Let us briefly review Mr. Corzine’s history.  Head of the giant squid – Goldman Sachs – from 1994 to 1999.  Not sure how his tenure there was regarded but he was forced out as Paulson took control of the firm.  Next he went on to help destroy the United States as a Demunist Senator from New Jersey.  Not content to inflict pain and death at the national level, he then decided he had to further destroy New Jersey as its governor.  After his maladroit stewardship there, he was put in as the Key Man at MF Global, considered so important to that firm that the codicil to a bond offering by the firm provided for penalties to be awarded to bond holders in the event he left MFG for the US Treasury.  Yep, he was on his way to further destroy the US.  Fortunately for the country, he crashed MFG first.  Unfortunately for everyone who had any nexus with MFG, it seems the firm had the temerity to misuse client funds, leading to the missing $600Million or more.  Democrats are destroyers, but Corzine has a particular knack for it which has now crossed the line, probably, into outright illegality, to the extent that crimes by politically connected and powerful people are any longer considered wrong (see, Congress enriches itself by insider trading).

In the Percy Jackson series of books, the demigods have some kind of Mist they use to confuse mere mortals into seeing something other than what is real.  Somehow guys like Corzine get people to think they are a person to be entrusted with authority instead of sent straight to the nearest prison.  Amazing really.

What is not reported are the consequences for thousands upon thousands of people.  For one thing, all of the employees of the firm have been cashiered, losing any equity they had built up and without severance or benefits.  But more pernicious is what is happening to the clients of the firm.  And though I have never had any dealings with MF Global it has even affected me personally.  One of the clients of MFG, who probably had hundreds of millions of dollars parked there, is an interesting character who gives traders a chance to make their own fortune by sponsoring an account for them.  This persons business is now dead in the water.  But not only is his business dead in the water, all of the people employed by the more than 50 CTAs sponsored are also dead in the water, at least to the extent they depended on the funding they had via this program.  I was set to get some money via this program, literally as MFG was imploding.  That is now gone.

Maybe these people will get their money back and maybe they will not.  If not, and it turns out that MFG misused the customer segregated funds, as seems likely, it boggles the mind how it could be that Corzine is still free, unless his political connections are keeping it that way.  In any event, if that turns out to be the case, Corzine and anyone who shields him ought to be in the set of those that “just needs killing”  (see Consequences of Kerffufluous Tomfoolery below).  Full stop.

Click me!

So the question is, did someone on the Obama team or at the Fed apply pressure to the CME or conspire with the ECB or pressure the USDA to achieve these drops in commodities to spike the commodity inflation the Fed has engineered? In other words did they use the fist of government to move markets to overcome the effects of their other wrong-headed policies? A couple of years ago few would have taken this idea seriously. But now that the Fed has acknowledged it is outright manipulating stocks and bonds, why not commodities? If so, it is both sad and dangerous. Markets need to function freely. They undershoot and overshoot, but for the government to manipulate them openly as they seem to be doing would be a further signal of the tragic demise of American leadership and culture. It would or should also be grounds for impeachment or dismissal. Though we will likely never know if it is the case, I would not put it past the statists now in control.

So before we go squawking about how MORE government intervention is necessary, why don’t we try removing government intervention first so that the utterances of single individuals do not have such massive influences and then see how things play out.

What Bernanke misses, and the press corps failed to elicit, is that the Fed, which despite having no responsibility for the dollar, surely affects its value more directly than Timmaayyy ever could. It is therefore, intellectually dishonest protestations to the contrary, stoking the commodity inflation fires that rage across the globe. And sure as you can say “new low on the dollar index” and “new highs in gasoline, gold and silver” there will be a breaking point that imperils what growth there is. This will have the effect of both transmuting into unanchored inflation expectations in the intermediate term and simultaneously crimping growth and therefore employment. The response will therefore be what? If they tighten policy to attack inflation expectations, then the employment mandate will slip further out of their grasp. If they do not, then they will have both inflation and low employment, a situation actually worse than the status quo ante. As I write this an hour after the big event, gasoline prices are up over 8 cents a gallon at 3.44 basis may and gold is up $26 to a new all-time nominal high while silver is up over $3 clawing back toward Sunday night’s high. Do these markets know something about intermediate inflation expectations that the Fed’s preferred and massaged intermediate term inflation expectation measures are missing? Tragedy lurks.

A fairly facile assessment of why this has happened would put together the move to a fiat currency system in the early 1970s together with a profound and predictable lack of discipline by Congresses who let no palm go ungreased and no economic rent go uncollected with a final piece which was the move toward a freer global trading system (laudable on its own terms but in conjunction with the other two preconditions, disastrous for the level of domestic wages and hence for our Gini Coefficient which will matter when it matters).  The result has been the rise of a current account deficit of staggering proportions and a world awash with dollars in the hands of mercantilist economies needing to park such dollars – in US Treasuries and other US assets primarily.  The other result has been a move to source labor, the highest proportion of the cost of doing business, to overseas markets where labor was orders of magnitude cheaper.  This of course placed downward pressure on labor prices here in the US, but with the tradeoff that the cost of goods to be bought with remaining wages would also be lower.  It turns out that the stagnation in wages has left the majority of people worse off even considering the availability of cheap goods, resulting in downward pressure on the standard of living.  A temporary cure was found for that problem.  Interest rates were low due to the recycling of dollars into Treasuries and together with official urging, produced a massive inflation in the prices of real estate which allowed people to borrow against the collateral to maintain their standard of living…until the music stopped.

And stop it did in 2007 when enough people who had been given loans they could not really afford to service stopped servicing them in size.  Note that there were two kinds of people and two kinds of institutions – those who exercised some restraint and who did not leverage themselves to the hilt by buying more than they could afford, and those who pushed to the limit.  Once a sufficient number of people stopped paying their loans, the virtuous circle reversed as prices of real estate began to fall, ensnaring more and more people in positions of negative equity and removing the crutch that had allowed everyone to maintain their living standards.  It also threatened the balance sheets of financial institutions to the extent that their capital vanished and they were insolvent.  An insolvent financial institution has to raise liquidity to forestall liquidation, first by selling assets.  This impaired collateral across the economy and the recursive downward shift was on until in September 2008 Lehman collapsed and all transactions were grinding to a halt as banks would not lend funds to anyone for any length of time and companies could not roll over operating loans.

At this point a choice had to be made.  Let the markets clear – which implied a painful reduction of asset prices, which, while it would punish those institutions that had made poor choices as their equity and debt was wiped out, would also punish innocents alike as the value of collateral was impaired.  Or prop everything up to save the innocents, while letting the bad actors off the hook – the so-called moral hazard of bailouts which serves to privatize gains while socializing losses, ie, putting them to the taxpayers.  The compassionate conservatives of the Bush administration in conjunction  with the wild-eyed liberals of the 111th Congress, who could be counted on to help out anyone down on their luck, especially as they had been so helpful with campaign donations, chose the course of moral hazard.  The clearest example of this mindset was the early program to help underwater mortgagees which prompted the Rick Santelli rant that precipitated the formation of the “Tea Parties” and which was haughtily dismissed by Robert Gibbs for the White House as he urged Santelli to actually read the plan, which he claimed did not help those who did not deserve it at the expense of everyone else (I did read the plan – it did help those who acted irresponsibly at the expense of everyone else, the White House lied).  Bernanke even chimed in.  His reasoning was that if the bad people were punished by the market, it would also result in punishment for the good people and we wouldn’t want that would we?  That was very telling as to the mindset of the man in charge of the Fed and the conception of the relationship between the institutions of governance and those governed in the minds of liberals everywhere.

A parent has to decide whether to interject when their child is in peril as a result of their own actions to protect them or to stand aside and let the child learn from the experience, absent some threat of irreparable harm.  This is the pattern in mind for liberals.  But note that this is appropriate when the relationship is that between Parent and Child.  In other words the relationship assumed by liberals and progressives is one of paternalism.  But such a pattern is not appropriate when the relationship is between two adults.  In that case, the adult takes their medicine and better luck next time (of course this assumes that true bankruptcy is available to people, a fresh start – this was removed during the Bush administration at the urging, inter alia, of our current Vice President Joe Biden).

Returning to the main thread of the story, the collapse of the system threatened the banks over whom the Fed IS the protector.  It also threatened pension plans.  This is an underreported aspect of the crisis.  As the Baby Boom generation prepares to retire it would be most inconvenient for them if their 401ks had become seriously impaired.  This in turn would threaten the government who would be looked to to DO something about it.  it also threatened debtors everywhere as deflation INCREASES the real value of debts to be paid as the dollars to be repaid have GREATER purchasing power than the ones borrowed, and in a massively leveraged economy that would result in a lot of bankruptcy and insolvency for everyone including the government.  And especially the government as the debts of the nation were massively increased both because liberals acting in the name of Keynes (rolling in his grave) decided to spend like drunk sailors (also underreported, how many of those tens of billions went straight into the pockets of political supporters in various states) and also as tax receipts plummeted from reduced economic activity.

Enter the saviors.  The cooing could be heard getting louder as the doves at the Fed flew in first, and appropriately, to stem the liquidity crisis resulting from the collapse and then, inappropriately, to continue flooding the system with liquidity indefinitely by facilitating massive further borrowing, making the insolvent even more insolvent.  This of course is the whole idea of pushing on a string in a liquidity trap.  The idea that you give a runner who is choking on water MORE water and keep pouring in more water as if that will help rather than hurt.  The problem with insolvency is too much debt.  And adding more debt is not only NOT going to help solve the problem of too much debt but is going to make it worse.  At first the runner may run some more as the parched condition is better, but eventually he will collapse.

Aside from that though there is the question of who is helped and who is hurt as the Fed monetizes the debt and holds rates at negative real levels.  The Fed Funds target rate has been at 0-25 basis points for nearly two and a half years at this point, even though the recession officially ended something like 21 months ago.  The thing about the zero lower bound is that real people do not necessarily care what real rates are when the nominal return on their savings is zero.  One large class of people hurt, as stated for example by Michael Steinhardt in an interview yesterday on CNBC, are savers.  From a cultural standpoint, it is considered a virtue to save, right?  Except that it is the official policy of the government that savers not get a nominal return on their savings.  What is the message you suppose will be learned?  On the other hand, in a bid to have banks rebuild their balance sheets, zero rates on the short end, where banks can borrow for funding, with an explicit guarantee that the shape of the yield curve will remain stably positive for “an extended period” so that banks can earn the spread between what they pay to borrow (0%) and what they lend it out for to the government (1% or more), works wonders – at the expense of savers.  So Prince Alwaleed of Saudi Arabia, a major holder of Citibank, is made whole on his investment, a person who is a billionaire merely because he was born into a family on a plot of land occupied by people whose religious institutions (with funding by the ruling family) exhort them to kill us and who will not let women go outdoors unless they are with their husband or brother, while ordinary Americans trying to do the right things and play by the rules are screwed.  The message there?  It is better to cheat than to play by the rules.  There is therefore a moral rottenness suffusing the whole enterprise that also is rarely talked about but that represents a real long-term cost to our society.

The official policy of the organs of the US Government is that cheaters prosper and prudent people are screwed or quaintly naive (after all our Senate Majority Leader even said so when the Cornhusker Kickback scandal brewed – “You are not doing your job if you DON’T cheat” was his message -and he was reelected shortly thereafter!!!).  And this doesn’t even take account of the actual TARP bailout that was a direct injection of capital to existing banks.  Is it a surprise then that people were a little bit upset that with our tax dollars and foregone savings flowing into the balance sheets of banks as an official policy of our government, the bankers then turned around and paid themselves huge bonuses out of those guaranteed profits for doing “God’s Work”?

Ben Bernanke, whose work as a Professor at Princeton prior to joining the Federal Reserve Board of Governors in 2002 supposedly makes him an expert on the Great Depression, probably thinks he is doing “God’s Work” too.  Because he views the relationship between the government and the governed as a paternalistic one, he thinks he is protecting us.  But his policy is in fact creating commodity inflation.  The official measures of inflation include housing as 40% of the measure or so.  Housing is in a depression and is deflating.  So official inflation measures look tame.  But the very people who can least afford commodity inflation are the ones getting hammered by it as they pay substantially more for food and energy and these represent a relatively high portion of their discretionary income.  So not only do they not get paid to save, but they are paying out more to live.  At some point anger will erupt here as it has erupted in North Africa and the Middle East if Bernanke does not change course.  Fortunately for everyone, most of the 25-30% of the unemployed young adults and probably some of the 9-14% of unemployed older adults are busy enough playing Wii or Playstation that they are not out rioting.  But that only works while they can somehow afford to get enough calories from cheap foods at McDonalds and Wal-Mart to stave off hunger. Wal-Mart and McDonalds have both come out recently and said price rises are on their way.  With 44 Million people on food stamps the government is doing all it can to keep them in their living rooms in front of their TVs.  How long can that last?

And to top it all off, from a capital markets standpoint, the Fed has interjected itself into the markets to such a degree that our markets, especially the stock market, and every other market which depends on the value of the dollar, can no longer be said to be free markets.  Price discovery? For chumps. A reliable signal of value for long term investment? Whoever heard of such a thing? The Fed Chairman as much as said that the Fed would make the stock market rise in the shocking editorial he wrote in the Washington Post in the days after the QE2 announcement in November 2010.  For years, people had speculated about a “Plunge Protection Team” at the New York Fed but they were derided as fringe conspiracy whack jobs.  Here was the Fed Chairman stating openly that there would be a “Plunge Protection Team” of sorts to  greatly enhance the now openly spoken Greenspan/Bernanke Put under the market.  Amazing.  No wonder the equity indexes have surged with the Fed pumping billions of dollars a day into primary dealers and other banks (and not always at the best prices.  See zero hedge for plenty of instances where the bonds monetized were not the cheapest to deliver). The misallocation of capital continues apace which represents a long term diminution of aggregate wealth.

Finally I cannot end this discussion without mentioning the outright lies to Congress stated by Bernanke in the latest Humphrey Hawkins testimony.  In it, when a Senator talked about the Fed monetizing US Treasury Debt, Bernanke was quick to correct him that they were not monetizing the debt.  Well technically that is true.  They are not buying the debt directly from the Treasury.  Instead it is worse.  They let the primary dealers buy it from the treasury and then a week or two later they buy it from the primary dealers.  And you can bet the primary dealers are getting paid for the privilege of holding the debt for a week or so.  The level of dissembling has gotten to the point that people are not buying it any more.  When William Dudley, the President of the New York Fed and a former Goldman Sachs Chief Economist, was speaking to a group in Queens a week or two ago, he was trying to explain to them how because people were getting higher quality goods like iPads which are more powerful for the same price, that was actually an offset to inflation.  The audience guffawed at that and someone said “I cannot eat an  iPad”.  The Fed is getting out of touch when it is getting caught saying “Let them eat cake”.  Again this will not matter until it matters, but at some point it will matter and when it matters, it will matter painfully.

And another thing. The US Attorney in some district or other just put a man behind bars for what they described as the most heinous act of domestic terrorism, that of creating a currency that competes with that of the US Dollar, because it represents a threat to our currency. Well who do you suppose represents a clear and present danger to our currency? Really? Well, duh, maybe the guys who are debasing it by virtue of keeping real rates of interest negative indefinitely. And yet because they are vested with the imprimatur of authority, somehow they get away with it. Take a look at the chart of the Dollar Index below. Notice anything? Since Ben Bernanke became a member of the Federal Reserve the dollar has accelerated straight down. And this with the blessing of two successive Administrations. Who should be in jail?

Helicopter Genocide Zimbabwe Ben Bernanke’s term as Fed Chairman does not end until January 2014, which is really far away.  Maobama will, by all accounts today, be reelected in 2012 and so may even reappoint Bernanke to another term.  Either our taxes will be raised therefore in a desperate attempt to stave off default, reducing our standard of living even further, or Zimbabwe Ben will have to print until we risk a catastrophic loss of confidence in our currency and interest rates skyrocket and we default anyway.  While I hope we can drastically cut expenditures, after which a modest rise in taxes would be palatable from a morale standpoint, and that the debt can then be worked off without a collapse, the odds of threading that needle do not look high.  The charts below illustrate why the Fed Chairman doth protest too much when he abjures responsibility for the current commodity inflation.  There are many more such examples.  Ben Bernanke’s famous Helicopter speech can be found here.  A timeline of Quantitative easing events can be found here.  The chart on Real Rates of interest can be found here.

Click me (Real versus nominal rates)!

Click me (Annotated Gold Weekly)!

Click me (Annotated Silver Weekly)!

Click me (Crude Oil Weekly)!

Click me (Annotated Dollar Index Weekly)!

Bernanke has decided he is the King Slayer.  He has just attempted to slay King Dollar by monetizing the debt of the United States.  Strangely, the dollar now rallies.  But I already took my shots at him (see below).  Krugman writes almost daily missives in the New York Times arguing that if we the polity would just spend much much much more money that we do not have and that needs to be borrowed, we could restart an already debt saturated economy and bring down unemployment.  The key to any argument about such stimulus is whether such spending has a positive multiplier effect or not.  As even a schoolchild could tell you such spending obviously does have a positive multiplier.  As long as you have your blinders on and follow the money up from where it is spent.  Of course if you give teachers some money, they will spend it.  And those whom they paid will also spend some more, and so on.  Monetary velocity ensues and voila! you have takeoff.

Except that if you take the blinders off, you realize that the money given out as stimulus came from the private economy in the form of taxes (or debt which just represents a claim on future taxes).  In the aggregate then, the muliplier can not be greater than 1 unless you believe that the government will put resources to more productive uses, in the aggregate, than if they had left the resources in the private economy.  Now as any second grader could also tell you, that is not the case.  Any reading of history will suffice to demonstrate that money expropriated by the government results in less value or output than the same resources left in the private economy.  The multiplier has been demonstrated to be less than 1, as anyone should have been able to tell you a priori, unless you are a Princeton economist.

But it does not stop there, just in case we are wrong, we can buttress our case by constructing a contrary argument and then following its consequences through to a reductio ad absurdum to disprove it.  So if the multiplier in the aggregate really is greater than 1, it follows that to achieve any level of output growth and employment growth, all you need to do is create dollars out of thin air and spread it around in perpetual stimulus!  Why haven’t we been doing this for years!?  Well it is because this does not work of course.  There is a reason natural scientists, who have been trying for millennia to create the perpetual motion machine, have failed.  It is because it violates principles of natural physical law.  It cannot be done.  QED:  Krugman style stimulus is a net loser.  While you might argue in the blinders on way that a limited stimulus might be appropriate in limited cases to prime a pump here or there, Krugman’s shock and awe strategy is just ludicrous.  People give him the time of day presumably because he got a Nobel Prize.  But that he has one speaks more poorly of the Nobel than it speaks positively of Krugman.

Princeton will survive.  It really is a beautiful place.  The nation may not if it keeps getting subjected to the insane meddlings of Princeton’s economists however.

The Fed is trying to hoodwink the world.  Bernanke, in his Washington Post editorial, has come right out and said he is targeting higher stock prices.  Yes you read that right.  The Federal Government is now actually directly interfering in the markets for debt and equities in an attaempt to micromanage the economy to health.  You see, stock index price levels are one of the components of leading economic indexes like the ECRI.  So by raising the price level, they think that they can improve the ECRI, which in fact they have, and that this will cause people to believe all is well – particlarly as they see their 401k and other asset values rise -  and thus alter their behavior to consume and to undertake investment, thereby growing the economy and swelling employment, restarting the virtuous circle.  The Fed is gambling that it can trick people into having confidence.

This may work or it may not.  If economic actors were not already saturated with debt at every level – individual, corporate and government – I would assign a higher probability to a positive outcome.  But in fact the state of affairs is one of nearly universal insolvency.  In their efforts to stave off realization of this fact, the authorities have engaged in various undertakings to extend and pretend, like suspending mark to market rules for banks, QE1, HAMP, TARP, a steep yield curve withcentral bank guarantee that the curve will remain steep (code to borrow short and lend to the treasury long to banks in order to rebuild balance sheets), among others.  The problem with all of these programs are myriad.  The most important is it prevents markets from clearing.  Perhaps equally important is it sends all the wrong signals to society by rewarding those who made poor decisions and penalizing those who are doing the right thing.  Moral Hazard.  Privatizing gains while socializing losses.  Basically, shareholders and lenders to banks who lent foolishly will be allowed to keep their shares and will likely be repaid their loans in full.  They will not suffer for their foolishness.  At the same time, the Fed keeps rates at the lower bound so that banks can essentially gather new equity by borrowing at 0% and lending to the United States Treasury at 2% for risk free profits.  Savers and those on fixed incomes get nothing.

Now with the Fed intentionally devaluing the United States currency with the stated intention of creating inflation, those savers will see the value of their savings decrease.  Also, anyone who lent money to the US Treasury will see the value of their loans decrease.  By monetizing the debt, the Fed is attempting to default on behalf of the Treasury and Tiny Timmaaahhhh by inflating away the debt.  This is going to cause all kinds of problems.

1.  One of the primary benefits of having “free”  markets is that in the coming together of buyers and sellers transacting at arms length, out come prices which can be observed by others, which help them to assess the value of their own assets.   This function has been given the name of Price Discovery.  Well, with both the government and the Fed intervening all over the place, price discovery has become meaningless.  One cannot depend on the prices being thrown off.  This will have the effect of lessening the confidence of business people, the opposite of what is sought.  The more the government does, the more private enterprise, with the exception of those engaged in pure crony capitalism – e.g. Jeff Immelt – will hold back, refraining from investment and hiring.

2.  The place where price increases are being felt is in commodities.  For a great many people this will be a disaster.  The price of food and energy will be steadily increasing, while wages which are far sticker, lag.  This will actually act as a tax and lessen activity, a  la 2008.  Businesses, faced with higher input costs may not react as anticipated if they cannot raise prices to compensate.  Core CPI or Core PCE values will not rise, as they have a heavy dose of housing in them and housing will not benefit.  But the Fed will get headline inflation in spades.  As Gasoline prices rise to $4 or beyond, there will be pressure brought to bear politically.

3.  Foreign governments are not likely to take unilateral dollar devaluation too well either.  Already there is talk of US incompetence and capital controls and other impediments to open cross-border trade in goods and services.  Foreign governments will not react well to rising tide of protectionism such as the pre-election Smoot-Hawley type bill passed by the House.  The global system has thus been rendered less stable and more likely to cause problems which will rebound back at the US.  Also, there is a growing lack of respect for the US as the world now laughs at all representatives of US power from the President to the Treasury Secretary to the Fed Chairman.  One of the two things you do not hear the Fed Chairman talk about is the value of the dollar or any recognition of the effects of weakening it.

4.  The other thing you do not hear the Fed Chairman talk about is Debt saturation.  QE makes the debt saturation problem worse by shielding Congress and the Administration from the consequences of their profligacy.  By artificially depressing Long bond rates and keeping bond vigilantes at bay, they are sending a signal to lawmakers that they can spend with impunity.  This will make the problem more acute and heighten the level of the eventual fall.  The final reckoning, if the Fed fails, will be terrible to behold.

I see 3 possible outcomes.  If the Fed loses control and there is a crisis of confidence in the Dollar, then we could see massive inflation or Hyperinflation.  There would be a hopefully brief period of chaos where much wealth is wiped out, savings and debts are rendered worthless and the economy collapses.  Or maybe the Fed engineers a goldilocks scenario where things muddle along, debt levels are eventually worked off and we have slow growth for an extended period.  Finally if the Fed fails in raising inflation expectations altogether, then we could have a deflationary crash that has merely been postponed.  Debts would then be wiped out but savings would be worth much more.

Whatever the outcome, I wonder how long the Fed will be allowed to play this game.  The Fed was created in the aftermath of the Panic of 1907, one of many bank depositor panics which resulted in liquidity problems.  As there was no recourse to any governmental authority, and the alternative of appealing to private bankers like JP Morgan seemed ad hoc and unsustainable for an economy then breaking out into new qualitative levels of wealth and size, it seemed prudent to establish a government sponsored entity that could be depended upon to be the liquidity provider in such scenarios.  Never mind that the advent of deposit insurance obviated the need for such a liquidity provider at the retail level, but the Fed has now well exceeded the bounds originally envisioned for it.  Interfering in asset markets to directly set price levels (a permanent Plunge Protection Team as others have put it – put that debate to rest now) and managing the economy to have taxpayers and savers fund the recapitalization of banks to the benefit of existing shareholders and bond holders – including Saudi Princes – is a power grab of mythic proportions and an outrage so massive it should take one’s breath away.

The only official potential for putting a stop to this outrage is the US Congress.  Ron Paul has already stated that oversight of the Fed will be heightened in the new Congress.  If they fail, and any of the more extreme outcomes take place, Zimbabwe Ben is likely only to be stopped by a mob that carries his head out of the Marriner Eccles building on a pike.

Might I suggest that trying to levitate markets and support the utterly unsustainable debt of the United States through such underhanded means as issuing dollar chits to the Treasury directly in exchange for Treasury Bonds so our out of control government can spend more out of control money on more out of control social engineering experiments is the kind of thing done by the kind of people your mother told you to avoid? This is known as monetizing the debt (never mind the actual mechanism it is the essence of the thing). In other words theft. If Helicopter Ben wasn’t so nattily dressed with his bow-tie and neatly trimmed beard and hailing from Princeton (where Einstein worked you know) you would think the person doing this was a Russian politician/bureaucrat, some kind of scumbag that should not be driving a bus much less driving the US Economy.

We got ourselves into this mess. Let us face it squarely and either admit we are not going to pay, or buckle down and get to it while getting the god damned government out of the way so we can get it done. No more of this mamby-pamby BS where we hide furtively in the shadows, coming out only to lie to ourselves and others “Oh yeah, no, everything is ok, we’re good” while cutting the corners off the coins we are using to pay our bills.

Real men do not do QE. I always thought of our country as being full of real men (women too obviously). Are we real men in the United States or not?