London Issues Orders to Obama: Hyperinflate!

The British Empire's messengers continue to bark out orders to their Obama administration in Washington, that he has to hyperinflate the financial system like there is no tomorrow. After all, it worked really well for Weimar Germany, didn't it?

On the day of the Washington confab on "The Future of Housing Finance", chaired by Treasury Secretary Geithner and HUD Secretary Donovan, the Financial Times editorialized that the U.S. housing bubble must not be allowed to pop, and that in fact a brand new one should be built on top of the old one. It is "politically and economically imperative to keep house prices high and rising," they intoned, since "the U.S. is still not in a position to bear a tidal wave of foreclosures... Cramming down mortgage assets would pull the rug away from under a barely recovering banking system."

The only problem with the FT's description is that the banking system is already hopelessly bankrupt, and that a second tidal wave of foreclosures has already begun. For example, mortgage delinquencies (defined as being 3 months or longer in arrears) rose nationally from 3.3% in 2008, to 9.4% today—a near tripling. In 23 congressional districts in the worst-hit states—California, Nevada, and Florida—delinquencies are running at 20% and higher.

In a private discussion, an economist at one of Germany's regional Landesbanken confirmed that there is much discussion in financial circles about another U.S. government mega-bailout in the works, in the range of $2.5-3 trillion dollars on top of the $2.3 trillion in toxic paper that the Fed already owns—exactly as British spokesmen have been demanding of Obama for weeks. The fresh Monopoly money would be targetted to bail out not only the real estate speculative bubble, but other toxic assets as well. The Landesbank economist said that printing $3 trillion in new money would lead to a total collapse, and she couldn't believe that Geithner, Bernanke and Obama would be crazy enough to risk that.

She's wrong about that. Indeed, some authorities in Washington have confirmed to EIR that if the Fed expands their assets portfolio to $3 trillion total, that break-point will trigger a Weimar hyperinflationary blowout!