Tag: monetization

Welcome to the Ponzi Economy

  You’ve heard the term Ponzi Scheme. Well now I want to introduce you to the term Ponzi Economy.

 Here’s the problem that the U.S. Fed’s “exit” poses in simple English: Our fiscal 2009 deficit totaled nearly 12% of GDP and required over $1.5 trillion of new debt to finance it. The Chinese bought a little ($100 billion) of that, other sovereign wealth funds bought some more, but as shown in Chart 2, foreign investors as a group bought only 20% of the total – perhaps $300 billion or so. The balance over the past 12 months was substantially purchased by the Federal Reserve. Of course they purchased more 30-year Agency mortgages than Treasuries, but PIMCO and others sold them those mortgages and bought – you guessed it – Treasuries with the proceeds. The conclusion of this fairytale is that the government got to run up a 1.5 trillion dollar deficit, didn’t have to sell much of it to private investors, and lived happily ever – ever – well, not ever after, but certainly in 2009.  Now, however, the Fed tells us that they’re “fed up,” or that they think the economy is strong enough for them to gracefully “exit,” or that they’re confident that private investors are capable of absorbing the balance. Not likely.

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There’s A Spectre Haunting The Blogosfera

cross posted from The Dream Antilles

My friend Claudia, who is a wonderful writer, has a piece up at her blog and at Huffpuff, in which she asks the eternal, dreaded question for writers, “Am I getting paid for my work?”  The answer, as you probably expect, isn’t good:

Twice in the past week, I’ve heard the same bad news: two media outlets for whom I’d written articles informed me that they would not be paying me for the writing I had submitted.

Please join me below.