Thursday, January 31, 2013

Crazy intersections

See: http://www.theatlanticcities.com/commute/2013/01/could-these-crazy-intersections-make-us-safer/4467/

These include:
Michigan Left
the Jughandle
North Carolina Superstreet
Diverging Diamond
Continuous Flow
Elevated Left Turns

Tuesday, January 29, 2013

Getting Hysterical about Hysteresis

Hysteresis is the dependence of a system not only on its current environment but also on its past environment. This dependence arises because the system can be in more than one internal state. To predict its future development, either its internal state or its history must be known.
--http://en.wikipedia.org/wiki/Hysteresis

It has a specific meaning in the field of economics:
"Hysteresis is used extensively in the area of labor markets. According to theories based on hysteresis, economic downturns (recession) result in an individual becoming unemployed, losing his/her skills (commonly developed 'on the job'), demotivated/disillusioned, and employers may use time spent in unemployment as a screen. In times of an economic upturn or 'boom', the workers affected will not share in the prosperity, remaining long-term unemployed (over 52 weeks). Hysteresis has been put forward as a possible explanation for the poor unemployment performance of many economies in the 1990s. Labor market reform, or strong economic growth, may not therefore aid this pool of long-term unemployed, and thus specific targeted training programs are presented as a possible policy solution." Ibid.

I've never heard the term before today but noticed it mentioned in an article:
The Spanish authorities and the Commission are betting that Spain’s policy of “internal devaluation” and wage cuts within EMU will slash unit labour costs enough to claw back competitiveness, but this is a risky strategy that may overlook the lasting damage to the productive economy - a concept known as "hysteresis". --http://www.telegraph.co.uk/finance/financialcrisis/9835502/Spains-crisis-strategy-under-fire-as-economy-buckles-again.html
It is also mentioned in another article:
The term in vogue is "hysteresis". If people are out of work for long enough, the damage to skills and human capital becomes a permanent loss. The underlying growth potential of the economy is damaged for years. This is what we are seeing in half Europe right now. --http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100022429/david-camerons-referendum-may-never-be-necessary/
So, hysteresis in the labor economic sense, means decaying job skills due to prolonged unemployment.  This is the risk that someone who has been unemployed a long time may never be employed again.

It is used as an excuse not to cut the budget, because of the potential damage to the long-term economy:
Hysteresis can mean that the costs of failing to pursue expansionary policies are much greater than even the direct effects on employment. And it can also mean, especially in the face of very low interest rates, that austerity policies are actually self-destructive even in purely fiscal terms: by reducing the economy’s future potential, they reduce future revenues, and can make the debt position worse in the long run. --http://krugman.blogs.nytimes.com/2011/09/18/hysteresis-begins/

I think it is all tosh.  I think "hysteresis" is a pseudo-scientific word meaning that you mustn't cut government spending ever.  It sounds like an economic disease.  "Dr. Krugman says that if you cut the budget, the economy may develop hysteresis."  It has about the same credibility as "female hysteria", which was a diagnosis given by quack doctors, for which they also conveniently had an interesting treatment.

I will comment further if I run across the word again.

Saturday, January 26, 2013

Interest rates will skyrocket as soon as 2016


First, read this:  http://www.zerohedge.com/contributed/2013-01-26/fed-defer
Now read the underlying article:  http://www.federalreserve.gov/pubs/feds/2013/201301/201301pap.pdf

It's not an easy read.  Part of it is a discussion of "deferred assets".  The word "deferred asset" is misleading.  It really refers to a loss, in the situation where the value of the liabilities exceed assets.  In other words, insolvency or bankruptcy.  But instead of the Federal Reserve declaring bankruptcy, which would really freak everyone out, they make up a fictional asset to hide the loss.  They could call it anything they want since they are making it up, like "unicorn poop", but "deferred asset" sounds more technical.  To be more accurate, it should be something like "unrecognized losses".

Anyhow, by using deferred assets, it is IMPOSSIBLE for the Federal Reserve to ever become bankrupt.  So we can quit worrying about that.  But the result is that the interest that the Federal Reserve has been paying to the Treasury will drop from about $90 billion/year to zero.  Instead of making payments it will reduce the deferred asset by the same amount.  This will cause the interest paid by the Treasury to increase by about $90 billion/year, adding to the deficit.

Furthermore, the interest rates on short-term notes will increase from near 0% at the end of 2014 to at least 4% by the end of 2017.  This will cause net interest paid by the government to suddenly surge to more than $700 billion per year by 2018.  ($18 trillion public debt x 4%).  And we can't maintain the fiction that the Fed owned bonds aren't real because the interest is remitted back to the Treasury, because the Fed will need that interest to cover its deferred assets.

Conclusion:  It looks like the free lunch and kicking the can down the road will end about 2017, coincidentally about the time when the current partier-in-chief will be leaving office.

==============================
It seems like the market is addicted to the easy money, and as soon as it stops, probably the end of 2013, interest rates will begin to rise.  In reaction, the Fed will need to intervene again. Any hopes of a medium-term exit are unlikely.  So, in other words, the "beginning of the end" could start as early as 2014. 

So I see two options - a) the short-term interest expense bomb which will go off as this article states, about 2016, causing a recession and immense pain or b) the long-term hyperinflation bomb, which will go off about 2036.  I'd rather have option A.  Let's pull the bandaid off quickly. 

My opinion is that the Fed should immediately stop all asset purchases, and slowly start to sell off its portfolio, and raise interest rates to 5% over the course of the next 2 years.

Daniel Hannan Unleashed



The bailouts involved stealing from the poor and giving to the rich bankers. "The bailouts were an ethical crime, where low and medium income people were required to rescue some extremely bankers and bondholders from the consequences of their own errors.  It will one day be seen as a generational offense."

Crisis in 2036

Here is a new deficit projection I created:


I see a crisis once net interest expense exceeds 5% of GDP, and this will occur in 2036 in this model.  I'm calling this Model L-2, and it is similar to one I did last year.  See http://aftermath2022.blogspot.com/2012/06/interest-rates-explode-after-2029.html.

One of the major differences is that I foresee the Federal Reserve intervening much more and buying up government debt in an attempt to keep the interests costs down.

===============
According to the latest CBO projections, my Medicare projections are too high and my Medicaid projections are too low.

Thursday, January 24, 2013

Konza, Kenya

The BBC spotlights Kenya begins construction of 'silicon' city Konza...
"Kenya's president has launched a $14.5bn (£9.1bn) project to build a new city intended to be an IT business hub and dubbed "Africa's Silicon Savannah". It will take 20 years to build Konza Technology City about 60km (37 miles) from the capital, Nairobi. [...] Konza is part of the government's ambitious Vision 2030 initiative to improve much-neglected infrastructure over the next 18 years. [...] The 5,000-acre (2,011-hectare) site was a ranch to the south-east of Nairobi on the way to the port city of Mombasa. [...] The city wants to attract business process outsourcing, software development, data centres, disaster recovery centres, call centres and light assembly manufacturing industries. A university campus focused on research and technology as well as hotels, residential areas, schools and hospitals will also be built. The government has appointed the Konza Technopolis Development Authority to oversee the building of the IT hub, which will be built in four phases -- starting with the technology centres first."
Source: http://www.maximizingprogress.org/2013/01/konza-kenyas-silicon-savannah.html

Wednesday, January 23, 2013

You are now entering ...


The Twilight Zone


President Eisenhower supposedly had secret meetings with aliens from outer space. I saw it on Youtube, and it was confirmed by the Daily Mail. It must be true!

Debt Spring Break



The Republicans are proposing to "suspend" but not "raise" the debt ceiling until May 19.  In other words, for the next 4 months, there will be NO LIMIT AT ALL on the debt ceiling.  Now is your chance Krugman & Co., you can run wild.  How much would you spend if you had a credit card with NO LIMIT on it?

"Under the proposal, the legal limit on government borrowing — now set at $16.4 trillion — would remain intact, but its enforcement would be suspended until May 18. In the meantime, the Treasury could continue borrowing to cover the cost of Social Security checks, the military payroll, interest payments to the nation’s creditors, and other obligations.
The approach — unprecedented since World War II — would let Republicans avoid a debt-ceiling fight, which could be politically and economically damaging, without endorsing a higher limit.
On May 19, the debt limit would automatically be reset at a higher level that reflected the additional borrowing. Treasury officials could then begin taking what they call “extraordinary measures” to continue paying the nation’s bills, probably pushing the new default deadline into late July or early August, independent analysts said."
--Washington Post

Oh, by the way, this also means the scheduled constitutional crisis with the quadrillion dollar platinum coin will be postponed.

Tuesday, January 22, 2013

The Depression of 1786

I believe that history happens in cycles, and I am going to be publishing a series of short articles about previous depressions.  First is the depression of 1786.

===============
Summer of 1786 - Americans suffer from post-war economic depression including a shortage of currency, high taxes, nagging creditors, farm foreclosures and bankruptcies.
August 8, 1786 - Congress adopts a monetary system based on the Spanish dollar, with a gold piece valued at $10, silver pieces at $1, one-tenth of $1 also in silver, and copper pennies.
August 22-25, 1786 - Angry representatives from 50 towns in Massachusetts meet to discuss money problems including the rising number of foreclosures, the high cost of lawsuits, heavy land and poll taxes, high salaries for state officials, and demands for new paper money as a means of credit.
August 31, 1786 - In Massachusetts, to prevent debtors from being tried and put in prison, ex-Revolutionary War Captain Daniel Shays, who is now a bankrupt farmer, leads an armed mob and prevents the Northampton Court from holding a session.
September 20, 1786 - In New Hampshire, an armed mob marches on the state assembly and demands enactment of an issue of paper money.
September 26, 1786 - Shays' rebels, fearing they might be charged with treason, confront 600 militiamen protecting the state Massachusetts Supreme Court session in Springfield and force the court to adjourn. --http://www.historyplace.com/unitedstates/revolution/rev-nation.htm
==============
I haven't spent too much time researching this, but it seems that what I call the "Depression of 1786" was caused in part by a lack of hard currency.  There was a credit crunch, with Europeans refusing to extend lines of credit to Boston merchants, and they in turn demanded hard currency from farmers in Western Massachusetts.  There were many foreclosures and property seizures.  There was also no bankruptcy process, with debtors' being sent to jail.  The unfairness of the situation led to Shays Rebellion.

What ended the Depression of 1786?  First, the US Constitution, which went into effect on March 4, 1789.  It gave the federal government the power to put down revolts, which it did in the Whiskey Rebellion of 1791.  It established a process for bankruptcy.  The Commerce Clause eliminated interstate tariffs.  The Federal government took over state debts, which alleviated pressure on them to collect taxes to pay them.  The establishment of the mint allowed more coins to be issued.  Last, but not least, the First Bank of the United States was founded in 1791 with a capitalization of $10 million, which created credit.

The US was in a recession from 1796-1799, starting with the Panic of 1797 (caused when a bubble of land speculation burst).  This led to the Bankruptcy Act of 1800.

The early united states (plural) to boomed from 1803 to about 1815.  One measure shows the CPI (where 1967=100) rising from 43 in 1802 to 63 in 1814, when the bubble began to burst.  It didn't hit this level again until after WW2.  The Second Bank of the United States began in Feb. 1817, and the New York Stock exchange opened in March 1817.

Kondratiev wave theorists see a Spring that began in 1789, leading to a Summer beginning in 1803 and ending with the end of the War of 1812.  They don't account for the panic of 1797, probably just seeing it as a short interruption of growth.

When did the first US K-wave summer end?  1818 is probably the best guess.  It was caused by a need for hard money to pay for the debts incurred by the Louisiana Purchase. "Total bank notes in circulation were estimated at $45 million in January, 1820, as compared to $68 million in 1816. The severe monetary contraction, lasting through 1820, led to a wave of bankruptcies throughout the country, particularly outside New England." --https://mises.org/rothbard/panic1819.pdf

So the first Great Depression of the United States began in the summer of 1818, and that is the subject of another post.

Monday, January 21, 2013

The history of banking

See: http://criminalbankingmonopoly.wordpress.com/

Former chairman of the House Banking and Currency Committee, during the great depression era, Louis T. McFadden in 1932 stated, “We have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our Government. It has done this through the corrupt practices of the moneyed vultures who control it.”
Rep. Louis T. McFadden (1876-1936).
Rep. McFadden said, “When the Federal Reserve Act was passed, the people of these United States did not perceive that a world banking system was being set up here. A super-state controlled by international bankers and industrialists acting together to enslave the world. Every effort has been made by the Fed to conceal its powers but the truth is the Fed has usurped the government.”  After he lost his congressional seat in 1934, he remained in the public eye as a vigorous opponent of the financial system, until his sudden death on October 3, 1936. There were two previous attempts on Louis McFadden’s life. Two bullets were fired at him on one occasion, and later he was poisoned at a banquet. Evidently, the third time the assassins succeeded, and the most articulate critic of the Federal Reserve and the financiers’ control of the nation would finally be silenced.

Sunday, January 20, 2013

The most properous countries in the world


  1. Norway
  2. Denmark
  3. Sweden
  4. Australia
  5. New Zealand
  6. Canada
  7. Finland
  8. Netherlands
  9. Switzerland
  10. Ireland
  11. Luxembourg
  12. United States
  13. United Kingdom
  14. Germany
  15. Iceland
  16. Austria
  17. Belgium
  18. Hong Kong
  19. Singapore
  20. Taiwan
  21. France
  22. Japan
  23. Spain
  24. Slovenia
  25. Malta
Source:  http://press.prosperity.com/PI2012_Brochure_Final_Web.pdf

China is 55, and Russia is 66 on the list.  Kazakhstan is 46.

The Amtrak long bond

The Secretary of Transportation has possession of two long term notes with the National Railroad Passenger Service Corporation (more commonly referred to as Amtrak). The first note is for $4 billion and matures in 2975 and the second note is for $1.1 billion and matures in 2082 with renewable 99 year terms. Interest is not accruing on these notes as long as the current financial structure of Amtrak remains unchanged.
--http://www.gao.gov/assets/660/651357.pdf

Wait, what? Did that just say the note expired in 2975? Yes, confirmed from multiple sources.  And what is the interest rate again?  0%.  Nice.

I wonder if there are any other cases like this.  Usually, 30 years is the maximum borrowing time in the US.  I will post some more info if I find anything else.

=====================
The Univ. of Pennsylvania issued $300 million of 100 year bonds set to mature on Sept. 1, 2112, yielding 4.674%.

Other 100 year bonds have been issued by Yale, Boston University, Coca-Cola, MIT, Caltech, Ohio State, Univ. of California and Norfolk Southern.  Mexico issued $1 billion of 100-year bonds.

======================
Some real estate in the UK is leased for 300 years.  It's essentially a purchase of the building, but the lessor gets the land back at the end.

Saturday, January 19, 2013

The land of Deflation

Is it possible that the greatest economic threat facing the US is not hyperinflation but deflation?

Exhibit 1.  During periods of inflation and hyperinflation, money is losing value, so the holder has an incentive to withdraw cash as soon as he can and take it to the market to buy bread before it goes up in value even more.  So the velocity of money would be extremely high.   Deflation would be the opposite.  Money would be rising in value, even if only so slightly, so there is an incentive to hold on to it.   The last measurement of M2 velocity is 1.572, which is the lowest it has ever been since measurement started in 1959.

Exhibit 2.  Gold.  During hyperinflation, the price of gold would increase rapidly as people would seek to maintain their wealth.  But during deflation, the price of gold would drop.  The last closing price (1/18/13) was 1687.00, up only 27.10 in the last year.  So the price of gold is flat.

Exhibit 3. Ratio of M2 / TCMDO.  Almost all money has comes into its existence from borrowing. For the purpose of this article, I will assume that all money is created this way.  So money is a derivative, and its serves its master, the debt that created it.  So the important thing to look at is not the total amount of money, but its ratio to debt.  If the ratio is increasing, then debt would be easier to pay back.  Conversely, if the ratio is decreasing, then debt would be more difficult to pay back.  And the debt that matters is private debt, not public debt. So the calculation is very simple - M2 to TCMDO.

QuarterM2TCMDORatio
Q4 200880325327315.1%
Q3 2012100675446017.6%

Conclusion:  I entertained the idea briefly that we are in deflation not inflation.  If it weren't for the Fed intervening, this may have been true, but obviously we are having inflation.  I think M2 will be an important number to watch, and I think the M2 velocity will start increasing this year.

Thursday, January 17, 2013

Three world currencies

The dollar, the Euro, and gold.

"The world is moving step by step towards a de facto Gold Standard, without any meetings of G20 leaders to announce the idea or bless the project.
Neither the euro nor the dollar can inspire full confidence, although for different reasons. EMU is a dysfunctional construct, covering two incompatible economies, prone to lurching from crisis to crisis, without a unified treasury to back it up. The dollar stands on a pyramid of debt. We all know that this debt will be inflated away over time – for better or worse. The only real disagreement is over the speed.
My guess is that any new Gold Standard will be sui generis, and better for it. Let gold take its place as a third reserve currency, one that cannot be devalued, and one that holds the others to account, but not so dominant that it hitches our collective destinies to the inflationary ups (yes, gold was highly inflationary after the Conquista) and the deflationary downs of global mine supply. That would indeed be a return to a barbarous relic.
A partial Gold Standard – created by the global market, and beholden to nobody – is the best of all worlds. It offers a store of value (though no yield). It acts a balancing force. It is not dominant enough to smother the system.
Let us have three world currencies, a tripod with a golden leg. It might even be stable."
--http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100022332/a-new-gold-standard-is-being-born/

Monday, January 14, 2013

The $50 million coin

This is a much better idea.

Gary Gorton, an economist at Yale University, suggests there might be demand for a bunch of $50 million coins. He notes the financial system still craves safe, liquid assets. Corporations in particular are desperate for a safe place to park cash now that unlimited federal deposit insurance has expired. Including fees, many bank accounts now sport negative yields, as at times do Treasury bills. Money-market mutual funds may float their asset values. Platinum coins would represent a risk-free, liquid way to store cash with no risk of negative yields. Of course, if the CFO lost one down a sewer grate, it would be a disaster. So instead, the Fed could simply keep the coins in a vault with their owners' names affixed. When one owner wants to settle payments with another, the Fed could simply switch labels. In the meantime, Treasury gets the equivalent of an interest-free loan from the public and a reprieve from the debt ceiling. Not quite a free lunch, but close enough.
--http://www.cnbc.com/id/100367281

Democrats advocate a dictatorship

Democrats are still pounding on the table, unwilling to do what they claim to want on their own:
In a letter to Obama yesterday, Senate Majority Leader Harry Reid and three other top Democrats said Obama “must be willing to take any lawful steps to ensure that America does not break its promises and trigger a global economic crisis --without congressional approval, if necessary.”
There are no other lawful steps.

There are unlawful steps, of course, but Reid doesn't give a damn about the law.  Neither do the others.  All have advocated and passed laws that advanced blatantly unlawful actions for decades, and the worst of it in the budget sense is that Reid has violated the one duty The Senate has as an absolute -- to take up and pass a budget.
That the President wishes to spend more than the government takes in, and refuses to address this issue, does not make it something Congress must do.

Wake up Herr Obama; you're not a dictator (yet.)
--http://market-ticker.org/akcs-www?post=216015
Comments:  President Obama has said that he will not negotiate about the debt ceiling.  Reid advocates taking any step necessary to raise the debt ceiling.  If Obama unilaterally raises the debt ceiling by Executive Order, or otherwise, without Congressional approval, then we will have a dictatorship.  The Democrats want this to happen. 

I hope it does not, and I don't want to be unduly alarmist, because I think the President will back down.  But if he doesn't, and the Republicans don't back down .... unthinkable.

Saturday, January 12, 2013

France is the new Greece

"The virtual implosion of French industry is overlooked by analysts and pundits who claim that the eurozone had dodged disaster and entered a new, durable period of stability. In fact, it's France -- not Greece or Spain -- that now poses the greatest threat to the euro's survival. France epitomizes the real problem with the single currency: The inability of nations with high and rising production costs to adjust their currencies so that their products remain competitive in world markets."
--http://finance.fortune.cnn.com/2013/01/09/france-economy-crisis/

"Although still quite outside the focus of the media and investors as its risk premium relative to German bonds remains relatively low, for me, leaving aside the PIIGS, which are marked by blood and fire, France, is the real zombie of Europe, an economy that has been losing competitiveness rather quickly."
--http://globaleconomicanalysis.blogspot.com/2013/01/france-hidden-zombie-in-europe.html

Kuala Lumpur



See The Evolving Urban Form: Kuala Lumpur

Kuala Lumpur has an urban area of about 6.6 million residents. "According to the most recent Brookings Global Metro Monitor, Kuala Lumpur has gross domestic product per capita of $23,900 annually (based on purchasing power). This is higher than all metropolitan economies in Latin America other than Brasilia, Monterrey and Buenos Aires. If Kuala Lumpur were in China, it would rank in the top quarter of the richest per capita metropolitan economies."

In my last ranking, I put it as #162, based on an estimated GDP of $63 billion/year.  It's ratio of GDP/PP to GDP/actual is about 1.6.  So maybe its GDP is about $100 billion/year.

M4 up 1.28% in December

As of 12/31/2012:
M2 = 10,505.5
Public debt = 11,581.5
Fed held = -1,656,9
--------------------
Total as of (12/31/2012): 20430.1

This is up 1.28% in December from November's total of 20172.4The increase here is almost entirely in M2, which has been going up about 50 billion/week.  I don't know why M2 is increasing.  With M2 velocity so low, we don't need any more.  Maybe there is an increase in private borrowing due to the ultra-low interest rates.

The increase of 2012 over 2011 was 11.1%.

=======================
The numbers as of 12/31/2011 were:
M2 = 9613.8
Public debt = 10,447.6
Fed held = -1,672.1
--------------------
Total as of (12/31/2011): 18389.3

The increase of 2011 over 2010 was 7.1%.
========================
As of 12/31/2010:
M2 = 8792.6
Public debt = 9,390.5
Fed held =  -1,016.1
--------------------
Total as of (12/31/2010): 17167.0

The increase of 2010 over 2009 was 10.7%.
=============================
As of 12/31/2009:

M2 = 8472.9
Public debt = 7,811.0
Fed held =  -776.6
--------------------
Total as of 12/31/2009:  15507.3

The increase of 2009 over 2008 was 9.9%.
==========================
As of 12/31/2008:
M2 = 8219.7
Public debt = 6,369.3
Fed held = -476.0
---------------
Total as of 12/31/2008 = 14113.0

The increase of 2008 over 2007 was 19.0%.
==========================

As of 12/31/2007:
M2 = 7474.5
Public debt = 5136.3
Fed held = -754.6
---------------
Total as of 12/31/2007 = 11856.2
========================

What does this mean?  It means that the money supply must increase by about 1% per month just to stay "even".  That is because money is "leaking out" of the system, which is caused by repayment of private debt.  If the money supply were not increasing, which would be the case if we were on the gold standard, then the economy would be contracting, at least in monetary terms.

Tuesday, January 8, 2013

Asmara, Eritrea

Saturday, January 5, 2013

Why are people who want to be fiscally responsible the lunatics?

Max Keiser predicts collapse within 6 months


I don't agree with this but here is his reasoning.

1) Bonds are in a huge 240-year bubble that could pop at any time.  Interest rates are the inverse of bond prices.  But interest rates are the effect, not the cause of the bond prices.  So at anytime, the bond bubble could pop and interest rates skyrocket.  The Fed thinks it controls this process, but it doesn't.  Once the process starts, it will be almost impossible to stop.

2) An event is coming that could start the collapse.  That is Japan's determination to cause inflation.  And this will happen by April 2013.

Germany vs. the UK


Max Keiser testifies before a committee of Parliament.

Friday, January 4, 2013

The source of the insane trillion dollar coin idea

A Simpsons episode called "The Trouble with Trillions".

"In "The Trouble With Trillions," an episode from the show's difficult second decade, Homer Simpson is given a special assigment: Tracking down the $1 trillion bill printed by Harry Truman's Treasury during the rebuilding of Europe. The Feds believe -- correctly -- that the bill was stolen by C. Montgomery Burns, who had been given it for safe-keeping as "America's wealthiest, and therefore most trustworthy, man."
--http://www.slate.com/blogs/weigel/2013/01/04/john_boehner_not_entirely_convinced_by_platinum_coin_solution.html

Quote:
Mr. Burns: Well, if it's a crime to love one's country, then I'm guilty. And if it's a crime to steal a trillion dollars from our government and hand it over to communist Cuba, then I'm guilty of that too. And if it's a crime to bribe a jury, then so help me, I'll soon be guilty of that!
Homer Simpson: God bless America!

British pound as a new reserve currency

Analysts say the SNB has already bought $80bn of EMU bonds, enough to cover half the budget deficits of Euroland over the last year. It has been acting essentially as a conduit for capital flight from Italy to Germany.
It has since branched out, allegedly into Aussies, Loonies (Canada), Scandies, Won?, Real? but above all pounds. "There aren’t many places to go in this ‘ugly contest’ if you don’t like the euro, dollar, or yen," said David Bloom, currency chief at HSBC.
--http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100022037/switzerland-and-britain-are-now-at-currency-war/

A bad idea that won't die

President Obama is determined to raise the debt ceiling, even if Congress won't agree.
The consequences of failing to extend the country’s borrowing limit are catastrophic, the president said just after the House vote on Tuesday, and he simply won’t negotiate over it. Obama won’t negotiate over the debt limit, aides say, because he is determined to break the cycle of using the country’s borrowing limit as a bargaining chip.

“I will not have another debate with this Congress over whether or not they should pay the bills that they’ve already racked up through the laws that they passed,” Obama said. “Let me repeat: We can’t not pay bills that we’ve already incurred. If Congress refuses to give the United States government the ability to pay these bills on time, the consequences for the entire global economy would be catastrophic — far worse than the impact of a fiscal cliff.”

Read more: http://www.politico.com/story/2013/01/obamas-debt-ceiling-gambit-85755.html
What does that mean, "won't negotiate"?

===============================================================
 There is the idiotic idea about minting a $1 trillion dollar coin.  Whoever says this is an idiot, and it is time to start calling these people out.

"The 'Trillion Dollar Coin' Is No More Absurd Or Outrageous Than The Republican Threat To Put The U.S. Into Default"
Henry Blodget, you are an idiot.

Suddenly, Lots Of Influential People Are Talking About The Trillion Dollar Coin Idea To Save The Economy
Joe Weisenthal, you are an idiot.

How could Washington avoid a debt ceiling default? Mint a few trillion dollar platinum coins. Seriously
James Pethokoukis, you are an idiot

Debt in a Time of Zero
Paul Krugman, you are an idiot.  (At least he calls it "a gimmick", but he also says "the debt ceiling itself is crazy").

Looking to the next debt-ceiling fight, Nadler proposes a trillion-dollar coin trick
Rep. Jerrold Nadler, you are an idiot.

Why We Must Go Off the Platinum Coin Cliff
 ("If Republicans start issuing a list of demands that must be met before they will raise the debt ceiling, Obama should simply say that he will issue platinum coins as necessary to pay government bills if he cannot borrow").
Josh Barro, you are an idiot.

A Challenge to Business Insider and Huff Post
Bruce Krasting has his variation on the idea.  ("I want to say in print that I will support the coin concept with all of the resources I can bring to bear. My plan: - Three coins are issued. Two for $500B; the other for a cool $1T. I would use these coins to extinguish $2T of debt.").
Bruce Krasting, you are an idiot.  [Maybe he isn't serious.  If so I will cut him a break.]

The real benefits of the Platinum Coin Solution
"The majority of suggestions see a $1 trillion coin. I suggest a $100 trillion coin, so the mythical federal debt disappears forever, never again to rise from its stinking grave."  [Actually, it would take just a few years to spend $100 trillion.]
Rodger Mitchell, you are an idiot. 

 
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 Of course, all these guys realize that it is a crazy idea, but they justify it as necessary to raise the debt limit.

So what are they really saying?  That the President is allowed to spend whatever amount of money he wants, without any limitation by Congress.  The only limitation would be having enough support in the Senate that he wouldn't get impeached and removed from office.  So they are really saying that we need to have a dictator.  Let's ignore the Constitution that gives "tax and spend" powers to Congress.

So seriously, you are advocating a totalitarian dictatorship?  That makes you evil, not just an idiot.  Idiots can be ignored, but evil people must be actively opposed.

Let's see how this plays out.
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See also:

No, a $1 Trillion Platinum Coin is Not Legal

Newt Gingrich: Debt Ceiling Is A 'Dead Loser'

Sorry Folks, The $1 Trillion Coin Is Unconstitutional

Putting a Trillion Dollars of Platinum in perspective 

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How about a $1 Quadrillion Dollar coin?  

Only $25 million left on nation's credit card

The debt limit is currently at $16,394 billion dollars.  The total debt incurred, which is subject to the limit, is at $16,393.975 billion.  The limit will need to be increased again by February 28, 2013.