I wonder what the time will be when the US$ is heading to be worthless.
Utterly Fantastic Numbers: But Bloomberg has managed to do it - as they reported on March 31: "The US government and the Federal Reserve have spent, lent or committed $US 12.8 TRILLION, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s."
"The new pledges from the Fed, the Treasury Department and the FDIC include $US 1 TRILLION for the Public-Private Investment Program, designed to help investors buy distressed loans and other assets from US banks. The money works out to $US 42,105 for every man, woman and child in the US and 14 times the $US 899.8 Billion of currency in circulation. The nation's gross domestic product was $US 14.2 TRILLION in 2008." That financial data by Bloomberg shows that the US has entered fantasy land.
Holding up The Sky While The Foundation Sinks: All these desperate "money injections" by the US federal government, all its agencies and the Fed is a futile attempt to stop the effects of the deepening internal US deflation. All of them add up to an attempt to pump up - with all these infusions and stimulus packages - a US financial system which has had its collateral foundation fall out from under it. This has undercut loans and left gaping holes in bank balance sheets. The crumbling US collateral foundation can be clearly observed in this latest US data.
The S&P/Case-Shiller index of home prices in 20 US cities fell 19 percent in January, the fastest drop on record. The index dropped 18.6 percent in December. Right behind US private real estate comes the next crash - in US commercial real estate. US commercial real estate is a loudly ticking time bomb. Prices here are now expected to fall 20-30 percent over the rest of this year. That will lead to bank failures across the US at the State level, where lending for commercial real estate is their bread and butter.
The Bottom Line In The US: US household net worth plunged by $US 11.2 TRILLION in 2008 according to Federal Reserve data.
It is this knowledge which has panicked the US political establishment. They really think that by bailing out Wall Street, the banks, the mortgage lenders and, perhaps, the auto makers to the tune of $US 42,000 per individual American - or 14 times the total stock of currency in circulation - will move the present situation back to "normal" and then swing the US economy forward and into a renewed credit expansion!
It won't happen, simply because it can't happen. It can't happen because the rest of the world will have to underwrite the Obama administration's attempt to do this with their own buying of US debts. The rest of the world already has more than enough of US debt paper. Without sufficient foreign loans, the Obama administration's reflation attempt will have to rely on internal American savings - which are simply not there. Because the savings are not there, the inevitable end result is a descent into money printing chaos.
