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China Laughs At Geithner And I Do Too

June 3, 2009

I just came across a news article, telling how Geithner is over in China, trying to convince them our treasury debt is sound, and the U.S. Dollar is going to be fine.

http://www.reuters.com/article/companyNewsAndPR/idUSPEK14475620090601

He gave this lecture to a group of Chinese economics students, who after hearing Geithner talk about how they should lend us more money, burst into laughter.   Quoting from the article:

“Chinese assets are very safe,” Geithner said in response to a question after a speech at Peking University, where he studied Chinese as a student in the 1980s.

His answer drew loud laughter from his student audience, reflecting scepticism in China about the wisdom of a developing country accumulating a vast stockpile of foreign reserves instead of spending the money to raise living standards at home.

The top 3 U.S. debt holders right now are China, Japan, and the Caribbean.  China has like $786 billion, Japan like $686 billion and the Caribbean  $214 billion.

If you want to see who we owe money to, here’s the link:

http://www.treas.gov/tic/mfh.txt

So why are they laughing?  Because their investments are NOT safe.

These big international lenders are no longer wanting to give us money.  That’s why Geithner is over there, hoping he can sucker them into lending us more money.   The Federal Reserve is trying its best to get people to buy our debt to finance the Obama administration’s crazy spending sprees, and nobody wants it.

Just the other day I showed Obama’s “budget” numbers.  I say “budget” because I certainly wouldn’t call it a budget.  Budgets are designed so you’re not wasteful and live within your proper means.  Obama’s planning on spending a 2 trillion dollar deficit this year.  Next year it’ll be like 1.5 trillion.  And the spending continues like this throughout his entire years as president.  By the end of his administration he boasts that he’ll cut his deficit spending in half!  Wait a go, that’s only twice as bad as George W. Bush’s worst spending, and we didn’t have the money then either.

But wait, we can’t BORROW this money from any foreign country, because we’re in SO MUCH DEBT NOBODY WANTS TO LEND US MORE.   Obama, Geithner, and all of you in Washinton, where or where shall you get this money, since China, Japan, and others will no longer give you any more money to squander?

But wait, Obama thinks he’s clever.  He’ll just print money.  That’s what he’ll do.  Just print 2 trillion dollars, and call it an “economic recovery” plan.  Next year, print 1.5 trillion.  And the next year, another 1.4 trillion.  Come and get it, straight off the printing presses.  Print up paper money, and throw it around everywhere.  Just keep printing it up Obama.

Check out a “new era of responsibility” on his website recovery.gov, where he shows us just how much money he’s printing up, and where it’s being thrown around to.

Common sense says you can’t do this without consequences.  You can’t have all these economic troubles and just say, “Well hey, money is fake anyways, isn’t it?  Let’s just print up a bunch of money, and pay for all our spending that way…”

The problem is that debases the currency.  It makes it worthless.   The purchasing power of the U.S. dollar is going to become weaker and weaker.   It’s going to cause all hell on the economy, and our currency is going to stop functioning.  Remember in the history books where you hear about people rolling up wheelbarrels of currency to the market and it’s not enough to buy a loaf of bread?  That’s called hyperinflation, and Obama’s actions of printing up money irresponsibly leads to those types of situations. Also, trade relations with all these countries is going to stop entirely, because they’re not going to put up with that.

So you may be thinking, “So what, Obama’s printing up a few trillion.  BIG DEAL.”  Well, it is a BIG DEAL.  How much money is 2 trillion dollars, printed up, relative to ALL MONEY in circulation throughout our entire country?

Well the Federal Reserve keeps track of the total money in circulation, and there’s three numbers which represent the total amount of money.  They’re the indicators M1, M2, and M3.  But the Fed doesn’t keep track of M3 anymore, because well, they don’t like us knowing this stuff.  But M2 represents basically all currency, travel’s checks, demand deposits, checking deposits, savings accounts, mutual funds, and all of that.   Basically, all major forms of money, even kind of indirect forms of money.  So how big of number is that?  Look for yourself:

http://www.federalreserve.gov/releases/H6/Current/

As of 2009, there’s about 8 trillion dollars total.  And Obama’s cranking out 2 trillion this year.  1.5 trillion next year.  1.4 the year after that.   Massive currency devaluation?  You bet!  Just in a couple of years we’ll be up to 14 trillion in circulation.  Almost doubling the currency in circulation, and essentially halving the value of all savings accounts and creditor’s treasury notes.  So much for investments and retirement accounts!

Everyday I pull up the news, Obama’s promising more and more.  Free healthcare for all!  Free college for all!  Free this, free that!  Come to the eternal fount of Obama’s printed up money.

You want to know real responsibility Obama?  When you borrow money from someone, and promise to pay it back, pay it back!  How about that?   But nooooo.  With you, you’re going to print up a bunch of money.  So when we owe trillions to foreign nations (3.2 trillion total), once you double the amount of currency in circulation, it’ll be like we only owe 1.6 trillion instead, because you’ve halved the value of the dollar!   All of you in Washington are a bunch of losers.  Scheme your way out of paying bills, and constantly pissing everyone off because you don’t play fair.

I was talking with Greg just the other day on the phone and he was telling me about a book he read called Predictably Irrational.    I think it was written by a MIT professor.  Anyways.  The professor ran an experiment about how people viewed the ethics of money and stealing.

There are various refrigerators around the MIT campus, and what he did is place several packs of soda as well as a plate covered in $1 bills in the fridges.   What happened?  People drank the sodas, but they left the $1 bills.

People find it wrong to steal money directly, but they’ll indirectly steal money by other means, and feel little to no guilt about it.  The results of the experiment, and others like it, was that the more steps you put inbetween the object being stolen and money directly, the less guilt people feel about stealing.

Robbing a bank?  Terrible terrible!  People who do that sort of thing should go to jail!  Obama stealing the hard earned savings of Americans, and destroying the value of international creditor’s debt notes?   No worries Obama.  That’s not “real” theft.   We’ll even praise you as you do it with record approval ratings.

For those of you who may not be familiar with how the economics of trade works, and the problem we here in the U.S. are currently facing, here’s the gist of it.

When China exports all of the stuff they produce to us over here, we pay them U.S. dollars for the goods.  Then the Chinese can take those dollars and buy stuff over here if they want to.  So in a sense, it’s really just an indirect form of bartering, which is what money is.

Over in China, them carrying a wad of U.S. dollars is kind of like us having a wad of euros over here.  Unless they take it to the bank and have it converted to Yuans they can’t do anything with it.  There’s complex exchanges which allow them to do this, but overall, the main principle behind trade and currencies is very simple.   It’s basically bartering, with these currencies as an indirect intermediary.  What’s real in trade is not the money, but the physical goods shipped between the nations.

The Chinese have been stockpiling U.S. dollars by buying our government’s bonds, which is how the U.S. government borrows money.  The Chinese are currently holding this wad of U.S. debt notes, kind of like a bank holding a mortgage note.

The Chinese government has been responsible, and is operating with huge surpluses, and they’ve been investing their surplus money and buying U.S. government debt with it, so they could earn interest, like any smart investor.  That money that they lent us represents the hard work of the Chinese people in factories, producing goods and products of all kinds, and other forms of their labors.

But now Obama’s “new era of responsibility” has started.  The more money Obama prints up, the less the U.S. dollars the Chinese are holding are worth.  If Obama keeps printing up money like crazy, that $800 billion they’re holding now is going to become worth less and less.  True, the amount of “debt” as a number on paper will still be $800 billion, but that money is not worth as much as it was.  It’s purchasing power is a lot less.   And since money is “fake”, and just a number, what it really comes down to is we’re scheming our way out of properly paying back our loans.  We’re stealing from the Chinese and other lenders.

How about people like me, saving up for things we’ve always desired and trying to retire?  I’ve been trying to build up my savings to construct my science lab.  You know how many software projects I’ve written?  I’ve slaved away writing medical and financial software and helpdesk software for various companies over the past ten years.   What happens to me, and others like me?

Well, Obama’s madness printing up money makes it to where my savings is devalued too!  If he screws up the value of the dollar, now my savings can’t buy my science lab.  Science equipment will cost double or triple the cost.  All that hard work I did.  GONE.  Just obliterated by Obama printing up money.  Why?

Cost of groceries goes up.  Cost of homes goes up.  Cost of everything goes up, because there’s more money.  So people will want more money to build me science equipment.  They’ll want more money to build my building I need to house my equipment.  They’ll want more money to sell me groceries and food I’ve been saving up for, so I can have something to eat while I’m researching.  But unfortunately for me, the money in my bank account does not increase at the same percentage rate as what the dollar is devalued as Obama cranks out money.

So indirectly, Obama is stealing money from me.  He’s stealing money from every responsible American, and every responsible lender and nation who has paid off their debts, saved up money, and worked hard to build the economy by creating REAL value.   If I was the Chinese, I’d kick Geithner out of there.  I’m glad to hear they laughed him out of the room.   If I was there with them, I’d have joined in the mockery.

When the government prints up money, really all they’re doing is redistributing purchasing power.    People like me and China, our hard earned work is taken away, and given to the U.S. government programs, and whatever they’re spending money on… Which in our case, is mostly bankers.  I posted Peter Schiff’s videos the other day, and he said we’ve been “exporting our inflation to China”.   When they’ve been buying our debts, and letting our government spend like crazy, they were essentially the ones footing the bill.  Now that they’re not financing our stupidity anymore, we’ll feel the full consequences of our ignorance.

Every time I see Obama on the TV, I see some guy telling me, “Jason, I don’t give a damn about your science lab.  I don’t care about how hard you’ve been working for it over the past 10 years.  I need to bail out all these losers who took out loans they can’t repay, and keep companies afloat which have proven themselves to be ineffective.”   But what does GM and AIG have to do with me?  NOTHING.  I rarely even drive my car.  I personally HATE driving anyways.

All I hear Obama saying is, “Keep working hard Jason, but me and my goons are going to steal everything you work for, and hand it to someone who doesn’t deserve it.  And you’re not going to get your science lab, ever.”  If it was a little bit of money being printed up, it’d be different.  But trillons upon trillions EVERY YEAR.   He’s flushing the currency down the toilet.

If Bush would have been printing up money we would been feeling these effects happening five or six years ago.  But now we’re going to feel it for real because we’re actually having to print up money to finance the government spending.  My savings is going to drain to nothing unless I move it to gold or something which will keep its value as the currency tanks in value.  Gold holds its value because gold can’t be cranked out on a printing press.  So the rich are buying gold so they don’t lose their hard earned money.

But just as Predictably Irrational predicted, people feel no guilt as any of this goes on, because all this stuff going on is just a sort of fluffy “political” nonsense, which they don’t think means anything.  All the normal person wants is free healthcare and free college.  Well, if we can afford it with real tax dollars, and we’re taxed relatively equally, then I’m fine with it.  Because at least my savings isn’t stolen.  But when it’s funded with printed money, we’re all doomed.

But Obama’s the worst.  He keeps upping the taxes on the wealthy and successful businesses, WHILE printing up money with record deficit spending.  It’s the ultimate equation of economic doom.  Really what’s he’s doing is this:

He’s going to take more and more of the hard earned profits from business owners, removing their incentives to create new inventions and innovantions which improve lives, and he’s going to steal the savings earned from the hard work of the past.   Talk about the ultimate ream job.

We’ve always been feeling inflation on a smaller scale.  The Federal Reserve has a rather crooked scheme called “fractional reserve banking”, which basically lets banks lend out money which is nothing but thin air.  They loan you money that doesn’t even exist.

I find it funny reading my macroeconomics textbook right here in my room.  It has a table displaying M2 back in 1998, which is when this textbook came out.  Guess what the total amount of money in circulation was back then?  4.4 trillion.  The amount of money in circulation has nearly doubled since then.   This is the kind of thing why people can’t afford homes, and why cars cost $50,000… insane relative to their wages.

These schemes of cranking out money that doesn’t exist, and lending it out through the banks has made us dependent on the banks, which is why everyone has to live on credit cards.  Why you have to go to the bank to get a student loan for college, and why there’s no way in hell you could ever save up cash for a new home.   It’s all because of this same stuff.  The Federal Reserve!  They’re the only reason Obama can finance his garbage.

Support Ron Paul in his efforts to Audit The Fed:
http://www.campaignforliberty.com/campaigns/auditthefed.php

Even if you don’t like Ron Paul, the Federal Reserve should not be a private bank, doing whatever the hell it wants.  It should AT LEAST be subject to our elected officials.

Here’s the Obama/Fed relationship.  Obama needs 2 trillion dollars.  The Federal Reserve, a private bank which is not even subject to Congress, prints up 2 trillion, and hands it to them.  That money then gets spent, circulates around through the economy, but unfortunately, for Gods knows what reason, we have to pay back the Fed all the money we “borrow”… So we have to pay INTEREST on the 2 trillion we “borrowed” from them.

In the 1950s, with their relatively primitive technology, one man working was enough to pay for all the bills.  The wife stayed home, and cooked and cleaned.  Now, even though we have BETTER technology, and it’s easier to build homes, easier to grow crops, easier to do EVERYTHING, we work twice as hard to pay the bills.  Now both the husband AND the wife work, and still can’t get by.   That’s the Federal Reserve system for you.   Research fractional reserve banking.   You’ll fall out of your seat.  It’s unbelievable.

But that’s relatively minor inflation compared to Obama’s hyper-inflation we’re going to feel.  If some of the big money managers, whose newsletters I subscribe to and read are right, the government’s plan is to destroy the U.S. dollar completely, and institute a new currency of some sort.  They’re guessing it will be called “The Amero”.   The more I read, the more I believe they’re right.

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