Thursday, October 17, 2013

The Next Step Down





So we took the plunge or well we were pushed down the next step while the Republicans in office took the plunge.

Not unexpected at all although I had hoped they would stick to their guns. Several important changes came along for the ride this time though that in my opinion at least has increased the speed of decline once again and solidly placed us another step lower.

This time the treasury was given a free hand and is not constrained by the debt ceiling at all.  Of course we know that this last go around the U.S. Treasury had in fact stopped reporting the actual debt anyway but in the old "give em an inch" motto we know this new privilege will just get used more and more.

China is not happy. We took a downgrade to U.S. Debt and while most Americans could care less  China has been scaling back on buying our debt anyway. We won't notice this move directly at first. The FED will still be the buyer of last (only) resort but I believe now we will see an increase in the amount of USD's coming back into America. It has been increasing steadily regardless but with the debt being downgraded the gas will be pushed to speed up the process. Foreign held US money coming back into the US is a danger for massive inflation and one the FED cannot control as easily.

Ever so slowly U.S. credibility is declining. Actually I don't think it's that slow except the debt holders have to be careful to dump the debt slowly or create a panic and thereby lose their value.

It ain't pretty folks.

So what does this mean for us? Well simply put more of the same but coming a little faster just as it has for the last four years or more. A continuation of decreasing buying power and inflation. Except it's going to speed up a bit.

This decline is solidly out of our hands now and obviously the FED and government are just gonna ride this horse until China kicks em off.

And that can come tonight or in ten years but I am betting it's going to get much darker in the U.S. before the China acts.

Keep Prepping Everyone!!!


10 comments:

  1. Yup. My guess is that the EBT fiasco last weekend was to show the hold-outs a glimpse of the hell that the administration would unleash if they did not capitulate. I'm thinking we already have a thinly-veiled dictatorship where our constitutional government used to be... Soon the veil will come off for the rest of us.

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    1. MM - I agree. I don't think any sane person could not see that it was a threat and the Repubs caved and now we are done for. No way out of this for sure, which there really wasn't before but now it will come much faster I believe.

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  2. China is very busy hoarding gold (along with Russia) so that they can more properly back their currencies.

    It's hard to tell tell which will come first, but I believe that the price of gold will start soaring, then China and Russia will completely pull the rug out from under us.

    As it is they along with a growing list of countries, are already buying oil with currencies other than dollars.

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  3. I guess I'll buy an extra case of toilet paper and some mroe spam.

    Actually, it really does look to me like we've cast off the last restraints. There's no where to go but down the drain from here.

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  4. I knew it was a matter of time for the Republicans, honestly I am shocked they lasted this long.
    There are those today celebrating as they feel it is a victory. *sigh*

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  5. It doesn't matter, our currency is based on debt and has to have new debt to survive and the whole thing will collapse on it's own without any help from anybody. It is kind of like the old pyramid scheme sort of and when there isn't enough to keep it going then the game is over.

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  6. PP, it's gonna be ugly, real ugly.

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  7. They are crashing the dollar, mark my words. Get ready for your new UN World Notes! You can buy them for fifty cents on the dollar (if we are lucky) It might be ten cents on the dollar before the Feds get through with us.

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  8. PP,

    January 15 and February 7th is around the corner. We will see it get really bad.

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  9. If China does not take our cash (or bonds) than the value of the currency will start to rise. They aren't about to let that happen.

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