My best pal from age 5 all through school, both primary and secondary, is a banker who works and lives in Houston.
He has experienced the oil boom/ bust cycle inherent in the economy through the 80's up until now. He warned me of the housing bubble/bust which got me essentially out of rental houses in 2006 and over to farmlands in our place of birth, Western Tennessee. I will refer to him only as David and only he and I know if it is his real name to protect him from any repercussions for allowing a non banker inside secrets reserved only for the most well connected in the financial world.
David and I have shared our lives and consider ourselves to be brothers. One day he told me something I believe is a great secret kept tightly guarded by the banking establishment.
"Maybolt, when a man owes the bank a hundred thousand dollars it is the man's problem. But when the man owes the bank 5 million dollars, it is the bank's problem."
I have reflected on David's banking corollary and believe the titans of government know when a government owes a nation state a billion dollars it is the government's problem, but when this same government owes a nation state 5 trillion dollars it is the nation state's problem.
My prediction is the US Government has no intention of repaying the national debt. Our nation's bond holders will be left holding the bag of IOUs printed up over the past 30 years just as GM and Chrysler's bond holders were left out in the cold with the now infamous government bailouts.
Smart bond holders will quietly leave the market while there is somebody willing to pay for them. Right now the bond offerings are being snapped up by the geniuses at the Federal Reserve Bank by printing more money. We are financing our own debt.
Great work if you can get it. Print money to pay for the money you printed last year. This is a recipe for disaster. Flooding the world with dollars hot off the Federal Reserve Bank's printing presses is no different than counterfeiting. Good counterfeit bills serve only to diminish the value of the dollars that are sanctioned by the US government through auctions of treasury notes.
When was the last time you bought a T-Bill? I haven't even bought a US Savings bond since grandpa Finkbinder bought me one I still have upon my birth in 1953. It stopped paying interest in 1969 and I could cash it in and get the $50 dollars and fill up my gas tank one time where as the $18.75 granddaddy paid for the bond in 1953 would have bought him 75 gallons of gasoline or
$250 worth of gas at today's prices. Probably not the result he had hoped for and not the down payment on my future he had hoped for.
I won a 25 dollar US savings bond for my skills as a better than average football player in 1970 donated by the fine fellows at the Rotary club and I cashed it in immediately and spent the money. My good! Maybolts aren't easy dupes, just dupes.
Anyway, "If I had money, tell you what I'd do, go down town and by a Mercury or two, cause I am crazy about that Mercury."
All that I'm saying is we will see inflation or deflation if my read on current currency events play out. You need to make your bets and see for whom the Bell tolls, for it tolls for thee.
Disclaimer: Jack Maybolt is not a economist and any advice offered in these musings are as backed up as the dollars flying off the Federal Reserve Banks printing presses. This being said, Jack likes silver, gold, and farm land. Excesses of money should be passed along to the next fellow for then it becomes his problem if the default occurs.
I will add one fluff item to the above list of Jack Maybolt likes: I like Ford Shelby GT 500 mustangs! I am getting 24.5 mpg highway using 92 octane pure gasoline in a supercharged 550 hp super-car! Of course the mileage will drop if you kick in the supercharger frequently. My buddies at the SO have offered to close a section of road and see what it will do. I'd do it but I am afraid it would get us all in trouble.
Jackson Delano Maybolt, President Urban Poverty Law Center
"Having congress watch your money is like having your dog watch your food." Mark Twain.
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