Thursday, April 28, 2011

The Sting or you can't cheat an honest Tea Bagger

The first quarter GDP preliminary number is in at 1.8% growth which is below estimates and given the trend will probably be revised downward next month. We are still better off than the Brits who came in at .5% growth as they have taken that austerity nonsense to heart. They have an even bigger problem with corporations off shoring profits so they really think they are broke.

You might wonder where all that money goes that the rich and their corporate empires offshore. Is it piling up in huge money bins in the Cayman Islands? Do they drive over from their beach villas and go for a swim in the cash like Scrooge McDuck? No, but only because modern “money” is just an entry on the balance sheet of a bank somewhere.

The offshore tax havens (or tax dodging paradises) are only PO boxes and no such place actually exists. The “money” never really goes anywhere but is ultimately “invested” here in the US or in China simply by pushing a couple of buttons. What do they invest in? Factories, office towers, new technologies? Somewhat, at least in China but not here. Mostly what they invest their untaxed trillions in is US Treasury bonds.

Why in Treasuries? Is it that whopping .5% or less interest return they have been getting? (snort) Is it because they are so safe? Well sort of, they’ve been banking on deflation setting in eventually and US Treasuries are like USDs, as good as cash. When you have deflation then “cash is King” and you can do like Gran’ dad Koch did when he came back from the Soviet Union in 1932 (Stalin paid him cash) and he bought up a ton of stuff for 10 cents on the dollar.

Also there is the small problem of the huge amount of cash they have to spend. There is no where to spend that much money except to buy bonds with it. Of course the only reason there are so many bonds for sale is that all these rich bastards have rigged it so they don’t pay any taxes. A great scam if you can find a bunch of suckers who will let you do it. (Bernie Madoff got life in prison for stealing a paper clip by comparison)

All this debt that has the tea baggers are incensed about is just a confidence scheme. The debt is nothing but uncollected tax money that the rich loan to the government. Then the suckers think they owe money to those rich people as we can’t tax the “job creators” or tax their corporations because they would just pass it along to us anyway. So the rich lend us our own money to pay the bills and the debt just continues to pile up.  

Don’t let anybody tell you that we borrow money from China unless you start seeing Government checks that are payable in Yuans. Here again it is nothing but uncollected corporate taxes that ends up in Chinese banks. Oh, and China announced last week they aren’t going to buy bonds anymore but will put their “extra” money into China’s Sovereign Wealth Fund. That means they will be buying more hard assets like factories, mines and oil fields.

But don’t worry, the rich Americans that sell off our assets will continue to buy Treasury bonds with it. They are playing the long con. Do the rich touch the side of their noses when they meet another rich person like the confidence men Newman and Redford in The Sting? They should.  www.prairie2.com

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