His trick? He's stopped funding the retirement plans for government workers.
This "debt issuance suspension period" will run from today to August 2nd. During this period, two government retirement plans won't get their regular payments.
Now, Tim promises no one currently getting benefits will be affected, and that once Congress raises the limits again, all of the money will be paid back. Promise, cross-my-heart-hope-to-die, stick-a-needle-in-my-eye.
How much money are we talking about? Judging from the FAQ [link] the good Secretary produced, this should provide the government with an additional $214 billion ($84 billion from the CSRDF program and $130 billion from the so-called 'G-fund').
Uhm, Houston, we have a problem.
Our current borrowing rate is $1.7 trillion a year. That's roughly $4.6 billion a day. The "headroom" Geithner is buying covers us for 78 days. $4.6 billion a day multiplied by 78 days is roughly $360 billion. That means we'll come up $146 billion SHORT even after this federal retirement fund-grab.
Where will they get the additional money?
I'm sure Timmy will figure this out. Especially since he won't have any pressure from the Government Scribes (the press) whose motto is, "Trust and DON'T verify" when it comes to the Administration...
Last week, Ferfal - Fernando Aguirre (Surviving in Argentina blog) did a guest post on Chris Martensen's blog titled, "Preparing For Economic Collapse".
If you're not familiar with Ferfal, his blog has chronicled the economic collapse that is still in effect in Argentina. Argentina did many things the US is now doing.
Devaluing its currency, instituting central economic planning, etc. We can now add to the list, "stealing retirement funds".
Take the time to read the article. It gives you 5 things you can do to make the potential US economic collapse a bit more livable. Try this on for size -
Every single Argentine wishes he could go back in time, close his bank account, and put that money into gold. We would all do that if we had a time machine. Since you can't guess the future, all you can do is estimate what can happen and play the odds in your favor. In the event of a full economic collapse, if you have 20% of your savings in physical gold and silver, that’s a percentage of your savings that is spared. It's not an investment; don’t go crazy over gold and silver going up or down a few dollars, just be content that it's not getting any lighter as it sits in your safe. If the economy collapses or even if there’s simply inflation (as there clearly will be), that percentage of your savings in precious metals is safe and will likely go up in price beyond its standard purchasing power as things get worse.Singin' to the choir, brother...
Speaking of physical gold and silver, I have a bit of bad news. Premiums have increased. While the spot price of gold and silver have had a pretty significant drop, the premiums paid for physical gold have gone up.
For instance, we used to charge approximately $5 over spot for an American Silver Eagle. We now charge $7 over spot. American Gold Eagles used to go for about 5 percent over spot, now they're up to 8 percent!
Why? The manipulations or games being played in the futures market have not had as significant of an impact on the physical market. Availability has gone down with the drop in spot.
That being said, the out-of-pocket price has still dropped, and you can get gold and silver for less money than you could two weeks ago.
YOU need to determine if precious metals make sense for you and your lifestyle. If they do, and your personal Crystal Ball says the government will continue spending more than it brings in, will continue to deflate the dollar and will continue to get creative on ways to get its hands on money, now might be the time to add some PMs to your stash.
I found this a bit odd: I have a couple accounts with Chase bank. As I've noted in the past, I keep very little cash in the bank - a couple of thousand to pay our monthly bills and give a little bit of cushion.
We used to keep almost all of our cash with them in both check and savings accounts. The savings account was closed two years ago, and the two checking accounts have the money I mentioned.
I just got an email from them offering a $500 chance at a bonus for re-opening the savings account. If you put $500 in an account, your name will be eligible to be drawn and you can claim the prize.
What I found interesting is that they were even offering this bonus. This indicates that I'm not alone in withdrawing my money and holding it in cash and PMs (or the long-term unemployed continue to deplete their reserves). For some reason, Chase isn't taking advantage of the zero percent loans they can get from the Federal Reserve Bank.
Or perhaps, the Fed has indicated the tap has run dry. I dunno, but I found it interesting...
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