“First, we’ll have to have a failed Treasury auction or two. Because once the Treasury cannot borrow, the game is up.”

steeple for all practical intents and purposes that has already happened. How many Treasury Bonds did the Fed buy last year or is indirectly on the hook for through the bank bailouts? Truthfully we are very close to insolvency now and the one big domestic pool of untapped liquidity out there is in 401ks. If the SCOTUS allows allows the Commerce Clause to be used to force people to engage in commerce in order to buy health insurance then there is no leap at all to force them to put their 401Ks in Treasury Bonds rather than securities “for their own and the common good”. The idea has already been bandied about and I will be shocked if it tacked on to one bill or another in the next year.

When this house of cards comes apart it is going to happen with shocking rapidity, and the thing that really frightens me is what little imagination the average American has. They go through life thoroughly convinced that housing prices going up 20% a year makes perfect sense until one day the bottom falls out and they are caught under water on a large second mortgage never putting the housing price inflation together with the stagnant real wages in the country and thus the declining pool of buyers for extravagantly over priced houses.

I gave my wife my well warn and dog-eared copy of Incredible Popular Delusions the other day so she could read about the Mississippi Bubble because she became interested in Gulf Coast history from tracing her family tree. She didn’t get far in to it before even she started to grasp the essence of fiat currency for the first time. She turned bug-eyed and said this is what is happening today. To which I replied “No sh*t Sherlock?”

Now if I could only get Timmy Turbotax, Barney Frank, and that mental Titan in permanent campaign mode in the White House to read it would it do any good?