Plan to repeal debt ceiling -

TexTex Bronze ✭✭✭Posts: 197 Bronze ✭✭✭
https://www.washingtonpost.com/news/wonk/wp/2017/09/07/trump-schumer-agree-to-pursue-plan-to-repeal-the-debt-ceiling/?utm_term=.69db4508b44f

If this happens there will be no brakes (or appearances of brakes) left. It will be full steam ahead debt rampage. Ye haw! bring on the spending spree! Will we relive the 20's again?

Answers

  • CampeadorCampeador Bronze ✭✭✭ Posts: 221 Bronze ✭✭✭
    Let them print more paper, is better for the PM community; screw them.

    The problem is, they are backed into a corner; damn if you do, damn if you do not.

    In order to fix the mess, the whole system has to come down, there is no other choice. The whole system was created to siphon wealth from the world via debt, and we are reaching a point were is getting tapped out.

    Everybody saw what happen to Puerto Rico, Virgin Islands, Florida and Houston (the cluster f0ck). Shelves are empty, price gauging, people are desperate, etc... When the music stops, the credit will stop. The world runs on credit and someone has to service the debt. Printing more currency will flood the market with more cash. People will hoard the cash in the beginning, because they are on dire need and want to save when need it; velocity of money will slowdown. The Gov will print even more and when people finds out, their worthless pieces of paper cannot buy an egg, they will dump it like a hot potato. History repeats itself; read on Germany Wiemar Republic, Zimbabwe, etc... No currency have survived ever.

    The Gov only has 2 choices, either print more or stop printing (cutbacks). Either way is a Lose-Lose situation and they always choose the print route.

    Trump has no choice and whatever he does, is a lose situation and will be blamed for it. The system is so screwed up that is no way in hell to fix it; it has to come down.

    These Natural Disasters open the flood gates (pun intended) of more spending without gains. The Bond Market is on a huge bubble, the Insurance Market will take a hit, since they have to pay to policy holders. Business are on a halt and no revenue is coming in, on top of that, they (businesses) have to spend some cash on hand to fix and reopen; some, might not recover at all.

    People that failed to take insurances they accepted the risks. The very same people, expect the Gov to bail them out and the career politicians fear to lose votes. The choice is always the same, print cash, overpay for stuff, and buy more votes.
  • CampeadorCampeador Bronze ✭✭✭ Posts: 221 Bronze ✭✭✭
    How funny... Peter Schiff talked on his latest podcast about what I just said...

    http://www.schiffradio.com/blowing-roof-off-debt-ceiling/
  • GMONEY1GMONEY1 Silver ✭✭✭✭ Posts: 426 Silver ✭✭✭✭
    Most people don't realize that insurance companies are like options/derivative houses. They collect marginal premiums upfront and on a rolling basis... essentially giving customers the option to execute their call if things go bad at very little additional cost (I.e. Deductible ~ strike price) to the customer . The major difference is that the strike for the customer is fixed, but for the insurance company variable based on the extent of the damage. Then the other problem is the insurance companies need to invest the premium they collect upfront in order to cover payouts (works great in a bull market backed by CB buying); a mass of payouts is essentially a margin call because the expected short term liabilities spike far above the cash on hand.... so they are forced to sell some of their positions**. I don't think they own much gold or silver or miners. FANG-like, index based ETFs, certain bonds... I'm worried for my family members who are confidently holding these with fat unrealized gains from the past 8 years of absurd fiat injection.

    **insurance companies can reduce risk by entering agreements with reinsurance companies... but now we're just displacing the original risk onto someone else ... someone gets called... because the risk is still in the systm.

    Question is going to be, can certain companies --A Mega Zeitgeist Network-- operate (I.e. Literally avoid bankruptcy) if their stock loses 90% due to reversion to fair value on a PE/maturity/diseconomies-of-scale basis. AAPLs PE of 18 is understandable imo, but other companies should be within arms reach + or - . Imo those that are not will be the names that insurance/reinsurance companies liquidate first.

    Or I could be wrong and printed money keeps the whole thing afloat for a while....until the confidence and value of the dollar has been diluted away.

    We'll see.
  • SpontaneousOrderSpontaneousOrder Bronze ✭✭✭ Posts: 302 Bronze ✭✭✭
    Years ago it was much easier to be an insurance company - just invest premiums into treasuries and safely earn 7%. Now they have to go into equities and junk bonds with leverage just to get a portion of that return. ZIRP and NIRP are fatal wounds to the insurance business.
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