Texas Federal Reserve Chair: At this rate "we will become insolvent, the question is when"

Via Drudge, some cheery news:

The United States is on a fiscal path towards insolvency and policymakers are at a "tipping point," a Federal Reserve official said on Tuesday.

"If we continue down on the path on which the fiscal authorities put us, we will become insolvent, the question is when," Dallas Federal Reserve Bank President Richard Fisher said in a question and answer session after delivering a speech at the University of Frankfurt.

"The short-term negotiations are very important, I look at this as a tipping point."

And yet the fiscal denialism continues apace.

Whole thing, including a twinge of optimism, here.

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  • Progressives||

    We're not broke, there is plenty of money, LA LA LALALALALA CAN'T HEAR YOU!

  • MIchael Moore||

    All the money we need, our national resource, is locked away in a giant vault under rich persons' estates. We just need to take it back!

  • Paul||

    We're starting with you, Mr. Moore.

  • Michael Moore||

    Buh, buh, I wear a ball cap! I'm a rich guy that "gets it" don't you see?

  • Michelle Obama||

    Let me introduce you to some healthier foods, with the added benefit that they cost more, relieving you of that money you don't need.

  • Gregory Smith||

    Perhaps we should get paid in gold coins since government can't print those.

    http://libertarians4freedom.blogspot.com/

  • ||

    That's some nice bullion you got there, it would be a shame if something happened to it.

  • Gregory Smith||

    I wish I had bullion, what I do have is credit card debt I'm trying to pay off and if Obama keeps fucking the economy, then inflation will come and lower my salary.

    OBAMA LOSES THE LEFT.
    http://libertarians4freedom.bl.....-left.html

  • Joe R.||

    Inflation would also lower your debt.

  • Gregory Smith||

    Not if I have to pay twice for gas, groceries, rent, and everything else.

  • Fist of Etiquette||

    But he added he was confident in the Americans' ability to take the right decisions and said the country would avoid insolvency.

    "Americans' ability". That's a veiled dig on Obama's citizenship.

  • Almanian||

    .....and therefore RAAAAAAAAAAACIST!!

  • Restoras||

    Yeah I'd like to believe that too but making hard decisions requires lots of people with little or no skin in the game to give up all their "free" stuff. Will be as easy as getting off junk.

  • Fist of Etiquette||

    Yeah, my original comment (before going with the awesome joke instead) was going to be:

    I wonder what he's basing that confidence on.

  • Mango Punch||

    Are we sure Matt Welch isn't the drummer for Yeasayer?

  • ||

    The closer financial End Times get, the less I worry. All the government can do - politically at least - is ruin the medium of exchange and its underlying valuation (creditors will be screwed). There are too many technologies and social constructs not to fill that vacuum when it appears.

    The only issue I see is if the government tries underwriting dollars not with Monopoly debt but with guns (the usual end-game for sovereign financial schemes falling apart). Then there will be problems.

  • Mike M.||

    The ruination of the medium is proceeding with great speed. The USD has depreciated 7.5% in the last three months, and an absolutely staggering 17% in the last eight months.

  • ||

    All the government can do - politically at least - is ruin the medium of exchange and its underlying valuation (creditors will be screwed). There are too many technologies and social constructs not to fill that vacuum when it appears.

    But the pain of the ruination of the current system will be immense, even if the state's fiscal collapse isn't accompanied by a round of asset confiscation.

    Merely taking the leverage out of our economy, and without counting any collateral damage, would lead to a reduction of GDP of around something like 40%. Even if that kind of contraction didn't lead to massive social dislocation, the damage would be substantial.

  • ||

    I don't think the physical 'real' economy would contract by 40%. There is intrinsic value to doing and making truly valuable things. As long as social structures remain intact, the markets for those things will also remain intact.

    A lot of the 40% contraction that shows up on that leverage is the low-hanging fruity inefficiencies in our economy with things like health-care, education, subsidies, sovereign distortions of basic economics.

    The resources borrowed to prop them up will be gone with the Monopoly shell-game that funds its persistence. Overall, as an optimist, I think of what can be achieved with all that human capital and talent doing useful things, the value-add to the economy over time, I have a lot of hope.

    Bring on the crash of crashes so we (my generation ~35 years old) can clean this shit up quick. That's what I say. More windmills! More Obamacare! Speed up the logarithmic entropy here...lol.

  • Scruffy Nerd Herder||

    Those who are not in the business of providing required services (think people other than plumbers) or usable assets (equipment rental), will be SOL. The tears of Wall Street will be the yummiest.

  • ||

    I'm relishing the plight of lawyers myself. And the Lifestyle Management Bureaucracy that is the War on Drugs (read: War on Society).

  • ||

    Actually Wall Street will do great. Which is a good thing too to be honest.

  • ||

    I don't know how well Wall Street would do.

    In a real open market for securities and investments, one where there was competition for savings and capital instead of a huge tax code, regulatory structure, and guild mentality funneling all that 401k and IRA gravy to one tiny island, the prices they charge to manage money in very mediocre fashion would be exposed to some degree I think.

    Sorry about the run-on sentence.

  • ||

    As long as social structures remain intact. . . . .

    A rather large assumption.

    I don't think the physical 'real' economy would contract by 40%.

    I'm not sure how any sector of the economy could insulate itself from a catastrophic contraction. Sure, some sectors will fare worse than others, but manufacturing, for instance, tends to get hit as hard as the rest of the economy in a contraction.

  • ||

    A rather large assumption.

    If Wisconsin is an example, it will be a loud de-leveraging but so long as more people are paying than soaking, the majority wins so-to-speak.

    I'm not sure how any sector of the economy could insulate itself from a catastrophic contraction. Sure, some sectors will fare worse than others, but manufacturing, for instance, tends to get hit as hard as the rest of the economy in a contraction.

    I really don't think it will contract that terribly. In a way, our vast trade deficit represents not uncompetitiveness on our part, but a need for all these paper-shufflers in society earning money to buy things but not making anything themselves worth buying in turn. So some kid in China makes it instead. The contraction would largely be in the off-shore entities that currently pick up the slack in exchange for paper.

    Very complex, and unique in history this financial situation is. But I'm an optimist.

  • Spazmo||

    The resources borrowed to prop them up will be gone with the Monopoly shell-game that funds its persistence.

    What makes you think we won't just end up with a dysfunctional, desperate government that still maintains its stranglehold over health care, education, agriculture, banking, etc.?

    A financial or currency collapse is likely to give us an even more erratic and dangerous state without substantially reducing its reach. They've still got the guns.

  • ||

    Ah, big difference. We all have the guns in this country. At least enough of us do.

    And if Official Money isn't worth much, people will treat government strangleholds over health care, education, banking, etc. with the worth such money merits. Money is power, and worthless money = worthless power unless you've got a monopoly on the guns. And that is distinct difference between this country and normal historical experience.

  • Mike M.||

    Anyone out there seriously believe that quantitative easing and debt monetization are really going to be coming to an end any time soon?

  • Restoras||

    I suppose it might come to an end when our creditors stop buying our debt?

  • Jeffersonian||

    Why do you think the Fed's been buying it so lavishly?

  • robc||

    They will always buy. The only question is the price.

  • ||

    Nah. That will just lead to a final spasm of QE, as it will be the only way to replace debt in funding the government.

    The scenario is: (1) Bond markets rebel, (2) Fed cranks of QE, (3) Dollar collapses, (4) Economy collapses.

  • ||

    At this point I think the Punks in the picture would do a better job running the Fed.

  • Otto||

    They did a "value for money" tour in 2008, so they probably do have a better grasp of economics than the Fed.

  • Paul Krugman||

    We're not spending enough.

    The government's budget is not like a household budget.

    The debt doesn't matter.

    Libertarians are mean.

  • Veruca Salt (Progressive)||

    But Daddy, I want an Oompa Loompa now!

  • A Serious Man||

    (starts playing "Nearer, My God, to Thee") Well if you're on the Titanic you might as well add some more deck chairs and just wait since there ain't any lifeboats.

  • ||

    The inflation makes it seem more like the Hindenburgh.

  • ||

    Or like Michael Graham wrote about the Martha Coakley Senate campaign: "It wasn’t the Hindenburg or the Titanic. It was the Hindenburg crashing into the Titanic."

  • Old Mexican||

    And yet the fiscal denialism continues apace.


    Yes, just ask shrike.

  • Old Mexican||

    The United States is on a fiscal path towards insolvency and policymakers are at a "tipping point," a Federal Reserve official said on Tuesday.


    But there's enough money! We just need to tax the rich 100% of their wealth, and sell their teenager daughters to Arabs!

  • Sudden||

    Yeah, but the problem is TEH AGGREGATE DEMAND HAZ DRIED UP!!1!!1!!! since we are working on deposing Ghaddafi.

  • ||

    I eagerly await a day when I can trade cell phone minutes for a baloney sammich.

  • Sudden||

    Get a LAN line. That whole cell phone ain't gonna function when financial end times come and satellite upkeep becomes unteneable.

  • Spoonman.||

    Satellite upkeep is pretty cheap since it's not like you can change much that's going on on one anyways except through firmware upgrades, I'd imagine. Now launching new ones, that shit's expensive.

  • ||

    Uh, I think you mean LANDline. And cell service is not directly dependent upon satellites.

  • The Gobbler||

    Landlines do not need recharging. I have two in my home. When the power is out, I have one landline for a backup phone AND a second andline for back-up, dial-up Internet access.

  • ||

    "dial-up Internet access."

    You mean you STILL haven't ditched AOL?

  • The Gobbler||

    I have USI Wireless, but still maintain a dial-up account with an ISP going back to 1994.

  • yonemoto||

    your assumption is that the repeater units at the TELCO will be able to work when the power is out. Long gone are the days when analog switchboards functioned without amplification.

  • Anon-o-saurus||

    This guy's "resignation" in 3...2...1...

  • wef||

    "If we continue down on the path on which the _fiscal_ authorities put us...."

    Who has been doing all this counterfeiting to tax all dollar and debt holders to pay for the fiscal path we are on? The monetary authorities are just the flip side of the thug state.

  • ||

    I'd like to create a death metal band called "Fiscal Authority".

  • Restoras||

    Bond Market

  • ||

    Bond Vigilantes.

  • Otto||

    That's just neat, neat, neat...

  • ||

    Fuck yeah I love The Damned. New Rose

  • Otto||

    I was in London in July, 2002 and caught this show.

    Fortunately, I already had a code-free DVD player, so I could watch the DVD.

  • Rock Action ||

    Love that first album. Love Song, too.

    By the way, who's this Otto guy and what did he do with the stoned and gentle flightless waterfowl? He's all punk rock and stuff.

    *ducks*

    Nah, I read the morning links...Baked Penguin is still a really good name, by the way. Nice euphony.

  • ||

    It seems likely the tipping point was actually a while back. Right now we're at the Wiley Coyote walking on thin air, about to look down point.

  • Restoras||

    Wow, Tony hasn't chimed in with assurances of non-doom yet? What gives?

  • Old Mexican||

    Re: Restoras,

    Wow, Tony hasn't chimed in with assurances of non-doom yet? What gives?


    Must be difficult to see the screen and reply with his head way up his ass...

  • yonemoTONY||

    But the Federal Reserve is a viper's den of libertarians who are trying to co-opt the world for capitalism, so any pronouncement on the impending bankruptcy of our nation cannot be true!

    How's that? I guess it's too curt and non-obfuscatory, but I can only provide distillates.

  • ||

    Who has been doing all this counterfeiting to tax all dollar and debt holders to pay for the fiscal path we are on?

    Haven't you heard? The families of all the Fed governors are being held hostage. If the Fed stops buying Treasuries, those helpless women and children will be sent home piece by piece. That Timmay is one tough customer; the utterly feckless demeanor is a subterfuge.

  • Irresponsible Hater||

    "Tipping point"?

    Sorry, I can't listen to you any more. Come back when you can explain it without any Gladwellisms, like a big boy.

  • ||

    Texas Federal Reserve Chair: At this rate "we will become insolvent, the question is when"

    Next he will be telling us that there are no rainbow-shitting unicorns.

  • Mr Whipple®©™||

    QE18, BITCHEZ

  • ||

    Isn't that supposed to be "Chairman Mr Whipple®©™, Esquire, Department of Redundancy Department?"

  • ||

    Funny little fact about QE2. Everyone talks as if it will end in June, but if you look at the actual announcement, the Fed was actually saying it will engage in QE at least through June, and longer as circumstances require. So QE2 is open-ended, and the dynamics driving it and justification for it aren't ending anytime soon.

    QE to infinity and beyond, bitchez!

  • Paul||

    I'm waiting for QE3 and the Deathly Hallows to come out this summer.

  • Jeffersonian||

    The federal budget needs to be cut back to its constitutional role of providing for national essentials like snooty FM radio stations and cowboy poetry festivals.

  • Old Mexican||

    Re: Jeffersonian,

    cowboy poetry festivals


    My whole world begins and ends with cowboy poetry festivals. Why does the GOP hate me so much???

  • Jeffersonian||

    Uhhh...your name???

  • Pro Liberace||

    BS, GOP loves the elderly.

  • Jeffersonian||

    There must be an equation we can set up to gauge when the progression of OM's age begins to overtake his fixed Mexican-ness on the GOP hate-o-meter. There must be a cross-over point that the tooth-gnashing loathing he surely got as a young lad wanes to indifference and, finally, to a warm embrace in his salsa-flavored dotage.

  • ||

    Speaking of the GOP anyone else notice how anti-government Red Dead Redemption is?

    Mass Effect 2 is also strangely anti-government. The galactic Alliance government is described as bureaucratic and ineffectual and in fact the entire defense against the galactic threat of the collectors and Reavers is funded and organized by the private Cerberus Group.

    There is even a free trade planet run by a race of hot blue alien women...of course they have legalized indentured service but the game even following Shepard's "good" dialog seems to say that it isn't so bad....and the solution to the slavery problem of indentured service is to garnish wages and turn the contracts into debt.

    Note: yes i am talking about escapist entertainments because to actually talk about how fucked up our government and its economy and finances are is to grim to hold on to for more then a few moments.

  • yonemoto||

    But the Federal Reserve is a viper's den of libertarians who are trying to co-opt the world for capitalism, so any pronouncement on the impending bankruptcy of our nation cannot be true!

  • ||

    In other news, the NBA announces that it is canceling the rest of the season because it has run out of points.

    Yeesh. This guy actually works at the Fed, and he has no clue how the monetary system works. I expect nothing from internet cranks like on this board, but you'd think he would know that "insolvancy" has no meaning for a curency issuer...

  • Purple Team||

    The answer is high speed rail that also prints money.

  • ||

    And runs on biofuel.

  • ||

    If nobody will take your cheques any more, you're insolvent, no matter how pretty the printing on the paper.

  • Bingo||

    "insolvancy" has no meaning for a curency issuer


    LMAO. This is true in some sense. Governments don't become insolvent; instead, they collapse.

  • ||

    The Zim Bob Way to financial freedom.

    They call it 'Catastrophe Theory'
    for a reason, Pollyanna of the
    rose colored spectacles.

  • 0x90||

    Yeah, and if Stanley took that attitude with respect to making tape measures, it wouldn't be any lack of inches which would end up sinking the company.

  • Canman||

    During the Clinton administration we were saved by the internet revolution.

    What now?

    A nanotech revolution?

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