Friday, April 15, 2011

The Con of the Millenium

So the basic outline of the Con is that private losses from the financialization of the U.S. economy were shifted to the public. Now to keep the Status Quo and Financial Plutocracy from imploding, the public is on the hook for $1.6 trillion in additional borrowing every year until Doomsday (around 2021 or so).
Having secured the backing of the Central Bank and Central State, the Plutocracy's only problem now is that it needs a risk-free source of high-yield income.
-Charles Hugh Smith

The US Teasury market is primarily dependent on one buyer: The Federal Reserve. If the Fed were to stop buying treasuries, rates would theoretically go up to try to induce anyone to buy them.
Well, then the Oligarchs would start buying up those suddenly higher-yield Teasuries...with all the money that they have been looting from the American people.
As rates increase, so will the demand for "austerity," (Would you care for some tea?) which should result in fewer bonds being issued, which should also result in a decline in rates, thereby boosting the value of the high-yield debt already purchased by the Oligarchs....with your tax money.

i.e. They're buying our country with our money, and we're getting nothing out of it but more and more debt.

This is the ultimate endgame of the financialization of the U.S. economy and the concentration of wealth and thus political power in the hands of those who skimmed the immense gains from that financialization.
-Charles Hugh Smith