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!!!