Richard Fisher, president of the Dallas Federal Reserve, has been a public dissenter of the loose Federal Reserve policy that Bernanke has been driving for years now. Very recently
he spoke publicly in Germany saying that our debt was near a tipping point. Personally, I'm never sure what is theater and what is real anymore when these people talk. The order of the day has become to lead by managing public opinion. Government has gotten smart enough to know that if you don't have some internal dissenters then the people sense the one sided-ness and begin to smell the scam. On the other hand if you allow, encourage and possibly even mandate some internal dissent that can be put on public display then people will settle down because they will be led to believe that the system's supposed built in checks and balances are working. A small number of internal "radical" dissenters is good for business or they would have silenced Ron Paul years ago. Of course, that can easily get out of control too if not closely managed and controlled.
Fisher went on to say, "If we continue on down the path which the fiscal authorities put us, we will become insolvent. The question is when."
Now, while this might make sense to a lot of people it suggests to me that Fisher isn't sincere. All this talk about future insolvency is disingenuous when the insolvency has already happened. Insolvency is normally thought of as the situation where you can't pay bills when they come due. For corporations which can't just print more money from thin air when cash flow from operations falls short, the situation is obvious and impossible to hide. However, when dealing with sovereign nations which can print their own money up from the ether or borrow endlessly in order to make up for shortfalls in taxation, the term insolvency needs to be redefined.
What does not need clarification is that the
US went insolvent in November 1971. That is when other nations were told they could no longer convert their dollars for gold from the
US treasury. That was a strategic default. We had a deal and we still had gold in the treasury. We just decided it would be better for us to renege. People presented us bills to pay in the form of Federal Reserve Notes and the government declared insolvency by failing to pay them. Since then, the whole nation has basically been practicing a form of "strategic default" wherein we haven't been making payments on the debt yet we aren't moving out of our house either.
So when Fisher suggests that we "might" become insolvent in the future I view that as being the same as someone living in their house without making mortgage payments saying that if he isn't careful he will lose his house someday. The house is already lost legally yet he retains possession and use of it. Possession, it seems, really is 9/10ths of the law even now.
What Fisher is really saying is that if we continue down the current path then everyone is going to realize that we are already insolvent and they will lose faith in our funny money. The fact that silver (AKA poor man's gold) has been skyrocketing over the past year tells me this is already beginning to happen. Also, the
Utah bill which would recognize gold and silver coins as legal tender is another serious sign. It has now
cleared the Utah house and senate and is awaiting signature by the governor. If he signs that bill it could have far reaching implications. The most basic one would pertain to the collection of federal income taxes on gold based transactions. If people are trading gold coins for other items in the economy, should people note the price of gold on the day they accepted the coins and then note the price on the day they spent them? If not then how will anyone pay taxes on capital gains in the gold which occurred while in their possession? Nobody will do it and the number of transactions could be too great and too untraceable for the government to enforce taxation of inflation gains on gold and silver. Lack of enforcement could encourage others to follow in those steps. It could become a slippery slope for fiat currency in this country. These are the types of things that will finally get people to realize that paper money is a worthless scam. All the signs I see indicate that it will happen within a decade.
