Daily Archives: September 19, 2012

Flash Point: We’re Not the Only Ones Thinking This …

Back in August, in Midnight Musing: Can the US End Up Owning Itself?, we asked the question if the Fed could end up owning all US debt. Were sure many have pondered this but today we get a published perspective via Zero Hedge: What Mitt Romney Also Said: A Glimpse Of The Endgame? Quoting Romney:

We’re living in this borrowed fantasy world, where the government keeps on borrowing money. You know, we borrow this extra trillion a year, we wonder who’s loaning us the trillion? The Chinese aren’t loaning us anymore. The Russians aren’t loaning it to us anymore. So who’s giving us the trillion? And the answer is we’re just making it up. The Federal Reserve is just taking it and saying, “Here, we’re giving it.” It’s just made up money, and this does not augur well for our economic future. You know, some of these things are complex enough it’s not easy for people to understand, but your point of saying, bankruptcy usually concentrates the mind.

As Zero hedge notes: Under Twist the fed has monetized 91% of all LT gross issuance. The transformational effects on its balance sheet we captured in Flash Point: The Limits of QE3. The Fed is increasingly acquiring more of all new debt issued. It’s buying the US.

Flash Point: War in the Middle East?

We were alerted to an article in the Asia Times today: All-out Middle East war as good as it gets. The author quotes a report from the Georgetown University’s Center for Strategic and International Studies, that “A strike by Israel on Iran will give rise to regional instability and conflict as well as terrorism”. He presents this as somewhat of a consensus view but offers a contrarian opinion to the effect of the possibility that all-out regional war is the optimal outcome for American interests.

Apart from expanding on this idea, the article we found to be valuable because it presents a point-form list of the major issues the Muslim world and the Middle east pose for the US. It discusses current dynamics in the area and how things might evolve under the scenario proposed by the author. His comments on the projected decline of Muslim states are worth the read.

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