Use access key #2 to skip to page content.

speedybure (< 20)

Gettin Out Of Dodge : The Implications Of The Recently Released Fed Minutes



July 06, 2009 – Comments (11) | RELATED TICKERS: AUY , SLW , PM , AUY , SLW , PM

The optimism I forced myself to have is completely gone after reading over the FED minutes today. I'm currently living in Australia and know will look into becoming a citizen, if dual citizenship is an options. There is only one outcome I can rationalize now, and that of course is hyperinflation! I hope I am dead wrong but even an 10 fold increase in prices within the next 5 years is a best case scenario. Let me briefly mention the troubling comments in the minutes along with all our other problems.

1) The Fed initially agreed to purchase 300 Billion of Treasuries in Feb then hinted that it will not. but yesterday they announced they will be purchasing 1.8 trillion of government paper which will be comprisd of agency debt, mortgage back securities and Treasuries (most likely 2 or 3 times the original 300 billion dollar announcement). 

1) The Monetary base, M2, MZM & M3 are all up well over 200% or more in the last 8 to 9 years. 

2) Unfunded liabilities on our 12 trillion public debt (which is determined by the interest rate on the 30-year for the most part) will increase to at least 10% (optimistically speaking) in 2010 or 2011. This means 1.2 trillion in interest payments to service our debt. Not to mention the 956 billlion in unfunded healthcare liabilities in 2010, rising to 1.2 in 2012-2013 and doubling to 2 trillion by 2018 (Social Security, Medicare , Medicaid).

3) The Massive deficit spending we will soon be embarking on - which will be financed with inflationary currnecy as this depression will continue to see increases in unemployment and tax loss carryforwards, so tax revenue will be far below all the estimates.

4) China and Brazil have began displacing the USD as the reserve currency as they have publicly agreed to use their respective currency in foreign trade.

5) The excess reserves in the system, currently over 900 billion will be turned in 9 trillion creating 8.1 trillion  via fractional reserve banking. This will be in order to cover defaults on loans and remain solvent. 

6) We still have a wave of defualts in the residential housing sector, and will likely see defaults increase by hundreds or thounsands of % barring government help. Not to mention the bigger shoe, the commercial real estate bubble burst. The Fed has bailed out everyone else so this will likely happen in this industry as well.

7) Past hyperinflations beginning with the Weimar Republic to present day had one thing in common, They had an average debt to GDP of 54%. The U.S will be at 46% by the end of 2009.

Dump your stocks that get more than a small % of revenue from the U.S, buy gold and silver or any other real assets. 


11 Comments – Post Your Own

#1) On July 06, 2009 at 8:17 AM, Chromantix (90.48) wrote:

Don't worry Speedy, our appointed officials Ben Bernanke and Tim Geithner will save us.  If not, our elected officials President Obama and House Speaker Pelosi can release and emergency back-up plan within days which will radically alter decades of government over spending and wrong-headedness.

Trust in our leaders and the markets will correct, our money will have intrinsic value, and there will be sunshine and fuzzy kittens, amen.

Report this comment
#2) On July 06, 2009 at 9:10 AM, ChrisGraley (28.63) wrote:

I've spent all weekend looking for a new country myself.


Report this comment
#3) On July 06, 2009 at 10:20 AM, EggplantWizard (66.89) wrote:

2) On July 06, 2009 at 9:10 AM, ChrisGraley (98.46) wrote:


Interesting- -- any leading candidates?


I'm partial to Thailand, Costa Rica, Argentina and Panama for different reasons.

Report this comment
#4) On July 06, 2009 at 11:52 AM, jesusfreakinco (28.24) wrote:

Debt is much worse than you think.  You have bought into the Gov'ts fabricated financial statements.  On a GAAP basis, the debt is over $50 trillion.  You need to watch this movie to get the real truth.


Report this comment
#5) On July 06, 2009 at 5:37 PM, speedybure (< 20) wrote:

jesusfreakinco : Your are right, but may i add unfunded liabilities total over $70 trillion. 

As I mentioned above past hyperinflations of Weimar, Agrentina and several others, The debt to GDP averaged 54% and the U.S is at 46%. So I did recognize the importance of this, in case you missed it.


Report this comment
#6) On July 06, 2009 at 5:51 PM, JibJabs (91.48) wrote:

How do bank stocks do with inflation?

Report this comment
#7) On July 06, 2009 at 6:36 PM, speedybure (< 20) wrote:

terrible, its called the cantillon effect, those who recieve the money last, in this case the creditors, will see inflation wreaking the most havoc. Banking is the wrost especially with low rates.

Report this comment
#8) On July 06, 2009 at 11:58 PM, russiangambit (28.88) wrote:

> I've spent all weekend looking for a new country myself.

I like Canada, and they do allow dual citizenship.

Report this comment
#9) On July 07, 2009 at 12:44 PM, davejh23 (< 20) wrote:

speedy - Where did you see the 46% debt to GDP number?  I've read that we're currently at 80%, and we were at 120% at the end of WW2.  Including unfunded liabilities, it's several times worse than anything we've seen before. 

Report this comment
#10) On July 07, 2009 at 1:23 PM, speedybure (< 20) wrote:

from casey research, its up on my website somewhere. But I'm talking about using the government GDP which they have been altering every decade or so. If you took out government spending, 80% would probably by the real number. I might also be using a different measurment than you, I didnt include future unfunded liabilities. 


Report this comment
#11) On July 09, 2009 at 6:42 PM, Donnernv (< 20) wrote:

If you are serious about relocating, understand fully the difference between emigrating and citizenship.  You can relocate anywhere, but becoming a citizen is a long process.

Then explore St. Kitts/Nevis.  This is one of the only two that have a fast track to citizenship.  Nice climate, nice people, no crime of consequence, Caribbean climate...and no taxes.

Report this comment

Featured Broker Partners