The Simon Lectures. Series I, Part 6.

Originally published on greatawakening.win, 2022 October 18.

This is Part 6 of Series I of The Simon Lectures.

Part 5 can be found here: https://greatawakening.win/p/15K6JWPoXQ/the-simon-lectures--series-i-par/

Part 4 can be found here: https://greatawakening.win/p/15JnPPYPZx/the-simon-lectures--series-i-par/

Part 3 can be found here: https://greatawakening.win/p/15JAllbd2t/the-simon-lectures--series-i-par/

Part 2 can be found here: https://greatawakening.win/p/15JAEy4lN4/the-simon-lectures--series-i-par/

Part 1 can be found here: https://greatawakening.win/p/15IrUHyPbl/the-simon-lectures--series-i-par/

To recap: (1) in Part 1, we determined that the United States federal government is insolvent, and that all of our assets bear illusory valuations, in that they’re all overvalued; (2) in Part 2 we observed (i) that the United States Dollar is backed by nothing other than the “full faith and credit” of an insolvent federal government, and (ii) that we have compelled use of the dollar by imposition of the petrodollar arrangement, thereby creating synthetic demand for the dollar in order to keep it artificially strong; (3) in Part 3 we concluded that the artificially strong dollar has decimated the U.S. manufacturing sector, but has fueled the stratospheric growth of Wall Street; (4) in Part 4 we determined (i) that Obama initiated a regimen of economic sabotage of this country; (ii) that expansion of our money supply is part of that regime; (iii) that the expanded money supply is being used by Wall Street to acquire business concerns on a global basis; and (iv) that the remainder of the world cannot “opt out” of all of this because they need our dollars to purchase OPEC oil; and (5) in Part 5 we concluded that our national debt is destructively large, that there are no available spending “levers” to pull to solve the problem, and that our leaders are, instead, reconstituting the citizenry of the country in response to the situation, and that this is societally observed as the Southern Border Crisis.

In Part 5, I compared our present-tense ratio of debt to GDP (134%) to Greece’s ratio in 2009 when it initially plunged into its sovereign debt crisis (127%). I may have gotten a little rhetorically “carried away” in my characterization of Greece and in my expression of disgust at the reality of our striking resemblance to our Hellenic brethren. But everything I said was true and I retract not a word of it. The fact of the matter is that we are on shakier financial footing than Greece at start of its sovereign debt crisis, and there is no sound fundamental reason that we are not encountering one, ourselves.

I know what you’re thinking. It’s something along the lines of this: “But, Simon, we always pay. It’s not like we fail to make the coupon payments on these securities. So of course there are buyers for our Treasurys. It’s not like we’re issuing junk bonds here – they buy because they know we’re good for it.” So we’ve been servicing our debt. So what? Didn’t Bernie Madoff pay his investors at first?

Let’s take a look at those debt service payments, shall we? Considering the period starting with the administration of Commie #1 (Recall: that’s Obama) in 2008 and ending in 2021, we have made about $6.4T in aggregate debt service payments. 2022 isn’t in the books yet, but let’s call it $7T to bring things to today. On average, that’s about $0.47T in debt service payments on an annual basis. From 2008 to today, we have run an annual budget deficit that is, on average, more than $1T. So, in any particular average year, we pay $0.47T to service our debt while running a deficit of $1.15T – meaning we go $1.15T further into debt.

Let me say that again. In an average year we need to pay $0.47T in debt payments. And we assume $1.15T in debt to do it. We are financing 100% of our debt with debt. This is not a statistical “trick” resulting from averaging figures. Since 2008, there has never been a year where we haven’t assumed more debt than we have paid out in debt service payments. Not one single year. 100% of our debt is being serviced with capital acquired via debt arrangements. Every single year. Is Bernie Madoff our Secretary of the Treasury? Let me ask you: would you be permitted to make your credit card payments using another credit card? Because that’s what we’re doing.

If you’ve been following along, you’re probably thinking we’re running a Ponzi scheme. That would be wrong. Because a Ponzi scheme is actually more honest than the scam we’re running.

We’ve been focusing on Commie #1, but now it’s time to shift our focus to Commie #2 (Biden). When Biden took office in 2020, the Federal Reserve held $2.2T in Treasurys; today it holds about $5.8T. So since the administration of Commie #2, the Federal Reserve has acquired $3.6T in Treasurys. In that same timeframe, we have made raised a total of about $7.5T of capital through the sales of securities, and made about $1.7T in debt service payments. Let’s dissect that slowly.

We have paid $1.7T in debt payments since 2020. But we didn’t actually have the money to make the payments. So we have borrowed 100% of that. To be more specific, we sold about $7.5T in Treasurys to acquire the capital we used to make the debt payments (and to fund other operations we couldn’t afford). In large part, those Treasurys were purchased by banks on Wall Street. And in that timeframe, the Federal Reserve purchased $3.6T of Treasurys off of our various banks’ balance sheets. So the Federal Reserve is the ultimate source of capital for almost one-half of that (3.6/7.5 = .48).

Call to mind Part 4. When the Federal Reserve buys securities from banks, what do we call that? Quantitative Easing. And where does that money for quantitative easing come from? It is printed into existence. It is simply created by the Federal Reserve. We are selling Treasurys to Wall Street banks; printing money at the Federal Reserve; using that money to buy Treasurys off of the balance sheets of the banks in order to replenish them with cash; and they use that cash to buy more Treasurys. This means that of the $1.7T we have paid to service our debt, almost 50% of it was simply printed into existence. Almost 50 cents of every dollar we have paid to service our debt has been simply printed into existence. And we’ve actually printed more money into existence than we’ve paid out in debt service payments.

Ask yourself: if our Federal Reserve were not buying $3.6T worth of Treasurys, could our Treasury Department successfully market those securities? If we weren’t clearing Treasurys off of our banks’ balance sheets, would our banks continue to buy Treasurys in this volume? What kind of coupon rate would we have to pay to market those securities?

I stand by what I said: a Ponzi scheme is more honest than the scam we’re running. At least in a Ponzi scheme, you have to locate real buyers willing to pony up real money into your scheme: Madoff had to persuade holders of genuine wealth to part with their cash. We’ve only got to locate real buyers with real money for half of our scam. We’re printing the other half.

What do you call it when you are financing debt with debt? What do you call it when you have descended to a state where, ultimately, you are printing money to supply the debt cycle? What do you call it when half of every dollar in debt service payments have been printed into existence? It is called constructive default. We are in constructive default on our debts. Recall Part 1. You cannot sell off our nation’s assets for a sum of money great enough to pay our national debt. And, in reality, we are unable to pay our debts in a meaningful way as they are coming due. This means we are insolvent. And our creditors know it. Wall Street knows this.

Ask yourself another question: why do you think we’ve got the former chairman of the Federal Reserve (Janet Yellen) occupying the position of Secretary of the Treasury? Because the Federal Reserve is the dominant buyer of the securities that our Treasury is marketing. That’s why.

Want to know what Janet’s day looks like? If I were doing this as a podcast, I’d ask you to close your eyes to imagine the scene I’m about to set. But I’ll need your eyes open so you can read this. So don’t close them.

[Scene opens. It is 9pm, and Janet is sitting in a secluded booth at the elegant Nobu Downtown location on Broadway. Jane Fraser, CEO of Citigroup, is seated opposite her. A bottle of Hokusetsu sakè sits between them.]

Yellen: I can’t get enough of the Toro here, Jane. Best in the city. Fatty, tender, perfect delicate taste. Let me order the sushi – I know the menu cold.

Fraser: You really know your way around this joint, Janet. Are you sure you’re not secretly a sushi chef on the side? I must confess, I love my dinners with you.

Yellen: Me too, Jane, but I’m afraid you’re not going to love this – I’m going to need Citi to purchase another $100B of my securities this year.

Fraser (choking on her sakè): That worthless shit?! Please Janet! We’re friends. But I’ve got responsibilities to my shareholders.

Yellen: Settle down. Pour yourself another sakè. I’ve got this under control. I’ll have the Fed buy that excrement right off your balance sheet next fiscal year. But I need a year. It’s got to look legit. And I’ll tell you what – all those worthless collateralized debt obligations cluttering your balance sheet? I’ll have the Fed buy them too. You’ll be swimming in cash. But I need a year.

Fraser: Are you sure? Are you sure the Fed will do that?

Yellen: Jane! You and I, we’re friends! I wouldn’t lie. I’ve still got the entire board on speed-dial, and I’ll be out with them – here – next week, firming it all up. So what do you say? Can I count on you for $100B?

Fraser: Janet, you sweet-talker, what’s a $100B between old friends? I’m in.

[Scene closes.]

Folks, don’t let them bullshit you. Yellen doesn’t occupy a Cabinet position to twiddle some coupon rate figures. Any moron could do that. Hell, I could do that. She’s on Biden’s Cabinet to move securities by the billions. Period. That’s the whole job of the Secretary of the Treasury. And if you think it’s an accident that she used to chair the entity that she relies on to clear those bad boys off banks’ balance sheets, you shouldn’t be reading this Series – this Series is far too attached to reality for your sensibilities.

Here's what this all boils down to. We are in de facto default on our debt. And both Wall Street and the Fed know it. Moreover, none of them see a good way out of this mess – not the Biden Administration, not the Fed and not Wall Street.

Let me be blunt. This can’t last. This system doesn’t have much time left. Don’t get me wrong: it’s not going to collapse tomorrow. But it doesn’t have, say, two decades left in it either. Either our government collapses or our debt collapses or our currency collapses before then. So time is running short, and that’s the prime mover in all of this.

I will conclude Part 6 here.

The takeaways from Part 6 are: (1) our country is financing debt with debt; (2) the debt cycle, itself, is being seeded with printed money; (3) we are in constructive default on our debt; and (4) Wall Street knows this.

Stay tuned for Part 7.

Or don’t. It’s your decision.

Ever yours, simon_says

[Footnote: Like so many of you, I am anonymous. However, were it the case that my identity became known, then a curious and tenacious mind would be able to unearth a firsthand connection between yours truly and a former Treasury Secretary. Given this connection, it is foreseeable that some might draw the conclusion that this information comes from or is otherwise endorsed by that individual. I take this opportunity to say that I have never had any conversation with said Secretary about any topic discussed in any of these Parts. These are exclusively my thoughts and words. I suspect the aforementioned Secretary would endorse none of this.]