To summarize what is his scenario:
It takes somewhere near $3 billion to run FedGov for a year.
We may end up with only $1 billion in revenue this year.
We need to borrow $2 billion to keep the wheels on the train. If we can’t borrow the money, because China is tired of buying our bonds, and there is a glut of bonds out there.
Bernacke has pointed at the solution. Buy our own debt with Fed money created out of thin air.
Denninger (and many others) thinks this is The Beginning of The End.
Strangely though the markets aren’t showing that yet. T-bills surged on the announcemnet of the Fed plan. Weird. If Argentina did the same thing money would flee their bonds, they’d be selling for 50c on the dollar in a day.
Errrr ... “trillion”, not “billion”, right?
That’s what I’ve been thinking: Why are stocks rallying in the face of this, and Oil going to $52?
That Oil’s on the rise is proof that printing the Trillion is causing the price of a BBL to go up. Demand isn’t driving it, that’s for sure.