debt chicaneryBrotherJohnF discusses the House Republicans folding and passing a clean debt ceiling bill, as well as a historical review of the US debt, and discusses how the increase is likely to affect the markets as well as gold & silver in his latest Silver Update:
Debt Chicanery

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  1. Ok  Here we go. The complete fraud of the Clean Debt Bill, signed off by the Boner Congress and the toothless Reid Senate does exactly what every other country is doing right now. The debt will explode higher and in short order as the piggies hit the trough to get theirs before someone else snorkels up the FIAT. This is a critical election year so hundreds of billions of dollars will flow to pork as well as the dollars needed to shore up our markets, stock or otherwise.
    Ukraine, Kazhakstan, Bosnia, Netherlands, Venezuela, Argentina, Japan, China, Italy, Thailand, to mention a few countries, are all printing currency or debt to infinity.  The US can get away with this for a couple of reasons and for a little longer than these countries.  We are the world’s reserve currency; the biggest turd sandwich in the picnic basket.  We will be the last sandwich consumed.
    The weaker links; the countries mentioned above, and I could name 5-10 others equally destitute and ready to collapse, could, any of of them, be the pivotal event that causes a cascade of events that will hammer us harder than anything in the last 30 years, maybe longer. 
    The derivatives that surround every debt instrument, totally hundreds of trillions of dollars, will fail.  Interest rates in just a couple of countries like Ven and Arg are causing immense distress. Double digit rates cripple everything including derivatives.  Riots in the streets, shortages and martial law are coming down hard in many countries, while the military and police shoot the protestors left and right. No wonder bankers are dying. Celente says the body count is 20 or more.
    This sort of violence causes countries to fall and when a bankrupt country falls it falls into chaos. 
    All of these countries are systemically important.  If not financially tied, they are allied with other countries who must save them from falling into chaos. That can be fiscally debilitating or drap the sister country into collapse.
    Russia to the Ukraine. Arg to Ven or vice versa.  Italy to the other peripheral PIIGS. South Africa or Brazil to China.  These countries have formed alliances; trade, financial and economic links that if broken, will spread out as neighboring countries try to stem the flow of chaos across their borders. 
    The banks that link these countries are in great peril of failing. The banks themselves may be the weakest links.  Even RBS, Barklays, NTR, Buba and other interconnected European banks are feeling great pressure.  The ECB has failed in its mission after the German court ruled against its plans.  Bail-ins and multinational theft in the EU is now planned in great detail and advertised for all to read. 
    There will come a time, soon, that one or more banks, TBTF or central, will fall apart and start a domino effect, creating a cascade of damage that will complete what started in 2008.
      We will be able to stave off the worst for a short period by printing more FIAT but Yellen, Lew, Obama, Dimon and the other klepto-corporatist thieves cannot stop the unstoppable. They have no options short of military action and we are stretched very thin. Without options other than printing, it’s just a matter of time before we get hit hard.
    I am not at all sanguine about our chances in the intermediate term.  My confidence is flagging even in the short term but the most likely scenario will be a slow erosion of the equity prices, a drop in the dollar value and a sharp increase in precious metals as more and more people come to realize that the end game is nigh. And the process accelerates from that point. What comes after that is anyones guess

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