Jonathon,

Very well written and spot on.

I guess you'd also agree the massive spending spree by goverments(around thge world)on the first global financial crisis didn't avert it but merely postponed it ... till now.

I'm watching a little askance and wondering as to why the Aus $ is falling in relation to the US $.

I think that something really scary is occuring in Australia.

Jonathon
A good analysis of the end result that must come of the Santa Claus economics of Keynesianism.

imajulianutter
"I guess you'd also agree the massive spending spree by goverments(around thge world)on the first global financial crisis didn't avert it but merely postponed it ... till now."

Yes, thus proving the Keynesians wrong, and the Austrians right. Can we all have our money back now?

Ultimately, the whole thing boils down to this. There is no legitimate reason why anyone, including government, should have a licence to print money, or to permit anyone else such a license. While the artificial boom it sets off is popular, in the end the chickens come home to roost and cause enormous economic, social and moral destruction. We are in the long run for the economists and governments who profited from this bad advice - they are all dead!

There is no way that a monopoly power over the money supply can be entrusted to government without it being grossly abused, and it should therefore be abolished.

i would have thought that any analysis of the situation in the US on the fallout from the S&P downgrade, would include an acknowledgment of S&P's zero credibility in being able to assess what is and isn't blue riband security. After all S&P rated as Triple A the junk bonds which failed in GFC Mark 1.
Like S&P this article has zero credibility.

This is a ridiculous situation when the US could fix the problem with just a few strokes of a pen, Obama's pen at the moment.

The cost of importing oil, & the now silly high price, & rising, of power, is causing most of the US problems.

They have plenty of proven oil reserves, more then Saudi Arabia in fact, & huge coal & gas reserves, but increasing appeasement of greenies, to buy their vote, has stopped the extraction of all this wealth.

Like Oz, most yanks are too busy with their every day problems to put in the time to understand what is causing their pain.

Just as well I suppose, the yanks can be quite vicious with those who harm them.

Today, Tuesday, some more bad news was revealed.

Foreign investors cut their holdings of U.S. Treasury debt in June for the first time in more than two years. The decline came as the fight was starting about raising the US's borrowing limit.

Interestingly, China, the biggest buyer of U.S. Treasury debt, INCREASED its investment for a third straight month. But Japan, the second-largest buyer, along with Brazil, Russia and Hong Kong cut their holdings of Treasuries.

Overall, foreign holdings dropped 0.4 percent to $4.5 trillion. It was the first decline since April 2009.

Most of the decline was driven by private investors. Their net purchases (the difference between what investors buy and sell in one month) of long-term U.S. Treasuries fell by a record $18.3 billion in June.

The decline lowered foreign private investors' holdings by $15.1 billion.

Foreign governments' holdings which include our RBA, dropped a mere $1.7 billion.

Perhaps foreign governments know something the "men in the street" don't know.

Many of the so called facts quoted by the author, from ECRI & BEA, are no better then a smoke screen. The information is months old and doctored. There are so many Govt Agencies covering the US Economy, it's almost impossible to glean a true picture.

Is it any wonder Congressional Leaders are so befuddled ?

Quote from the Austrian School of Economics:

" There are no means of avoiding a final collapse of a boom, brought about by credit expansion. The alternative is really whether the crisis should come sooner as a result, or a voluntary abandonment of further credit expansion later - it would mean a final and total collapse of the current system involved ". Ludwig Von Mises.

Forty years ago ( Aug 15.1971 ) Notorious, impeached, tricky-Dicky, Richard Nixon, declared unequivocally the inconvertibility of the US dollar for gold. It was hailed as the greatest liberation that Keynesians and Govts had dreamed about for decades ! The result, however has been catastrophic.

The harbinger of America's default today.

The Bretton Woods system officially ended that infamous Day. The Dollar became a fully fledged " fiat " currency - not backed by gold, but by empty promises of the Government. Fiat money, miraculously turns stones into bread, and / or changes paper for limousines, plasma TV's, or luxury townhouses !

It has taken 40 years for the World, IMF, Banks, Sovereign Nations, and thousands of Economist to wake up to the grim reality, paper money MUST be backed with tangible like-for-like value eg. GOLD, silver or assets of equivalent value.
Remarkable, that sophisticated Academics, could be so blinded by any thing so mundane ?

The great American Dream is sorely shattered. The hyperbolic free ride is, all but over.

Bloody shame.