It Is Clear that the Republicans Are Financial Terrorists Who Don't Understand the Economy

The Republicans are holding small business hostage by closing down the small business administration lending flow. The Republicans are holding social security recipients hostage by threatening to not pay the debt ceiling. Treasuries cannot be issued and the government will eventually run out of money.

The Republicans are lying when they say we have runaway spending, when you consider that the deficits are declining. You have to realize that if the deficit becomes zero, the real currency of the world, treasury bonds, go away. If treasury bonds go away as a means of collateral, then you will have frozen markets.

We have fiat money. Since we have fiat money, money is not worth as much as collateral is are treasury bonds! The government has to be in debt to a certain extent to make these treasuries available.  

The real currency in the fiat money system is a treasury bond from the USA! 

With the addition of clearing houses for derivatives, we are in a new world order. There are things about this world order that I don't like, but there are things which are pretty much guaranteed to work.

And those things guaranteed to work, the libertarians like Schiff don't understand. 

One thing guaranteed to work is the demand for treasury bonds as collateral. Schiff does not understand this at all. Now, there is one Achilles Heel to this system. That is banks need to make money other ways as well. If they only have these derivatives (for which treasuries act as collateral), as money makers when they make loans, then the banking system could be in big trouble.

But as long as the government does not default on treasury bonds, no thanks to the Tea Party, the financial system will continue in some form going forward.  

We have to remember that there were abuses in the hard money system. When the US was on the gold standard, government could make the percentage of gold backing the dollar less and less. There isn't enough gold for one thing.

We could just have a system where there is no or little lending based on a limited supply of dollars backed by gold. But that would not work any better than what we have now!  

So what we have are treasuries, ie, debt instruments, acting as currency, as a sure collateral.  You have to wonder why the Tea Party would seek to destroy the only real collateral that exists by seeking government default? It is curious, indeed. 


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