Treasury Secretary Tim Geithner is proposing to lift the debt ceiling to “infinity,” as in “QE to infinity”. I am actually a fan of this move as it would end the annual hypocrisy that there is actually a debt ceiling. There is no debt ceiling and hasn’t been for years, only the facade of a number which generally gets hit or exceeded on an annual basis. At least with an “infinite” ceiling we’ll know what their target is and for once we will actually get a truthful, factual and real number coming out of Washington. INFINITY, quite a big number and I must say that I never thought the “work ethic” existed in Washington to attain such grandeur.
Is there something behind this request? You bet there is! The FHA and Post Office each ran up $15 billion deficits and will require a bailout but these are not even the crust on a ham sandwich. Who do you think will be the ultimate backer when Europe goes down? Who is going to step in to save California, Illinois and others as states go down? What will happen when the giant Ponzi/orgy of banks go down because no one trusts anyone else? I should probably add in the $ trillions upon trillions of unfunded pension plans not to mention over $1 quadrillion worth of derivatives. How would these get funded without that wonderful concept called “infinity?” The Fed/Treasury is going to be required to bailout EVERYTHING … EVERYWHERE. PERIOD, end of story because if they don’t?
What if they don’t? NOTHING can go forward because the business model of the entire financial system is flawed. The entire system has been built on nothing but air, worthless pieces of paper and electronic credits issued by the Federal Reserve. Everything will stop unless more and more credit is created at exponentially faster rates of growth. It is simple really, “infinity” must be attained or the system collapses. But… but what if it is attained?
We all know that it cannot be attained but it is a neat concept (goal) to chase. A truly damned if you do, damned if you don’t scenario. If The Fed doesn’t pump “enough” to continue on an exponential growth path, the system comes down in a heap and … everything paper is worth nothing. On the other hand, if The Fed could actually reach “infinity” (yeah I know, what comes after infinity?), they render their product (currency and Dollar credits) worthless and everything paper becomes worth nothing! This is truly a simple concept and one that’s easier to wrap your head around than that oh so elusive new goal called “infinity.”