US Treasury Holders Alarmed at Rate of Money Printing

Top US Treasury holders especially China are increasingly vocal about their trepidation as the Federal Reserve cranks the money printing machines to full throttle. Cheng Siwei, head of China’s green energy program and former vice-chairman of the Standing Committee, recently said the following:

“If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies.”

This is nothing new for people who are keeping tabs on the Federal Reserve, and economists in general. The solution to our economic situation was simple, simply create more money out of thin air and give it to those most in need. The very idea goes against the foundations of a free market society but according to the leaders of our country, the treasury department, and their masters when it comes to monetary affairs (the Federal Reserve board) it was something that must be done.

A measure put forward by Ron Paul to “audit the Fed” passed the House but has slowed down and will most likely be killed off by the Senate under threat of veto by the President. Local solutions to uncontrolled spending and increases in the size and scope of the government are reaching a point of futility but perhaps China will be more persuasive as the largest holder of US debt. In fact, every household owes China (taking only into consideration Chinese holdings of US Treasuries) over $6,000. Add on to that the gigantic amount of trade coming in and out of China, and you have the most important “concerned citizen” to be considered in the debate.

Cheng Siwei succinctly stated:

“The US spends tomorrow’s money today,” he said. “We Chinese spend today’s money tomorrow. That’s why we have this financial crisis.”

The funny thing about the situation is that the government is encouraging the return of the habit, as new programs encouraging people to spend their loose or non-existent money on items ranging from new homes to new ‘fuel-efficient’ cars in programs ranging from home buyers assistance and tax breaks to the novel “Cash for Clunkers” program which will be scoffed at by historians as the most ludicrous pilfering of the taxpayer’s wallet in recorded history.

Cash for Clunkers Ends, Again!


The government gift money aimed towards buyers who trade in their old cars for new fuel efficient cars is once again running out. Within this few days that it has lasted, the government first spent one billion (that’s right, billion) in only one month and an additional two billion in about the same amount of time. That means shelling out money to destroy of at least 666,666 thousand vehicles. The number results from dividing three billion by $4,500, which is the maximum allowance for a trade-in. Cars that are traded in must have their engine permanently disabled by replacing the engine oil with sodium silicate!

The top selling car for this program was the Ford Focus. The program was sponsored in the House of Representatives by Republican Betty Sutton, and in the Senate by Democrat Debbie Stabenow and Republican Sam Brownback. The program, besides being outrageously unconstitutional (read article I section 8 about the powers of congress), is also an absolute waste of resources and money. Not only are engines which are perfectly good (a provision for cash for clunkers was that the car traded in should be ‘drivable’) being destroyed, but also the government is giving out cash it doesn’t have (the US government has historically astronomical budget deficits).

Let’s hope this foolishness is not continued in an effort to ‘preserve the environment’ and ‘stimulate the economy’, as a few hundred thousand marginally cleaner cars in the US won’t stop the millions of new cars being sold in China every month.

Obama To Tax Middle Class for Healthcare, Reducing Deficits

Obama’s team on Sunday presented their solution to paying off some of the deficit, Obama’s new heathcare plan, the bank bailouts, cash for clunkers , etc. The plan is to tax the middle and upper class. Now taxes are not a bad thing, if used in a way to benefit society in terms of infrastructure and protection.

But to use tax money to encourage people to spend more during one of the worst economic crises in most people’s lifetimes, is a bad thing. The propping up of the old ways, the banks such as AIG who after being saved by the government retorted by rewarding their executives with multimillion dollar bonuses; General Motors, who was destined for extinction over ten years ago, being injected with money only to declare bankruptcy and liquidate assets.

Giving people $4,500 to buy a new car, with requirements that dealers cripple the old cars beyond repair by dropping thermite-like substances on the engine, is detrimental to the environment in the long term because the energy put into making new cars makes it more environmentally friendly buy used.

What happened to the free market saying “it’s time to downsize production” or “stop investing into risky securities”. It is the very fear of government induced inflation that has driven the oil price sky high, although one can argue a high oil price is good for fueling green technologies and slowing down its consumption.

Now we just need to see how much our taxes will be increased, be it income, capital gains, etc. However it has never occurred to me that raising taxes can spur economic growth, especially at a time like this. Reducing the deficit is one thing, reducing consumer spending power is another. It is like the government cannot make up its mind, should we give people money like mana from heaven to buy a new car and help the lobbyists in Detroit, or should we take money from everyone left standing in the worst recession of most people’s lifetimes? Oh well, let’s do both!

Back to what Geithner was saying:

“We will not get this economy back on track, recovery will not be strong and sustained, unless we … can convince the American people that we’re going to have the will to bring these deficits down once recovery is firmly established,” Treasury Secretary Tim Geithner said on Sunday.

“Borrowing a trillion dollars from future generations of Americans and spreading it around the economy is going to have some catalytic effect in the economy in the short term, but again, it’s no substitute for fiscal discipline in Washington, D.C.,” he said.

When asked whether this means a increase in taxes, he said “You’re absolutely right.”

Cash for Clunkers Extended, Billions More to be Spent

Congress has approved two billion dollars more for the cash for clunkers, after lobbyists from Detroit and car dealerships across the country said it was vital for their businesses. Meanwhile, the value of the dollar has dropped in recent days, indicating that the hyper inflation that has been predicted due to these massive government injections of money they don’t have continues…

Cash for Clunkers Over, One Billion Spent.

The cash for clunkers program initiated by the Obama administration is already over, as officials believe $1 billion has already been spent. Auto dealers are naturally against ending the program, which effectively subsidized sales by up to $4,500 per car. Doing the math means that 222,222 cars can be purchased assuming the maximum subsidy doing this, and quite frankly that’s not a lot of cars.

For those who did not take part in the program, congratulations, you effectively paid for other people’s cars. Good day!

Cash for Clunkers, Another Waste of Government Money

The free market should encourage people to switch to more fuel efficient cars, not the Federal Government by simply throwing people money.

Did you know that every “clunker”, regardless of how well maintained it has been, must be destroyed and the engine permanently diabled using a chemical compound?

It seems like a big waste of government money, as the government will virtually pay around $5000 just so an old car will be destroyed……