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After all is said and done, this is basically what’s been happening in Europe, where countries like Spain, Greece, Ireland, Portugal, Italy and Cyprus depend on each other and the stronger members of the European Union to keep buying their bonds, burying them ever deeper in debt (to each other).
But it’s not limited to just Europe, of course. The US is in just as bad of shape as far as debt is concerned. In all western nations, as the cartoon above adequately portrays, there seems to be a symbiotic relationship between the banks and the countries in debt. The banks enable the governments to keep borrowing just to be able to buy more debt from other countries’ governments, which are doing the exact same thing. The whole sovereign bond market is one giant Ponzi scheme, just waiting to capsize.
U.S. Treasury Secretary, Timothy Geithner and Federal Reserve Chairman, Ben Bernanke testified at the House Committee Oversight and Government Reform on March 21, 2012. In discussing the European debt crisis and responding to questions regarding IMF funding, the Treasury Secretary suggested that a default by the IMF or any of its borrowers was highly unlikely because the loans are backed by “a substantial amount of IMF gold …”
More commentary from Swiss America can be found here.
At 10AM on Wednesday, February 29, 2012 gold and silver were hit with massive paper selling on the COMEX. Gold was hit for about $100 (5.5%) and silver was taken down $3.75 (10%). But the stock market was flat, untouched.
According to Jim Sinclair, this was a cover-up by the Fed chairman and the precious metals were manipulated to the downside on purpose. Because if the expectation of no more liquidity from the Fed was really the cause of the collapse of precious metal prices, then the stock market should have been hit just as hard, which it was not! Furthermore, this $700+ billion for European banks was QE! The ECB got those funds from two places: “It’s been coming in from the IMF and from swaps done by the US Federal Reserve.” Here’s Jim Sinclair’s audio interview at King World News.
Indeed, here are three articles making the case that the sell-off was initiated by a seller who wasn’t at all interested in profit, but was motivated by taking the market down:
Ironically (or not), the precious metals were hit during this exchange between Ron Paul and Ben Bernanke, where Paul held up a silver ounce coin and asked the chairman why people aren’t given the option of using gold and silver as a “competing currency” with the US dollar.