Jim Rogers on Dylan Ratigan: Cut spending and write off the debt

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Ron Paul tells Manchester crowd inflation will hit 50 percent

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Mark Hayward
New Hampshire Union Leader

MANCHESTER — Texas congressman Ron Paul on Friday predicted that inflation will hit 50 percent in the next couple of years, thanks to the massive debt the country has accumulated.

Paul, who spoke to admirers and Republican activists at a Manchester house party, said the inflation will act like default.

Social Security checks will still be cut and interest payments will still be made, but the inflated dollars will allow the government to repay borrowed dollars with devalued money, Paul said.

“They cannot pay the debt,” he said. “I don't think that means you shouldn't try and work things out, but with the size of this debt it never gets paid.”

The national debt is about $14.3 trillion.

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Call The Bluff of Financial Terrorists (Video)

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China Has Divested 97 Percent of Its Holdings in U.S. Treasury Bills

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Terrence Jeffrey
CNS News

China has dropped 97 percent of its holdings in U.S. Treasury bills, decreasing its ownership of the short-term U.S. government securities from a peak of $210.4 billion in May 2009 to $5.69 billion in March 2011, the most recent month reported by the U.S. Treasury.

Treasury bills are securities that mature in one year or less that are sold by the U.S. Treasury Department to fund the nation’s debt.

Mainland Chinese holdings of U.S. Treasury bills are reported in column 9 of the Treasury report linked here.

Until October, the Chinese were generally making up for their decreasing holdings in Treasury bills by increasing their holdings of longer-term U.S. Treasury securities. Thus, until October, China’s overall holdings of U.S. debt continued to increase.

Since October, however, China has also started to divest from longer-term U.S. Treasury securities.

Thus, as reported by the Treasury Department, China’s ownership of the U.S. national debt has decreased in each of the last five months on record, including November, December, January, February and March.

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Treasury to tap pensions to help fund government

Zachary A. Goldfarb
The Washington Post

The Obama administration will begin to tap federal retiree programs to help fund operations after the government lost its ability Monday to borrow more money from the public, adding urgency to efforts in Washington to fashion a compromise over the debt.

Treasury Secretary Timothy F. Geithner has warned for months that the government would soon hit the $14.3 trillion debt ceiling — a legal limit on how much it can borrow. With that limit reached Monday, Geithner is undertaking special measures in an effort to postpone the day when he will no longer have enough funds to pay all of the government’s bills.

Geithner, who has already suspended a program that helps state and local government manage their finances, will begin to borrow from retirement funds for federal workers. The measure won’t have an impact on retirees because the Treasury is legally required to reimburse the program. 

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$2 Trillion Mile Marker on Road to Perdition

Greg Hunter
USA Watchdog

This week, Treasury Secretary Tim Geithner proposed raising the debt ceiling by $2 trillion.  I thought, this should be big news!  After all, a trillion is a thousand billion.  This adds up to 2 thousand billion over the next 2 years!!  The mainstream media greeted this story with a great big yawn. I do not get that because the Republicans and Democrats fought for weeks to only cut the budget a measly $38 billion.  The press was non-stop, and Congress was only an hour away from shutting down the government.  Even the $38 billion cut was a big fat lie according to CBS News.  The story said in mid-April, “Well, thanks to the Congressional Budget Office and some great reporting by the Washington Post, it turns out the government won’t be cutting $38 billion in one year after all. No, the real cuts will be more like $352 million!  You heard me right, $352 million, NOT $38 billion.  The rest? Mostly smoke, mirrors and accounting gimmicks.” (Click here for the entire CBS News story.)

Both parties want to cut roughly $4 trillion out of the budget over the next 10 to 12 years.  Can someone please explain how that is accomplished by tacking on another $2 trillion to the national tab?  I do not get the math and neither does Bill Gross, the head of the biggest bond fund in the world.   He said in early January, “We have a deficit in the $1 trillion plus arena, which means we must borrow at least a trillion dollars additional a year in order to fund the deficit.  And, so, the debt ceiling currently at $14.3 trillion, which is 95% of GDP, has to go up by another trillion or so every 12 months.” (Click here to read my original post on the debt ceiling.) Not long after Gross made this statement, he sold most, if not all, of his U.S Treasuries.   What do you know?  He was right on the money.  The proposal from the Treasury is a $2 trillion increase in the debt ceiling to cover the next 2 years.

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