Paul Krugman is plain awful

You can't unilaterally forgive debt. It's owed someone. In the case of sovereign debt, if you default, you bring on more consequences for your country than even I can get into a post.

Money in this day and age comes from central banks. It has no backing, other than the words of the governments. There in lies the rub. So many countries have run up so much debt. And those central banks exist to do the bidding of those governments. So they use a variety of tricks to devalue their money, in an effort to reduce the amount of debt in real terms.

That hurts us, though -- the people who work and earn that money. And this is the cycle we are in. The U.S. Federal Reserve in particular has shit all over the dollar. And they are creating more and more dollars -- just the paper. Which devalues what you have in your pocket and what your paycheck says. They have tried to mask it by changing the way they measure the CPI, which is a measure of inflation. But we are seeing inflation. Anyone who has grocery shopped in the last three years sees it. The only things keeping inflation in check are that the housing market popped and we are not seeing wage inflation. But as a measure of household expenses? It has gotten worse and is going to continue to.

If that makes you think money is a farce, I guess that is a fair sentiment. But governments have set up these all powerful central banks that act in near secrecy for a reason. Control the money supply and you control your people. Except it is all crashing down right now. Because they are not in control of the money supply. They have crossed lines that are making people lose their faith.

If you think "money" is a farce, think in terms of alternative currencies. Things with intrinsic value. Food, for example. Food commodities over the next 10 years, are likely to soar in price the way we are going. Precious metals, of course. Their value is in their scarcity, not someone telling you they are worth something. There are ways to protect yourself in this kind of environment. There are always things that have intrinsic value when sovereign entities devalue their currencies.

 

You know, we're using a large percentage of that money to provide liquidity to our banks. It's been an endless cycle, since 2008. Our treasury issues the debt. Our Central bank buys the debt and collects the 3 percent coupon. It then lends it to banks, which are supposed to loan it out (but haven't been--multiple reasons I won't get into). It's why the yield curve isn't really a curve right now. The 30 year lending rate is not much different--in relative terms--than the overnight rate the Fed lends money to banks at. And the whole shell game just adds more debt to our balance sheet. With the way they have fucked things up, the shell game is the only way they are keeping a semblance of liquidity in our economy. This is what happens when you try to manage economies rather than letting them float.