Inflation and Bailouts Go Hand in Hand
Pick a financial fire and you can be sure the U.S. government will hose it down with gallons of money. AIG, General Motors, Chrysler, insolvent states, FDIC, Fannie, Freddie and all the banks are just a few of the blazes Uncle Sam has sprayed money on.
Now, the Federal Reserve is printing up another $105 billion to send to Greece to help with its debt problem. Is the bailout cycle getting ready to take another turn bailing out the Banks? You know, the ones we were told had little exposure to sour European debt? Check out this article from Bloomberg last week: JPMorgan Chase & Co., the second- biggest U.S. bank by assets, has a larger exposure than any of its peers to Portugal, Italy, Ireland, Greece and Spain, according to Wells Fargo & Co. JPMorgan’s exposure to the five so-called PIIGS countries is $36.3 billion, equating to 28 percent of the firm’s Tier-1 capital, a measure of financial strength, Wells Fargo analysts including Matthew Burnell wrote today. Morgan Stanley holds $32.4 billion of debt in the region, which equates to 69 percent of its Tier 1 capital, Burnell wrote.”
I guess now we know why Ben Bernanke is supplying Greece with $105 billion in bailout money. It looks like he actually is bailing out U.S. Banks—again! I wrote about the Fed admitting to massive money creation 3 weeks ago in a post called “Bernanke Admits Printing $1.3 Trillion Out Of Thin Air.” It also looks like we are not going to stop this money printing train wreck because the bailouts seem to be never ending. This is the main reason we are facing a head-on collision with very big inflation.
In the latest report from John Williams of shadowstats.com, the inflation picture looks dire and definite. Williams wrote, “My outlook for a hyperinflationary great depression in the United States is unchanged; all that is unfolding now is some of the detail that should lead to that ultimate financial/economic disaster. Gold remains the best long-term hedge here, along with some silver, and cash outside the U.S. dollar and the United States. I still like the Canadian and Australian dollars and the Swiss franc. Again, the outlook is for the long haul, irrespective of any near-term extreme volatility in the various markets. As to the U.S. stock market, the term “insanity” comes to mind as I watch some of the day-to-day movements.”
Williams also thinks there are “mounting systemic risks.” On that issue, the Global Europe Anticipation Bulletin is in agreement with shadowstats.com. GEAB writes, “The fuss made over Greece by the English and US media in particular tried to hide from the majority of the economic, financial and political players the fact that the Greek problem wasn’t a sign of an upcoming Eurozone crisis (2) but, in fact, an early warning of the next big shock of the global systemic crisis. . . one mustn’t forget that the current crisis has its origin in the collapse of the world order created after 1945, of which the United States was the support, assisted by the United Kingdom.” (Click here for the complete GEAB report.)
I keep trying to find ways to explain the scope of what is going on in the world financial markets to friends and readers of this site. I told an acquaintance at dinner last night the money printing going on “has never happened on this scale in human history.” The guy just looked at me and said that he thought it was a good idea to invest in municipal bonds! How are broke cities and states going to pay the interest, let alone the principal, back. If the cities and states are bailed out, massive inflation will render the bonds worthless or near worthless.
People just do not understand the calamity that is upon us, but what do you expect when the mainstream media keeps broadcasting that we are in a “recovery.” I do not know exactly how this is going to end, but for the unprepared, it will end badly.
Greg- holy cow you are awesome. You and drudge keep me updated and current. Well maybe not current. It would take a team of people to be the watchmen of this administration.
I am real happy that you wrote this bummer news. Was gonna send you private message and ask if I was wasting time and money preparing for the GREAT collapse. My question was answered here I believe.
As a registered Independent it appears to me that our government is trying to collapse the economy on purpose. No one will say this out loud but I will. Rational thought would dictate the same. Only the blind would support these actions.
There are GREAT prices on everyday needs. Take advantage NOW. November will be too late
Greece, Spain, Italy……………AMERICA?
Excellent article. My observation when speaking to folks about the current financial meltdown is this: Unless there is a negative event or impact on their own personal situation (family, finances, job etc) they believe everything is fine. It is next to impossible to educate and convince most people that there are serious problems stalking the great USA.
Damon Vrabel is in the process of creating videos that provide a full-blown explanation that is not inconsistent with what you are uncovering.
It’s mind warping to read his explanation, but he makes a very logical and convincing case. It also jibes with what Jim Sinclair has been pointing out on his website. LOL I think even if people were provided with a full explanation, the scope of it would be too difficult for most to accept. It’s much too far out of the comfort zone because one would have to acknowledge that we all have been living in a lie, where we’ve been kept in the dark like mushrooms in a cave (that is, if what Vrabel says is indeed true).
Greg, we’re toast! All the prudent of us should now have accumulated as much gold & silver as we can, kept a couple months of cash on hand, etc. Now prepared, we can sit by and watch the maelstrom on the news (Fox preferably – at least it’s somewhat ‘fair & balanced’), and wait it out. Oh, one should also prepare to defend oneself and family…
At this point, I cannot imagine any type of lasting recovery, now that we’ve committed to bailing out other countries (just wait until our States – I’ve heard 33 so far) have to be bailed also. Buy municipal bonds?! That’s a good one!
I thought the rest of Europe was sending them $105 billion; not the U.S.
I’ve gone from being angry to feeling sick to my stomach. The bailouts will end when all the banks’ debts are inflated away and the dollar becomes worthless. $5000-$10,000 gold doesn’t seem absurd anymore. A lot of people need to go to jail and that will be their safe haven when the public finally wakes up.
“Now, the Federal Reserve is printing up another $105 billion to send to Greece to help with its debt problem. ”
That’s absolutely false. There is a ~ €100 bn loan from Europe to Greece on 3 years plus a FMI help, no “Federal Reserve priniting”!
So, is Bernanke keeping his friends in Gulfstream jets? Otherwise, why print more money? I am either a simpleton who does not understand basic economics, or we are headed for trouble.
I think people are responding to stability in their lives. Things do not seem to be getting worse; therefore, things must be OK. People may have become desenstized to how crappy things are and will most likely become.
Cognative Dissonance may be a good term to use.
I’ll point out the obvious again that the mainstream media is so complicit in their efforts to shield our government of any real scrutiny in relation to our fiscal policy, there is barely anything about this anywhere to be found. You worked with these people everyday so please answer this question for me. Why are we bombarded with articles about celebrities and sports when things that actually effect our lives go largely ignored? The media pundits hammer home social issues when actual issues that we should be paying attention to get no coverage. Is it the old “divide and conquer” strategy? Keep us divided so we will have nothing to galvanize us and our politicians can conveniently play both sides of the aisle.
Do you see a risk for deflation as opposed to inflation?
You’re correct again. The calamity in perpetuation from the Treasury and Red Reserve is astounding. I had read somewhere that the bailout is a continuous operation in which the clause in the congressional bailout was $780B ‘at one time’, so once the magic number is reached, they wipe the slate and start again. It would explain the fringe belief that our national debt is actually hovering around the $75T mark.
If the Fed Reserve accounts for up to 20% of IMF obligation, and greece is staged to recieve a bit over $100B from us, then why would our own Fed Reserve print out $100B for a Greece bailout when other countries (ie, Germany/EU) have proposed a bailout in cooperation with the IMF? Is one entity paying themselves, and the other loaning money? Either way, at this point the insolvency of Greece is emminent. The sovereigns want no part of it, especially if the budget cuts go deep into the public sector.
In perspective, it appears as though the UN is persuing yet another hostile takeover of a nation, just like we did in Haiti. The 3 giant financiers all have a personal vested interest in this. And who’s to say that they are taking their turns letting one lend money, one devaluing the lending rate, and the third betting on a national failure? Credit/debt is indeed a WMD. More powerful than the 5k+ nukes the US claims to have, yet causes no physical destruction, and doesn’t make a sound.
Inflation seems to follow in the wake of all the irony that is purposely created by the international bankers and huge corporations. Along with the manipulation of the dollar value, and precious metals, the trade ratios of currency will almost certainly continue to be volatile. Especially if the Treasury gets caught counterfeiting gold bars with tungsten again.