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Jim Cook

 

RUNAWAY SOCIAL SYMPATHY

Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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The Best of Jim Cook Archive

 
Best of John Williams
December 13, 2011
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An annual GAAP-based U.S. federal deficit running greater than five-trillion dollars is beyond control and containment within the sphere of the politicians controlling the White House and Congress and underlying economic reality remains an ongoing protracted and deepening economic catastrophe The lack of political will in Washington to address the mortal threats to the U.S. financial system and economy effectively killed any remaining global confidence in the U.S. dollar by early August 2011, and the domestic and global markets have been highly unstable—in extreme turmoil—ever since.  A new dollar-selling panic, and crisis reactions actions by the Fed, easily could bring the pending hyperinflation threat rapidly to a head.
The economic collapse that began in 2006 or 2007 is ongoing and is worse than popularly is recogn

zed.  With no relief in sight for the structural income and credit problems facing consumers, there is no near-term prospect for broad economic recovery in the United States.  An ongoing economic downturn has severely negative implications for the projected U.S. federal budget deficit, for projected U.S. Treasury funding needs and for banking-system stress tests and systemic stability.  It also promises a volatile political environment coming into the 2012 election, where pocket-book issues historically have dominated national election results more than any other single issue.

There remain no happy solutions available here to remedy the crises, only tools—devil’s choices—for the Fed and the U.S. government to buy a little extra time.  Domestic systemic instabilities, and possibly instabilities outside the United States, make substantial, expanded “easing” actions of some form likely by the Federal Reserve, sooner rather than later.  From the Fed’s standpoint, keeping the banking system afloat remains its primary concern, not expanding the economy or containing inflation.  The ultimate cost in propping the system, however, remains inflation.

The root source of current global systemic instabilities primarily has been the financially-dominant United States, and it is against the U.S. dollar that the global markets ultimately should turn, massively.  The Fed and the U.S. Treasury likely will do whatever has to be done to prevent ongoing crises in the euro-area from triggering a systemic collapse in the United States.  That precedent was established in 2008.  Accordingly, it is not from a euro-related crisis, but rather from within the U.S. financial system and financial-authority actions that an eventual U.S. systemic failure likely will be triggered, seen initially in a rapidly accelerating pace of domestic inflation—ultimately hyperinflation.

Thefinancial markets remain extremely volatile and unstable.  Underlying the various market upheavals fundamentally is the deepening crisis of confidence in the U.S. dollar and in the long-term doubts of U.S. financial, economic, systemic and political stability.  For those living in a U.S. dollar-denominated world, regardless of any ongoing near-term extreme volatility in the U.S. dollar—in either direction—versus the stronger major currencies and gold, the stronger currencies and precious metals, again, remain the fundamental, long-range hedges against what lies ahead.

Massive, fundamental dollar dumping and dumping of dollar-denominated assets may start at anytime, with little or no further warning.  With a U.S. government unwilling to balance or even to address its uncontainable fiscal condition; with the federal government and Federal Reserve standing ready to prevent a systemic collapse, so long as it is possible to print, spend, loan or guarantee whatever money is needed; with the U.S. dollar at increasing risk of losing its global reserve currency status; much higher inflation lies ahead, in a circumstance that, again, could evolve rapidly into hyperinflation.