As I noted earlier, the bailout of bankrupt US states has already begun in a quiet program that has eluded the media's attention. That's not surprising because state bailouts would turn into an explosive issue if the American people understood how much of their money was being redirected to the most irresponsible states. Our pro-socialist media are loathe to report any story that threatens the central government's ability to allocate funds.
Now, the Economic Policy Journal is reporting that the federal government has begun funding state unemployment payments for 32 states. California, Michigan, New York and Pennsylvania account for 45% of the total to date. Although this funding is reportedly structured as a loan, it's actually a bailout. Every global bailout has been structured as a loan, but a true loan requires some expectation on the part of the lender that they'll be repaid. Anything else is a gift. Does any believe that California will be paying $6.9 billion back to the federal government? Does anyone believe that California will pay interest on that amount to the federal government?
Just like every other form of deficit spending and money printing that has occurred in recent years, the people who pay in the end will be US dollar savers. It's gotten to the point where it's probably pointless to keep repeating this theme, but the US dollar is toast. This money will pass from state debt, to federal debt, to monetization. People who saved their money will pick up the tab. If you are holding dollars in a bank account, or a CD, or cash in a sizeable amount, you will pick up the tab. Eventually stock and bond holders will pick up the tab too, as the value of their assets severely underperforms the cost of living.
Meanwhile, the calls for deflation are rising to a new crescendo in the financial media and among Wall Street prognosticators. The folks making these calls are simply providing cover for our central bank to print more money. Wall Street loves money printing, because a large chunk of that money goes straight to their balance sheet. That's why we get a huge market rally every time global governments announce some new massive bailout. And all that printed money piles up and up and up, until at some point people lose confidence and begin to spend it. That's when the US dollar dies.