has a cure. An element that it can not overcome. All we need to do is to identify what that elusive cure is and take a good storng dose and we will be on the road to recovery.
Many have become lethargic and succumbed to the idea that the virus is now a permanent part of their lives. They embrace it and try to adapt to its many mutations and uncomfortable symptoms. They fear the powerful medicine that will destroy it. Some have become so consumed with the virus that they fear destroying it will destroy them as well.
There is some truth to that. Once a virus has surpassed a certain point, there can be no recovery for some people even with the proper medicine. These are the ones that resist the need of the society to apply the medicine and save what can be saved. The infected are content to take the rest of society down with them. As the infection sucks the life out of the host, it becomes less able to defend itself from its’ ultimate demise.
The epidemic we now face is at a tipping point. It will either destroy everyone or some will be strong enough to apply the needed element and destroy the infection. The window for using a cure is rapidly closing. As time goes on, the chance of fewer survivors increases.
Many realize they have been invaded by an invasive and destructive species and seek to correct the problem but are unsure what to do. They want relief from this monster that seeks to destroy them and are willing to take a chance on strong medicine without knowing what effect it will have on them. They are becoming sicker and more desperate as time goes on. The virus is becoming stronger and more destructive.
As of lately, I know of only three things that have any effect on this infection. A good prayer, silver and lead, all applied in appropriate doses at the appropriate times. The only thing people must be careful of is that they do not over medicate and make the situation worse. But at this point, that does not seem possible.
By: Tom Chatham
Prior to 1913 the U.S. treasury issued treasury notes as currency that was backed by gold. The Gold and Silver certificates could be converted into silver and gold on demand. This kept the government on a financial leash to prevent over spending. The treasury printed its own money so they did not have to borrow it. They could print as much money as they had gold to back it.
In 1913 a non-elected body called the Federal Reserve, which is owned by some of the largest banks in the world, became the issuer of U.S. currency. This establishment went on to replace all of the sound money in the U.S. with what is today a totally fiat currency. In 1971 we were taken off of the gold standard thus allowing the FED to print as much money as they wished with absolutely no backing other than the good faith of the U.S. Government.
When the government wants to borrow money they print treasury bonds which are sold by selected traders. The bonds are sold as an interest bearing investment. The more credit worthy the issuer is, the lower the interest rate will be. This is an indication of how safe the bond is.
Just like an IOU, the bonds are the same as cash. The perception of cash value is based on the perceived ability of the issuer to repay the IOU. If it is suspected that the IOU may not be honored, it may be sold at a discount to unload it onto someone else before the issuer defaults on repayment and it becomes worthless.
When the demand for bonds is not sufficient to absorb all of the new bonds, the FED must buy them to prevent a failed auction. A failed auction would bring the credit worthiness of the U.S. into question. This would cause the interest rates to go up to reflect the increased risk.
When the U.S. issues bonds as repayment for the loan, the holders of these bonds have the ability to call the loan if they want. This is done by demanding payment at maturity of the bond rather than rolling it over into more bonds.
As the U.S. increases its’ deficit spending, its’ credit worthiness will come into question. This will cause those holding U.S. bonds to dump them for something more secure. When no one else will buy them anymore, the FED must purchase them to keep the dollar stable. We are seeing this happen now. Eventually the FED will own all of the outstanding bonds if the crisis goes on long enough. When the FED has to buy bonds it must print new money to buy them. This is called monetizing the debt. This is very inflationary.
Keep in mind that the FED is owned by other banks. What the FED owns, they actually own.
Since the U.S. government no longer prints its’ own money, it must go to the FED to get more currency if government revenues are insufficient. If the FED should one day say it will no longer issue currency to the government until the bonds it is holding are satisfied, what would the U.S. government be able to pay them with? If you borrow money from a bank and cannot repay it, they ultimately come for your assets to satisfy the loan. That is a lesson the Greeks are now learning.
The U.S. government has some very nice assets in the form of pristine real estate, much of it with a great deal of mineral wealth beneath it. If they cannot pay the banks, the bankers may demand assets in return. If you don’t think the banks would do something like that, you obviously have not been paying attention to world events lately. It may not even be the FED bankers. It could be anyone with the funds to buy up all of the worthless bonds. Someone like the IMF perhaps.
This is a larger version of what happened during the great depression. People that owned land but had no money would get a line of credit at a store to buy food. The store would continue to extend credit until it reached a certain level then they would suddenly demand payment. The people were unable to pay their bill so the store owner would demand their land as payment. This was the intention of the store owner all along. I know because this is how some of the largest farms in my county came into existence at that time.
The people never agreed to use their land as collateral for the credit, but after the debt was created, they had no other recourse. This is the position the U.S. will likely be placed in to deprive Americans of the land the rightfully own. Those in power that get a piece of the pie will willingly support this option. Americans will lose the land their forefathers fought for, all for a pile of worthless paper printed out of thin air that ultimately destroyed their standard of living.
This may not be the future of this country but at this point in time it seems likely. Unless the public understands how this could happen and resolve to fight it if it ever does come to pass, we could lose it all overnight. One thing is for certain. Whoever comes to foreclose on America will not be willing to give up easily.