Fed Has Bought More U.S. Gov’t Debt This Year Than Treasury Has Issued

If the Fed continues to purchase $45 billion in additional federal debt each month in 2013 it will buy up another $540 billion in federal debt this year alone


The CBO currently estimates that the federal deficit for fiscal 2013 will be $845 billion. If the Fed were to buy debt at a pace of $540 billion a year, and the Treasury were to issue it at $845 billion per year, the Fed would be buying the equivalent of about 64 percent of all debt the government issued.

As recently as calendar year 2007, the total debt of the United States increased by only about $549 billion, or roughly equal to the amount of debt the Fed plans to buy this year.

Currency Wars Return, 1930s Style: Who Will Lose Out?

The U.K. was the first to leave the gold standard on September 19, 1931 due to painfully high unemployment. Sterling depreciated, setting off a volatile chain of events with the U.S., Norway, Sweden, France and Germany all following suit.

Remember, one country's weak currency is another country's strong one: it's a zero sum game. In the past, currency wars have led to protectionism and capital controls, as well as tariffs as countries seek to protect their industries. Look what happened in the 1930s and 1970s when the U.S. finally abandoned the gold standard and devalued the dollar.

Why Currency Wars Might Be Coming

The rush to cheapen the yen and the dollar, which has left the euro appreciating, is creating headaches for policymakers all over the world. The Brazilians are furious at the Americans, since it has increased the cost of exporting goods for them. They already have a weak form of capital controls.

Other policymakers have had to cut interest rates to weaken their currencies.

The worry: This could become a serious issue and undermine the global recovery.

Top Senate Dems Who Urged Obama To Raise Debt Ceiling Unilaterally All Voted Against Increase In 2006

On Friday the Democratic leadership of the Senate — Majority Leader Harry Reid, Assistant Majority Leader Richard Durbin, Conference Chair Charles Schumer, and Conference Secretary Patty Murray — wrote to President Obama urging him to unilaterally raise the debt ceiling in the event that Republicans either block such an increase or attempt to pass one “as part of unbalanced or unreasonable legislation.”

“We believe that you must make clear that you will never allow our nation’s economy and reputation to be held hostage,” the Democrats wrote. “We believe you must be willing to take any lawful steps to ensure that America does not break its promises and trigger a global economic crisis — without congressional approval, if necessary.”

Put aside the picture of leading lawmakers, usually so jealous of their constitutional prerogatives, asking the president to ignore Congress. What is striking about the letter is that every one of its signers — Reid, Durbin, Schumer, and Murray — voted against raising the nation’s debt ceiling just seven years ago.

Senator Obama calls Bush "unpatriotic" for adding trillions to debt

DHS Preparing for Civil War? Economic Collapse? Both?

Why has the Department of Homeland Security recently ordered a total of 1.2 billion bullets, the majority of which are hollow points and buckshot? What are they preparing for? Civil war? Economic Collapse?

Food Price Surge Puts Strain On India's Poor

Consumers in India are being stretched by a surge in food prices, which rose by more than 14 percent in December alone.
While price hikes have put many staple foods out of reach for India's poor, the cost of onions is stirring the greatest outrage. Onions, a pungent mainstay of Indian cooking, have jumped in price by 40 percent in the past year.
Analysts blame crop failures and a food distribution system that allows middlemen to manipulate food prices.
Onions are in short supply in the vegetable stalls that line the narrow alleys of south Delhi's I.N.A. market.
Grocer R.L. Setty says an unusually wet summer made for a poor harvest in many areas, that there were fewer onions, and the quality wasn't much good. Setty says he's hoping the price crunch will ease when the government starts bringing imported onions to Delhi next week.
Virender Khaneja, who sells spices at the Durga Masala Store, says it's not just onions — he's paying higher wholesale prices for all sorts of spices as well.
Khaneja says middlemen are creating fake scarcities by holding back certain commodities until the prices rise.
"Some market mafia are there," he says. "They keep five, six tonnes, maybe 10 tonnes [of produce] on the side," until the price goes up.
Ripul Oberoi, a doctor shopping at the market with his wife, says the result is that prices seem to go higher every day. "And for a consumer, for a middle-class person, or slightly below middle class, it's very difficult to have the daily routine items that everybody has to have to survive," he says.
Jayati Ghosh, a professor of economics at Jawaharlal Nehru University in Delhi, says the real pain is being felt by India's poor majority.
For most middle-class people, food is a relatively small part of the budget, she says, "but here, for about 60 percent of the population, if the price of food goes up by 10 percent, that means one less meal a day, it means children not getting milk. We're talking about very severe effects."
Ghosh blames the Indian government, which she says doesn't have an effective policy for managing food. She says the government needs to set up a system that can provide critical foods at reasonable prices that would dampen the effect of speculation in the marketplace.
"I'm not going to do away with private, obviously not, and especially small traders are critical in the whole system. But you have to have a system that provides the essential food items, which is basic food grain, basic vegetables, edible oils, sugar," she says.
Ghosh rejects the criticism that such a system would be a turn away from the free-market ideas that India has embraced during its surging economic growth. She notes that the United States has similar programs, such as food stamps, designed to make food available to the lowest-income Americans.
"I think there are some things that are just too important to be left to the free market, and food is one of them, because food is essential," Ghosh says. "You have to feed your population. You can't say, 'Well, too bad. If you don't have the money you can just starve to death.' So food has to be managed."
India's government has taken short-term steps to manage the onion crisis, such as banning the export of Indian onions and importing onions from abroad.
The political leaders have every reason to be leery. Anger over high food prices, and especially onion prices, has contributed to election losses for India's ruling parties in the past — and many fear it could happen again.