U.S. Credit Rating Downgraded After QE3

Egan-Jones dropped US credit rating from AA to AA- following a third round of quantitative easing by Ben Bernanke and the Federal Reserve.  (I’m sure you heard this on the tv national news… maybe not, as no one covered it).  While not as well known as Standard and Poors or Moody, this may be a glance at things to come.  “Egan-Jones has been ahead of the pack for a while,” Joe Saluzzi, co-manager of trading at Themis Trading told CNBC.  This may be a glimpse of things to come.

A finite, specified amount of TARP, QE1, and QE2 did not work.  So QE3 is open-ended at the rate of $40 billion dollars per month of new debt purchases.  Maybe forever.  Note that interest on the national debt is over $90 billion dollars per month.  This is one more last gasp effort by government trying to create jobs by spending money.  And it is a macro global economy participating, from Germany, to the ECB (European Central Bank), to China, to Japan, who are all doing open-ended bond buying, further devaluing the dollar and sending commodities sky high (read: go long oil, gold, and other commodities).

I had a pickup truck that would not stay running.  I decided the best thing to do was to keep pouring gas in the carburetor to keep it running.  It would run for a bit, then die, then I would pour more gas in the carb and it would run for a bit, die, and then I would pour more gas in the carb.  Then I finally realized the fuel pump was broken.  I replaced that and it ran great.  But there is no fuel pump ever manufactured that can repair the fuel failure our economy is facing.

No amount of Federal VAT (value added tax) and no amount of increased tax on the rich will fix this.  Defaulting on our national debt through a managed bankruptcy, to me, is our only option.  Remember, we have the strongest military in the world.  Whatcha gonna do? Huh?  Let’s see if anyone in elected office agrees with that.


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