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We Need Monetary & Debt Restructuring

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As of May 23rd, 2012, China now has direct access to the U.S. Department of the Treasury to buy U.S. government bonds. China can now bypass Wall Street when buying US government debts, and it is the U.S. Treasury’s first-ever direct relationship with a foreign government according to Treasury’s documents. However, while all the other countries have to go through primary dealers on Wall Street to buy and sell U.S. bonds, China now only has to sell, not buy, through these brokers. So the Treasury will not buy back the bonds. They will still need Wall Street to dump assets giving them advance warning so they can front-run them as they did with the Hunt Brothers back in 1980.

The People’s Bank of China, has a direct computer link to the U.S. Treasury’s bond auction system, and China used it to buy two-year notes in late June 2011. This is an important development in reducing the power of the bankers. Once buyers of government bonds have direct access, Wall Street will lose its grip over Congress to demand bailouts for all their failed trades. As long as they continually blow up and their losses are covered by Congress who lives in fear of being unable to survive without them selling their debt, there will NEVER be any structural reform. The entire issue is DEBT. This is what must be addressed and a return to the gold standard presumes responsibility that has NEVER existed. Bretton Woods established a gold standard. They fixed gold at $35 and continued to borrow beyond the amount of gold at that ratio causing the system to collapse in 1971. So a gold standard has never done anything to prevent fiscal mismanagement and historically the gold standard is always abandoned during times of war: i.e.US Civil War, Britain 1914-1925 abandoned gold as well as did Europe. It is the debt – not what money is at anytime that is the culprit.  Until we address a monetary and debt restructuring, there is no hope of ever resolving anything.