Green Shoots, Yellow Weeds and the Sleeping Giant

Last week, legislators sent a letter to Federal Reserve Chairman Ben Bernanke encouraging the Fed to stop printing money. They wrote: “Creating dollars to cover debts gives markets a short term boost at the expense of debasing the dollar and triggering inflation. To date, the Federal Reserve has already created over $130 billion to cover $35 billion of long-term debt and over $100 billion of short-term securities.”

The Capitol Hill geniuses also wrote:
“Lenders to the U.S. government are expressing growing reluctance to buy more U.S. debt. Key policymakers among U.S. creditors, especially in China and Japan, increasingly doubt the wisdom of this new policy," they wrote. "Most investors now see that the United States has embarked on a policy of dollar inflation in a short-sided attempt to replay old debts with newly-created dollars."

Well, better late than never, I suppose. Sound familiar?

On January 27, 2009 in ‘Economic Armies’, I wrote:

“The Fed and treasury total supply of money has nearly tripled since 2005 and jumped by 60% in 2008 alone. The massive amount of liquidity being injected into the system has taken a back seat to curing the deep recession upon us, but this will inevitably result in high inflation and a continuing debasing of the U.S. dollar.”

The appetite (especially from foreign governments) for U.S. treasury debt has waned because of the massive amount of treasuries they already hold, low rates of return, and the devalued dollar; which leaves only one option for generating the huge amounts of money needed to 'stimulate' spending - printing it.

And from ‘Short Term Gain, Long Term Pain’ March 25, 2009:

“The Fed has displayed a willingness to continue printing money to grow the money supply and now to buy treasuries. Although this policy may succeed in halting the slide of assets like real estate and stocks, this feat comes with a huge price. Every dollar printed to buy bonds or increase the money supply results in more inflation and a continued debasing of the dollar.”

I still believe that we could take 535 people randomly from the phone book and they couldn’t bollix things up any worse than the charlatans and donkeys on Capitol Hill. I should point out that we have sent emails and letters to various Senators and members of Congress to which there has been no reply in many cases. Senator Kennedy’s office, on the other hand, consistently replies - albeit with some boilerplate, mass-produced response written by an intern, no doubt. Perhaps if I were to send along a bottle of single-malt...

I’ve read much positive news about the markets lately; The Bull Market is here, we’ve turned the corner; job losses have slowed down, business sentiment is better, that sort of stuff. The term ‘green shoots’ has been thrown about.

Is it true? Anyone who says they know is lying to you or trying to take your money, or both. Call me a realist. Along with the green shoots, there are always ugly yellow weeds. Even with the huge surge in the stock market since early March, we’re still about even (that is to say – no gain) year-to-date. Business capex spending is still down, and companies are still cutting inventories to bring supplies in line with falling sales. We have 9.4% unemployment, and it is expected to rise into double-digits, probably 11% before it levels off. Long-term market technicals point to a correction. A couple of months ago, the Fed announced its intention to buy billions in U.S Treasury bonds in order to, among other things, push rates down. Now, the government is trying to sell billions of dollars in debt to finance the economic recovery, and this has caused rates to climb. If this keeps up, any housing rebound will be squashed. They’re trying to strike a balance; if they go too far one way, there is huge inflation; too far the other way and it’s bye-bye recovery.

In an interview with CNN Money about the financial crisis, Tim Geithner said “You're going to see a slower recovery than what you normally see." What a visionary. This is the same guy who, when Speaking at Peking University, said: "Chinese assets are very safe." Loud laughter followed from the audience of students.

In a more direct illustration of China’s lack of confidence in U.S. fiscal policy, the Chinese have now begun reducing their holdings of U.S. government bonds. Also, for the first time since June 2008, the Chinese did not purchase more treasury bills. This is the waning appetite mentioned earlier. "China is implying to the US, more or less, that it should adopt a more pragmatic and responsible attitude to maintain the stability of the dollar," said He Maochun, a political scientist at Tsinghua University.

The following is an excerpt from a symposium on the economic crisis on 4/30/09, where one of the participants was George Soros. The moderator asked “What is the actual state of the economy, and do we need a serious mid-course correction on the part of the Obama administration?” The reply is very interesting.

This was one of Soros’ comments, and is really all I need to know:
“You have actually to inject a lot more leverage and money into the economy; you have to print money as fast as you can, expand the balance sheet of the Federal Reserve, increase the national debt. And that is, in fact, what has been done, which is the right thing to do.”

Print money as fast as you can and increase the national debt, Mr. Soros says. For whose benefit? The uber-liberal Mr. Soros has made billions during the economic collapse, shorting the stock market and betting against the U.S. Dollar.

‘The Australian’ reported on March 19:
“George Soros is having a very good crisis. Other investors are wilting, political power structures are being upended and market economists are scrambling to fashion new theories, but the world's most famous speculator is having a belated heyday.”

"It is, in a way, the culminating point of my life’s work," the 78-year-old said.
How touching. Soros is also one of the founders of Moveon.org - the group who financed the “General Betray-us” ad in the New York Times, thinks that the Bush Administration was responsible for 9/11, and counts as profound the likes of Rosie O'Donnell and Sean Penn. Anyone who believes that people like Soros have the best interest of our country at heart should be held for psychiatric evaluation. If he says we need to print money as fast as we can and increase the national debt, we should be very suspicious - and the presses should be confiscated and shut down.

It’s important to know that the liberal assault on Constitutional values began in Roosevelt’s America generations ago and has been gaining strength ever since. It will not be eradicated overnight. Ironically, having staunch far-left supporters like Soros and others will ultimately serve as the greatest indictment of the Obama Administration and its over-reaching policies as liberals begin to realize that in their U.S.S.A, they too would need to pay ever-increasing taxes, fight for rationed health care, press 2 for English, and live in a nation for the government, not for the people. Their penance would come if they were forced to explain to their children how they drove the whole process of destroying the very principles on which our country was founded. I hope to God we don’t get to that point, but it’s clear that liberal citizen-of-the-world types are making one hell of a push to ruin our country under the guise of righteousness and ‘tolerance’ and under the leadership of the Celebrity-In-Chief. These are the pompous class masquerading as if to possess an abundance of dignity and knowledge. Thankfully, they are transparent; and they are ill-prepared for the relentless onslaught being brought forth by every-day Patriots who understand the difference between life, liberty, and the pursuit of happiness; and absolutism, tyranny, and the pursuit of hopelessness.

After Pearl Harbor was attacked, Japanese Admiral Yamamoto said: “I fear all we have done is to awaken a sleeping giant and fill him with a terrible resolve”. Now, Conservative and Constitutional principles are under attack by new enemies of the state. We, the now un-silent majority are that sleeping giant. We are now fully engaged. We are single-minded, and make no mistake; we have the fight of our lives on our hands. We will ultimately prevail because our resolve is limitless; because we respect and value the sacrifices that were made generations ago to turn back tyranny, and because our children deserve no less than the country that has provided hope and dreams to us and to our parents - through hard work and perseverance, not through entitlements and apathy. We will ultimately prevail because we must.


“Let us be sure that those who come after will say of us in our time, that in our time we did everything that could be done. We finished the race; we kept them free; we kept the faith.”


- Ronald Reagan