The Long Cold Winter

[1durphul]

He is absolutely correct in his analysis of why the US can simply print money to escape debt as long as we are the global reserve currency and that once we are no longer the reserve currency, that ability goes away.

The other thing is that his logic works like this Circumstance A, Result C. He never bothers to build a bridge between A and C. Everything in this video is "This is a bad thing. This is a bad thing. This is a bad thing. END OF WORLD!"

Let's look at his reasoning, starting around the 30 minute mark in the video and going to the 40 minute mark. This is where he lays out the "symptoms."

He mentions that other country's retail outlets aren't willing to take american dollars rather than local currency. (let's not even get into what kind of rude asshole tries to pawn off an American dollar in some other country which has a perfectly stable currency of it's own.)

He then says that Amsterdam currency exchanges aren't willing to accept american dollars. A little research shows that that was true, but only during a brief period in 2008 and only the small independent currency exchanges were not willing to trade in dollars. Why? Because they weren't able to exchange the currency fast enough to beat the 10% fluctuations that the euro was experiencing against the dollar at that point: http://www.dutchamsterdam.nl/280-amster ... ollar-euro

He also talks about Mexico, and HSBC no longer willing to accept dollar deposits. Guess what, that wasn't HSBC's decision, that was a decision made by the Mexican government in order to fight money laundring: http://www.bloomberg.com/news/2010-05-2 ... ering.html HSBC branches operating in Mexico are in fact subject to mexican bank laws and regulations. I don't know why this is shocking or surprising to the commentator at Stansberry.

He lists China's dumping of dollars as a cause for concern. Yet his chart doesn't show China dumping the dollars, merely holding what it currently has.

He lists Iran's purely political move out of the dollar as a sign of the dollars lost power. But that move was really just iran shooting itself in the foot as a "fuck you to americans." Apparently shooting yourself isn't profitable for Iranians, and they have since converted back 45billion in Euros to dollars. http://www.lebanonwire.com/1006MLN/10060304STR.asp (Your trusted guy here seems to have missed that.)

He then goes to Michigan where some small town is using a barter economy. Nowhere in the original article he is quoting does it say that they aren't accepting dollars. Your trusted guy doesn't mind leaving you with that impression though in his video: http://www.connectmidmichigan.com/news/ ... ?id=481793

He then goes on to point out the wonder of "euros accepted" signs ("like this one" as he shows an obviously photoshopped image.) As if any store is going to turn down a 50 cent profit on each dollar if a person is willing to give the store the same number of euros as they would dollars. ie, 5 euros instead of 5 dollars, means that euro baring sucker just paid me USD$7.50

To quote directly from the article he mentioned (but forgot to mention that the euro denominations are being treated as though they are dollars with an exchange rate of 1:1 providing a HUGE profit to those accepting euros) "Bridgehampton, as first reported by Plum Hamptons TV, shows how far the mighty dollar has declined. It reads, "We now accept euros. Bills only. Change given in U.S. dollars." http://therealdeal.com/newyork/articles ... take-euros


He then mentions that the Chicago Mercantile Exchange (CME) is now accepting gold as payment, an outright lie. They accept gold as collateral, as well as many other financial instruments (including foreign currencies) http://www.businessandfinancialsense.co ... ollateral/




Ever write a paper and backfill it with data to support your conclusions? That's what this presentation feels like. He hints that he thinks Obama is a socialist. He mentions Ron Paul as some sort of oracle. He has an agenda, and you have not researched the content of this video or else you would have come to the same conclusion.

[1durphul]

Good god this guy really doesn't mind talking out of his ass and making shit up. Now he's an expert in psychology and the "normalcy bias."

[geekster]

Exactly. His analysis of the basic situation is sound. His mitigation suggestions are full of crap.

Might want to watch this Ustream at 5pm Pacific:



From the Showme Institute in Missouri.


Basically he has the process of balance of payments right. He also has it right about why the US is unique among nations when it comes to being able to simply print money. He also has it right about what happens to the equation when the US is no longer the world reserve currency. But those parts are simply basic arithmetic, not opinion.

What he has wrong are his mitigation policies. And you might notice that silver took a huge hit down in the markets. Gold is up because many foreign countries are dumping their reserves of dollars and are buying gold instead because the dollar is losing value. This selling acts to increase the fall of the dollar as more countries dump more dollars to buy gold. But on the other hand, someone is selling the gold and accumulating dollars. This appears to be the IMF who is using these dollars to accumulate bailout funds.

What I am most interested in at this point are the first few treasury auctions after the fed stops quantitative easing.

I would look at things like the Vanguard VXUS ETF which is "global except US" or the FXF ETF which is pegged to the Swiss Franc. FXF has done pretty well over the last year: http://www.google.com/finance?client=ob&q=NYSE:FXF

[can't sit still]

Doug Casey had a summit with 35 speakers that he believed had proved their accuracy historically. “it should give you comfort to know that the faculty for this summit have in common that they correctly anticipated the trends now dominating the global landscape."
There is a lot of interesting stuff in the report.
http://www.caseyresearch.com/cdd/notes- ... ow-prepare

[can't sit still]

Well, housing is officially in a double dip. http://community.nasdaq.com/News/2011-0 ... ryid=74481 No big surprise.
Greenspan blew a bubble,, it popped. Benny tried to re-inflate the price of housing by pumping in "money". I don't really believe that he expected it to work. There are graphs of house prices that go back 110 years. Benny tried to escape the historic trend line.
A couple of quotes from John Williams [Shadow Stats].
"Housing starts have never been this low. Right now, they are running around 500,000 a year. We're at the lowest levels since World War II - down 75% from 2006 - and it's getting worse."
"unfunded liabilities for Social Security, Medicare and other programs on a net- present-value (NPV) basis indicates total federal debt and obligations of about $75 trillion. That's 5 times the gross domestic product (GDP). The debt and obligations are increasing at a pace of about $5 trillion a year"
Increasing at $ 5 trillion a year,,, yikes !
Time to move to another planet.

[geekster]

More data to throw on that fire:

http://www.marketwatch.com/story/housin ... atest_news

Housing was down in all but four metro areas. Money quote:

[quote]
What a foolish boondoggle those tax breaks for home buyers have turned out to be. The government spent an estimated $22 billion between 2008 and 2010 on tax breaks to prop up the housing market. All it achieved was a brief suckers’ rally that ended last summer.

“As we said at the time, it was a giant waste of money,â€

[Rabbi Dali Rick]

yes how familiar that sounds, I had a piece of property I bought in at 59,000 a year and a half later it had dropped to 29,000, fortunately it was owner financed so he let me opt out of the property with no penalties.


the rebbi

[Simon of the Playa]

[quote="geekster"]More data to throw on that fire:

http://www.marketwatch.com/story/housin ... atest_news

Housing was down in all but four metro areas. Money quote:

[quote]
What a foolish boondoggle those tax breaks for home buyers have turned out to be. The government spent an estimated $22 billion between 2008 and 2010 on tax breaks to prop up the housing market. All it achieved was a brief suckers’ rally that ended last summer.

“As we said at the time, it was a giant waste of money,â€

[1durphul]

geekster, the TARP plan and the vast majority of it was dreamed up and given away during the Bush Administration and Hank Paulson and so to say that this is obamas fault is fibbing at best, at worst, a vicious slander.


you need to wipe the republican crust from your eyes and wake the fuck up.

Geeksters blindness to Republican wrongs is astounding. To be fair though, he is not inaccurate in that Goldman has their claws in Obama, Geekster just has a blindspot about those same claws in the Republicans.

[ygmir]

you guys and your partisan bickering:

they're all crooks. Different methods, but, in the end, it all works the same.

the parties we have, are merely two sides of the same wooden nickel.

A person does not gain the much power by being a "nice, honest person". Period.
They sell their souls to get there, and, once there, are merely puppets to special interests and handlers.

so, yeah, point fingers, say how bad one is, and how "your person" is so much better...........and, then, see the results, at the end of the day.

meh.

[can't sit still]

Martin Armstrong says that June 13 will be a big day. A new cycle will start.
http://www.munknee.com/2011/05/martin-a ... 13th-2011/

Well, the bond market took a long time to decide if Greece would make it or not. Their verdict; NO. The bankers are offering to re-capitalize Greece if they're given huge chunks of the country for collateral. I do hope that the Greeks tell them to "GET FUCKED !"
This will, of course, shaft the investors in France. They should have been more careful. "The history of Greek debt is not a good one. They have been in default 105 years out of the last 200."
http://seekingalpha.com/article/188482- ... disastrous
The Greek problem serves as a probable roadmap for Portugal and Spain. "Spain built more houses last year than France, the UK and Germany put together"
http://www.arifanees.com/global-financi ... aking.html
OK, so Spain is in trouble. Super-high unemployment, etc. NOBODY can bail out Spain. Using Greece as a role-model, investors will dump Portuguese and Spanish debt much faster than they dumped Greek debt. The GDP in Spain is way down. It is very obvious to investors that Spain can't pay them back.
About the time that Spain goes off a cliff, Belgium and GB will be looking pretty sick.

FUCK the EMU. Fuck global currency and FUCK the bankers. VIVA Espan ~a

[can't sit still]

Geekster, you keep talking about the "wheels coming off the cart". There ARE other possibilities. It is a might BIG cart.

[cowboyangel]

Snow in May...wasn't that a sexual reference from Chaucer's Tales?
Well, there's plenty of snow here in May in Mammoth Lakes CA.
Gonna do the snowshoe thing now and post youtube video later.


Is there snow on the playa? will the world end at 7pm? who knows?

[cowboyangel]

[youtube][/youtube]


Hereeeeeeeeeees---Johnny!

[geekster]

Using the pre-1990 method of computing the Consumer Price Index and the unemployment rate, the "misery index" (inflation + unemployment) has now surpassed 25.

Using the pre-1990 formula, inflation is over 10% (while the government tries to tell us that inflation is 4.8% using the new method) and unemployment is over 15% while they try to tell us it is 9%.

The index is now higher than at any time during the Carter administration using the same calculation as was in use during his time.

http://www.economicpolicyjournal.com/20 ... st-on.html

[can't sit still]

Here are some numbers from here and there. From The daily Reckoning; "This year alone, the US Government has committed to pay out $3.7 trillion. Yet it will only take in between $2.1-$2.2 trillion in tax "revenues." As such, its available funds will barely cover 60% of the state's 2011 operating budget. The difference, the budget deficit, will total around $1.65 trillion"

"Following in the footsteps of a rather ignominious list of nations like Argentina and Hungary, the government of Ireland is set to take its 'fair share' of private retirement funds" FAIR SHARE,,, huh. So, if you have money, gov has an automatic right to it
"Late last year, the French government went through an elaborate process to change its pension laws, 'legally' allowing politicians to steal retirement funds from the public in order to pay off other debts. "
"In the US, public pensions have been raided for years; Congress routinely 'borrows' from Social Security to make up budget shortfalls. This is what talking heads mean when they play down concerns of a $14 trillion debt "because we owe it to ourselves-" $4.6 trillion of the debt is owed to intragovernmental agencies like Social Security."

Zero hedge has an article under the heading; SS Trust Fund - "We lost $1.1 Trillion last year!" That doesn't sound too good. http://www.zerohedge.com/article/ss-tru ... -last-year... The heavyweight investors expect the U.S. GOV to glom onto private retirement funds pretty soon.
If you want a preview, you can read what happened in Argentina;
http://www.reuters.com/article/2008/10/ ... ER20081022

The Burning Platform has a good article on the ongoing lowering of wages and purchasing power in America;
http://www.theburningplatform.com/?p=15246
It's a well written article and puts the blame squarely on the bankers. It ignores the problems generated by market forces. I don't consider it comprehensive.

Gordon Brown seems to think that nobody learned from the last crisis and that we're in for another crash,,, who knows?
http://www.telegraph.co.uk/finance/fina ... Brown.html
I guess that we have to just wait and see.

[geekster]

I guess that hopey changey stuff isn't working out for Spain, either.

http://www.cnbc.com/id/43129781

Looks like the Socialists were thrown out of seats they had held since Franco left power.

In the last few months, this is the third major election where the left was tossed out on its ear. First were the state elections in New South Wales, Australia where they were kicked out after 16 years in power. Then came Canada, and now Spain. This was only municipal and provincial elections in Spain but the depth of the Socialist losses are simply astounding. Seat held since their creation were lost. They lost virtually every single race. Their national elections are set for March of next year.

[can't sit still]

Here are some debt numbers from The Daily Reckoning;
"The total value of US housing stock is about $20 trillion. So, a 1% loss equals $200 billion. That's $9 billion every working day.

Now, say there are about 100 million wage earners. This puts the losses per day at about $90 per day per wage earner. The typical worker takes home about $2,500 per month - by our calculations, barely more than he loses in housing prices.

And here's another fact to toss in front of you this morning. In 1980, US federal, state and local debt per person declined at the rate of $2 per working day. As recently as 2000, debt declined again - at the rate of $4 per day.

But never have we seen anything like this. Government debt per working person is now increasing at $115 per working day. And that doesn't include the build-up in social welfare obligations.

Add housing losses to government debt, and the typical working person's balance sheet is deteriorating at the rate of $205 every working day.

The poor lumpen! He rolls out of bed this morning. By Friday evening he's $1,025 poorer! How long can that go on?"

[can't sit still]

Belarus is collapsing. http://www.thedutcheye.com/opinions/eco ... tries.html
It's possible that this collapse will cause other Eastern European countries to collapse. They aren't in good shape anyway.
Rumor control says that Greece is 6 weeks from collapsing. There is an important fact to understand. Many buyers of Greek bonds bought credit default swaps with their bonds,,, a sorta insurance policy. These CDSs have explicit definitions of what a default is.
The ECB and the EMU are fighting over this whole mess. They can see that the debt will never be repaid. Any kind of default will "activate" the CDSs. The counterparty to this "insurance policy" will have to pay out a huge chunk.
If the Greeks don't pay up, the person holding the bond will demand so much money from the insurer that it will bankrupt lots of banks and hedge funds. Those bankruptcies will set off a cascade of others. EVERYBODY is over leveraged.

The solvent members of the EMU can see that nothing will save Greece. They're tired of endless paying for a deadbeat. If they stop paying, the French and German banks will crash. That will bring down all of the rest. Everybody is interested in making money. Nobody cares if Greece lives or dies;
http://www.guardian.co.uk/commentisfree ... al-markets
New York and London have worked diligently to collapse Greece, hoping to preserve the reign of the dollar for a bit longer.

[can't sit still]

Congress is trying mightily to reduce spending by ONE TRILLION DOLLARS over the next 10 years. No shit Sherlock,,, congress spends $ 11 billion a day AND, they're talking about reducing this by $ 100 billion a year. Congress has made it abundantly clear that they plan to default.
The debt-markets have gotten the message.
"Risk of a U.S. default can be seen in the credit default swap (CDS) market. 1 year U.S. CDS has risen from 23 to 37 or by 60% in the last six trading days (see chart below). According to this measure, the U.S. is now more likely to default than Slovenia and Indonesia in the next year."
"In the more liquid 5 year U.S. CDS, the cost to insure has risen by some 50% in the last week. The U.S. is considered more likely to default in 5 years time than South Africa, Malaysia, Panama, Brazil and Colombia."

http://news.goldseek.com/GoldSeek/1306414800.php
The very wealthy investor Jim Rogers has "shorted" U.S. debt. This is VERY risky. For the CDSs to rise this much in 6 days is an indication that some new "force" is coming into play. The U.S. debt has always been un-payable. For investors to all-of-a-sudden react to this fact is suspicious.
There seems to be an internecine war between the power elites. It is speculated that DSK was brought down at a critical juncture to crash Greece and consequently, the Euro. This would help the dollar to survive.
http://www.larouchepub.com/pr/2011/1105 ... emise.html

There is ongoing projection and speculation of hyperinflation. It could be generalized that the power elites have quite a bit of control in this matter. They control the FED so it seems a reasonable speculation. Mike Shedlock argues that hyperinflation would harm the PE to a great degree. He insists that we will NOT have hyperinflation. He is convincing;
http://globaleconomicanalysis.blogspot. ... tiple.html
If U.S. GOV recklessly printed dollars to avoid default, that would ruin the value of the dollar. If GOV is indeed going to default, that would tend to destroy our credit but retain the value of the dollar. Since the FED invested a century in promoting the dollar as THE best currency, it seems doubtful that it would destroy it.

So, what does this all mean? If the FED refuses to hyper-print,,, if credit remains frozen, the velocity of money will fall even further. If the FED refuses to hyper-print there will be NO money for social programs or retirements.

There is a possibility that an imminent Greek default will cause HUGE turmoil. Reports claim that London and New York are squeezing Greece to default. The advantage would go to the dollar if the Euro crashes before the dollar. Apparently, the CDS market is assured of a Euro crash and is insuring U.S. debt as a precaution. It appears that the U.S. is doing pedal-to-the-metal spending to initiate a default.
Time will tell.

[geekster]

Have you read what is happening in Belarus

http://www.bloomberg.com/news/2011-05-2 ... -says.html

But what was most interesting about all this demagoguery surrounding Ryan's Medicare proposal was this:

This is Bill Clinton happening across Paul Ryan. Clinton says he is glad the Democrats won NY-26 but hopes he Democrats don't use it as an excuse not to do anything about Medicare. Ryan says it will probably spiral into paralysis but "you know the math, we had to put ourselves out there, you have got to get this thing moving" because Medicare is going to go completely broke and if nothing is done, everyone loses everything.

[youtube][/youtube]


They KNOW that Ryan is fundamentally correct.

Then here is another interview by Clinton:

[youtube][/youtube]

[can't sit still]

Ryan's proposal will NOT save us. If I remember correctly, the 5 year projection has us with a $ 19 trillion deficit,,,, Ryan's proposal would bring that number to only $ 17 trillion. The CBO says that debt service will take 100 % of GDP by then.
Medicare is the Boogeyman. I believe that I read a figure of cost-per-person of $ 451,000. This isn't sustainable. This page has some good figures on how costs accelerate hugely as age goes up.
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1361028/

[geekster]

Ryan's proposal will NOT save us. If I remember correctly, the 5 year projection has us with a $ 19 trillion deficit,,,, Ryan's proposal would bring that number to only $ 17 trillion. The CBO says that debt service will take 100 % of GDP by then.
Medicare is the Boogeyman. I believe that I read a figure of cost-per-person of $ 451,000. This isn't sustainable. This page has some good figures on how costs accelerate hugely as age goes up.
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1361028/

I think you mean total debt, not deficit. And it has most if its impact more than 5 years out. But in any case, its the only proposal on the table. So far the choice is Ryan's plan or do nothing. But I am even surprise the Dems are playing it as any kind of referendum on the Ryan plan. The election was a Ross Perot style win for the Dem where a fake "tea party" candidate (a Democrat who had run twice before) siphoned off about 8% of he vote and allowed the Dem to win the Republican district. And it is moot anyway because that seat will exist for all of 18 months. New York loses two seats due to reapportionment and the seats lost are generally the most junior. So this one and that one in upstate NY that was won in 2008 are likely the two that will be abolished.

Actually the Ryan plan is really simple for Medicare. Instead of running an insurance bureaucracy, it is just cheaper to make a direct premium payment to the private insurance company OF YOUR CHOICE and get rid of the bureaucracy.

Here is what I believe is going to happen:

Politicians are afraid that if they touch medicare or social security the other party will scare people into throwing them out of office. So they will do nothing and allow the system to go completely broke. THEN they will act to try to salvage something out of it and play themselves off as heroes for getting *something* back to the seniors. They don't care about the people, they care about their "political career". They know the system is headed for bankruptcy but there is more political downside to touching it than for just letting it go broke, they can then place the blame on people who left office long ago and are probably dead by now.

Ryan is so far the only one that seems to care more about the seniors than his own political career and has put forth a plan. Maybe it isn't a perfect plan, but it is SOMETHING. The Democrats won't go for it because it takes government out of the loop and at this point the US Democratic Party might as well be the Communist Party of the US. They are all about government owning practically everything.

[geekster]

This says it about as well as anyone can.

http://fullcomment.nationalpost.com/201 ... cial-ruin/

Unless the United States has the most spectacular cognitive awakening since Brunhilda, if not Lazarus, the laws of arithmetic are going to assert themselves in Zeus-like terms.

This isn't political opinion folks, this is just plain old arithmetic. Just plain old 1+1=2 stuff. Not any fancy algebra or "new math".

[can't sit still]

geekster,,, good posts. They point out political paralysis. Why political paralysis?
Gonzalo Lira has done some very good writing on the subject.
"It’s an overall concept I’ve designated as the Democratic Bankruptcy Paradox: The paradox by which every democracy eventually goes bankrupt—regardless of the people’s will and intention of keeping it from going bankrupt.

That’s why it’s a paradox: The citizens of a democratic state are supposed to control its destiny. They obviously do not want their nation to suffer bankruptcy—yet in spite of their will and intent, democratic states always go bankrupt. Always."

"Thus, as a group, we have an incoherent outcome: The majority of the group believes taxes should be cut—and at the same time, the majority of the group thinks the government should deliver more services to the people. All of the members of the group individually do not want a deficit, but as a group their incoherence leads to a deficit.
This is the democratic fiscal incoherence, a situation unique to democracies."

"However, as each successive, successful resolution of the democratic fiscal incoherence takes place, paradoxically, the democratic regime becomes more credit-worthy: The cost of borrowing goes down with each successive, successful resolution of the democracy’s fiscal incoherence.

When it finally reaches the point where credit is so cheap, and the cost of resolving the annual fiscal incoherence—politically, emotionally, practically—is higher than the cost of taking on debt, then a subtle crisis point will arise: The democratic regime will “postponeâ€

[geekster]

I think that argument is already obsolete. We are currently nearly to the point where none of that matters.

We are broke. The US government currently simply has no money. We are spending so much more than we are taking in that we can't even borrow enough on world markets to finance the spending so we need to have the federal reserve create money out of thin air in order to buy government debt.

We have people in this country that honestly believe that it is the role of government to see to it that they have an income, and I am not talking about just retirees. 51% of the population now gets the majority of their income from the US government. 45% pay no taxes. We say "tax the rich" when the taxes of the "rich" are already providing the income for more than half of the country through taxes.

It just isn't sustainable. YOU are responsible for your income. If you don't have a job, it isn't your neighbor's responsibility to send you a check. We have nearly 20% real unemployment in this country. One in five people are sitting on their asses collecting a government check. The only people taking low-end jobs are people who can't qualify for a government check.

Look at it another way. If McDonalds were to disappear from the face of the Earth and every single one of those jobs were to disappear, it would have no noticeable impact on tax revenue. It would be a tiny fraction of one percent.

We need to REDUCE benefits because increased benefits result in it being easier to remain idle and we need to broaden the tax base and have it actually painful to the government to implement policies that kill lower end jobs. Government can do things like increase minimum wages that result in companies laying off thousands of workers because those low end jobs don't amount to a pinch of owl shit when it comes to tax revenue. If we taxed people in low end jobs at a more reasonable level, the loss of low end jobs would actually be painful for government because it would lose significant revenue.

What is going on right now is that the Democratic Party is paying people to take a seat from the job market so illegal workers can fill those positions in exchange for votes. The UK Labour Party did the same thing. The US Democratic Party is simply importing voters (though recent laws in some states requiring ID for voting might put a crimp in that strategy in some states).

[can't sit still]

This is an excellent article positing that the EU was designed to crash. Since the EU would never have been formed if the individual countries were required to give up taxing authority, it was designed to crash. Out of the ashes, a new union would be founded. The new union would be empowered to collect taxes. Once the union was empowered to collect taxes, all sovereignty would fade away for the individual countries.
The wealth held by the banks is held by the senior bondholders. The senior bondholders are screaming for the various GOVs to NOT default. The ECB is holding all the sovereign debt. They will claim [reasonably, of course] that they should be allowed to tax all the countries so that there won't be a crash that would bring EVERYBODY down.

Those countries that can come up with tax money can pay their debt by simply transferring ownership of their prime assets to the ECB. The situation has been manipulated to where the individual countries will be in the shitter if they default. Like the slowly-cooked frog, The ECB will gradually demand a transfer of valuable assets. The bankers will own the profit generating assets and the GOV will sink lower and lower. The sovereign nations will NEVER escape the clutches of the bankers.
The bankers are hoping that the negative effect of default will appear to be less costly than the perceived cost of continuing bailouts.

Hopefully, the GIISP countries can figure this out. Hopefully, they can demand action from their leaders to DEFAULT. Hopefully, they can emulate Iceland. If they do not default, their country and their heritage will dissolve piecemeal.
http://www.gordontlong.com/Articles/art-2011-05-bs.htm
Good vid; http://cryptogon.com/?p=22689

[geekster]

Apparently China is cashing in her chips. China has divested 97% of its holdings in US short term debt and has been reducing its holdings of longer term debt:

China's holdings of US treasury debt has declined in each of the past 5 months.

[can't sit still]

Money does not make the world go round. Money won't move it an inch. Only profit makes the world go round. If there isn't a profit to be made, the financiers just hold back their money. Starting in the 70s, wages went stagnant. Since credit was increasingly used to make up for lost purchasing power, the ever-increasing interest burden cut in to profits.
Only growth could hope to maintain a profitable economy. Population growth went flat so our southern borders were thrown open.
Keynesian economics demands growth in both productivity and population. But, since wages and purchasing power had been stagnant for decades, GOV borrowed money to provide jobs in the public sector for those who were not needed in the private sector.
GOV borrowed money to fight wars that produced artificial demand for war materials.

GOV increasingly provided what was missing in both purchasing-power and employment. ALL done on borrowed money. The financiers withheld their money and only proffered credit,,, with little or nothing backing it. Banker-created inflation raised prices. Frozen wages meant that purchasing power steadily diminished. Purchasing-power was augmented by the entrance of women to the labor force. This diminished the birth-rate and diminished population growth. This contributed to diminished purchasing power.
Due to various factors, the Western economies continued to shrink. GOV borrowing and GOV employment was able to compensate at the expense of impoverishing our future and our children. We didn't have the children that were the planned tax-slaves to pay our bills.

Bubbles were blow to keep the financiers in a profitable scheme. As each bubble collapsed, it became apparent the we just didn't have the purchasing-power to keep the economy growing. The purchasing power of GOV was / is very finite because it must depend on increasing tax receipts from a decreasing work-force and decreasing tax base
As GOV was less able to absorb the excess labor, the demand of assistance went way up as tax receipts went way down. The public and private economies are both debt-saturated. The financiers see no profit to be found. With the debt-saturation of the bottom 80% , the economy can not possibly grow. The money of the financiers will just sit quietly in the banks.
There will be little money circulating but, many prices will rise. GOV is lying through their collective teeth. Obummer just announced that unemployment is just a bump in the road. GOV is working [lying] overtime to keep the capital from fleeing. As Geekster pointed out, capital is fleeing anyway.
US / GB is trying to crash the Euro to cause capital flight to the dollar. It's a see-saw back and forth. If the U.S. fails to implement QE III, the bond market will crash, the stock market will crash [worse] and housing will crash. If [when] QE III is implemented, investors will be driven away from the dollar.

This is an EXCELLENT paper that lays things out very clearly. It is linked to 3 previous papers in the series by the same author. They tell everything.
http://theautomaticearth.blogspot.com/2 ... -gold.html

[can't sit still]

There is a constant interplay between capital, labor and business. Currently, 50 % of the cost of something is for finance. That varies between 19 % for trash collection and 78 % for public housing. Business finds it difficult to make a profit because finance is charging too much. Labor is losing ground because business insists on a profit and capital refuses to lower finance costs. Business sent it's manufacturing overseas to lower labor-costs and maintain a profit.
The consumer is debt-saturated and can't supply a profit for business or finance. GOV has lowered the interest rate to zero in an effort to maintain profitability for finance. ZIRP was never passed on to business or the consumer so, they can't make a profit. Finance is flying high FOR THE MOMENT. Business is in the crapper because the cost of finance has eliminated the possibility of a profit. Labor has gotten the shaft
http://www.zerohedge.com/article/attent ... st-history
Finance is flying high and chuckles at the fact that finance screwed both business and labor. Now that business and the consumer are crashing, finance has discovered that they starved the "golden goose". The bankster-run GOV is vainly trying to resuscitate the goose with transfusions of "water" where only "blood" will make a difference.

Finance is happy as could be because the numbers in their ledgers are growing like crazy. Finance is slowly coming to the realization that those numbers are meaningless. Without the circulation of wealth, there is nothing to extract a profit from. A $ 1 increase in taxes results in a $3 decrease in GDP. If finance charges are commensurately negative for the economy, that would go a long way towards explaining why the manufacturing sector continues to go downhill at the same time as productivity continues to increase.
Islam and Christianity both proscribe against interest. It may be that finance will have to come up with a different arrangement if everybody is to survive.