Monetizing the debt - Our balls are in the hands of the asia

This blog is based on an article by Merk Funds

Before you read on, you may want to watch this Peter Schiff analogy

In this analogy (on the later half of the video), he mentions a group of people are stranded on an island. The people are several Asians and a dumb-and-fat American. For their survival on the island, the people are assigned jobs. One Asian forages coconuts, another goes fishing, another hunts a wild pig and so on. The American's job is eating (consuming).

In compensation, the American is basically giving "IOU's" to the Asians for all their hard work. Over time, the Asians are stuck with a barrel full of IOU's and decides to figure out that the IOU's are not worth crap as they thought it once was (the Almighty dollar). In the end, the Asians figure out that they don't really need the American dead weight on the beach to consume their resources so they eventually dump the IOU's on the market and the laws of supply and demand take ensue.

In today's real world, the Asians are losing their appetite to buy US treasury bonds since their interest rate is a whopping 1-2% (or whatever the peanut of the day is). Common sense tells me that there are better investments elsewhere. People may say that everything is dependent on the dollar. What about China's 2 Trillion in dollar reserves? They are about to cash out to stimulate their own economy. So are many other nations. And when that happens, they will figure out that the dollar is not the king of the hill anymore.

My guess is that we will get out of this panic of 2008 mess, and we will have some good times again probably by the end of Obama's first term. He will probably be one of the better presidents in US history and I think he is likely to get a second term (especially if the RNC picks Sarah Palin). But all this will come at the cost of inflation where everyday shit will be more expensive and 4-dollar gas will be considered cheap. Maybe we would be doing the 5... 5-Dollar... 5-Dollar-a-gallon... song

Whoever inherits the White House in 2016 will be in for a time bomb while people are enjoying the bailout that the Fed pulled off. Who knows when the next load of shit will hit the fan, but it's never too early to build your ark...