We're Going To Default (Actually, we're not.)

It's a political question, not an economic one (that I got wrong.)

Update: I was wrong. Gaetz is, apparently, just as bad as the rest of them, and has expressed no plan to do anything about it. I’ve taken the paywall down. Let this article stand as a shining example of the complete folly of having any faith in any of these politicians.

Lesson learned. Separate article coming shortly.

If you’ve been paying any attention - at all - to the political situation in which we find ourselves, you should probably have noticed by now that this is no ordinary situation. Every year we have this debate, every year they drag it out to the 11th hour, and every year they make a last-minute deal of some kind to avert the promised catastrophe.

This time is different.

Allow me, if you will, to tell you why.

Disclosure: Last Friday, I spent $40 (pretty much all I can spare) on OTM SPXU call options, strike $13.50, expiring 6/23. For those not financially inclined, that’s a very heavily leveraged position that will become profitable in the event of a severe drop in the S&P 500, and end up worthless otherwise. As of today, those options are exactly ATM. I very rarely trade stocks etc, but an opportunity like this is just too good to pass up.

Not financial advice; DYOR. But I’m putting my very limited money where my mouth is on this one.

Game Theory

I caught some flak for talking about game theory in relation to this. At its simplest, game theory deals with the incentives, motivations, and probabilities that motivate any given party to make the correct moves and maximize the chances for their optimal outcome. The Prisoner’s Dilemma is the Ur-example.

Encyclopedia Britannica. Source

There are, effectively, two parties to the dispute: President Biden’s handlers, and Speaker McCarthy. Both of them, as rational actors, want to secure the outcome that is the most beneficial to them personally. Does anybody expect any different from our politicians? That’s how the game is played, and this time is no different. What is different, this time, is the extremities of both their positions and their motivations. If there were going to be a deal, both Biden and McCarthy would need to win and lose a little. Give and take, compromise, the usual. So, what is motivating them, and what does it mean for the chances of a debt ceiling deal before a US default?

Biden

Ask not what China can do for you.

Let’s get the basics out of the way. Biden is a traitor. The Hunter laptop, among many other tidbits that have come out over time, have pretty clearly highlighted the fact that Biden is irrevocably beholden to several masters, China among them. If he were to defy their wishes, just like many of other corrupt politicians, we should expect to see graphic child abuse imagery involving at least him and Hunter, among God only knows what else they, or other parties, are holding over him. China already disclosed Hunter’s financial records to Senate Republicans, leaving not a shred of doubt that they are quite willing and able to pull that chain if he were to stray too far from his orders.

So, for starters, we have a President that is firmly beholden to our enemies. What would China, or anybody else who has power over him, like to see for their money?

Well, presuming that they are acting in their national interest, they’d probably like to see the US suffer, in some way or another. BRICS is in the middle of a worldwide campaign to de-dollarize the global economy; a US debt default would, among the multitude of other terrible economic effects, crush the value of US Treasuries, severely damage the credibility and reputation of the US dollar, and likely give a big boost to their competing plans. Of course, it’s going to get stronger before it gets weaker - as the world’s reserve currency, the Dollar Milkshake theory is in full effect, and so as people, institutions and countries divest themselves of increasingly risky USD-denominated assets, what will they trade them for? Dollars, of course. That will paradoxically drive up the value of the USD in the midst of that economic chaos: at least, until everybody decides to trade their dollars for whatever hard assets they can still get for them.

But surely he still has to worry about re-election, right? Also, not really - if you don’t understand by now that the 2020 (and 2022) elections were severely rigged, then there’s probably no helping you. Biden said it himself: he doesn’t need you to get elected. Any ordinary POTUS would be rightly very concerned that a gigantic, messy, chaotic economic crisis on their watch might harm their re-election chances. No such luck with this guy.

It’s also worth noting at this point that McCarthy himself recently said as much: “It seems like Biden wants to default.” Why would Biden possibly want that? Of course the Democrats are trying to lay the blame on Republicans; if they can get away with that, all the better, and maybe that’ll give them some cover to explain away another blatantly stolen election. That said, that’s a rather extreme, and telling, statement. It is a basic, undeniable fact that the US government brings in far more revenue than is required to keep up on debt service; the ongoing revenues are sufficient to cover those payments, including bond maturities (paying back the principal amount of a Treasury bill when it comes due, not just the interest). A debt default will not happen automatically; depending on how the Treasury balances change day to day, it’s likely that Biden would need to explicitly order the Treasury to default on those bond payments to prioritize something else.

In other words: The only realistic scenario of a US debt service default is the situation in which Biden actually wants one.

There’s also the incipient CBDCs, or Central Bank Digital Currencies. The Federal Reserve has been developing the FedNow “service” to that end. It was originally scheduled for release on July 1st; that may have been moved up to June 1st. Seeing as the expected default date is June 1st - why, I wonder, would they possibly do that? Biden is, of course, full steam ahead on board with the Great Reset, better known to some as the “Build Back Better” plan. It was literally his campaign’s tagline! CBDCs, which are programmable digital currencies, are a critical element of the “Fourth Industrial Revolution” under which we are all supposed to be digitally enslaved. They give the issuer the ability to view every transaction you’ve ever made, arbitrarily restrict where, when, with whom, or how much you are allowed to spend, grant them the ability to implement negative interest rates or time-limited allowances - that is to say, if you have $600 right now, you’d better spend it, because it will expire at the end of the month - as well as limiting the amount of savings you are allowed to build up. The FedNow service, intended for use between large financial institutions, is their first operational toe in the water. T-bills are primarily behind the banking crisis: the banks held them as collateral, and with skyrocketing interest rates, they lost a lot of their value, decimating the banks’ capital and collateral they are legally and contractually required to maintain.

The official reserve ratio is currently 0% - at the bottom line, they are allowed to maintain zero reserves to cover customers’ assets, withdrawals, et cetera - but once their liabilities exceed the value of their assets, that situation is known as bankruptcy, and they end up being seized by regulators. T-bills, once thought to be among the safest assets in existence, have already taken a heavy hit to their value, and a sovereign debt default ain’t gonna help matters. The Federal Reserve has implemented the BTFP program, directly buying T-bills from the banks above their newly decimated market value; a whole lot more of them are going to need that help if they have any chance of surviving a US sovereign debt default. What better, more convenient way to implement that program than the new CBDC? It could also, if the federal government stops funding Social Security, food stamps, et cetera, allow the Fed to unilaterally magic the money into existence even more efficiently. Of course, it would take one hell of a crisis for anybody to accept that.

We now have a few reasons each why Biden both will not be negatively affected by causing a sovereign debt default, and why he and his puppet masters will actually benefit from the chaos, destruction, poverty and suffering it will cause across the board. So, with that said …

There is not a snowball’s chance in Hell that Biden won’t allow, or cause, the default.

McCarthy

If you give the House to the Freedom Caucus, you’re gonna have a bad time.

Well, fortunately for the rest of us, Biden isn’t the only party to this debate. McCarthy is a well-known RINO; the man is slimy, opportunistic, self-interested, made-man Uniparty personified. Everybody expects the Republicans to fold - we’re all well and truly used to the pithy spinelessness that has defined the Republican Party for the last few decades. They talk a big game, they take it to the wire, and then they disappoint us all and fold like the cheap, empty suits they are. Why is this time any different?

Well, for starters, McCarthy is not in charge. You may have heard that it took him 15 votes to successfully take the Speaker’s gavel, and that he made some concessions to be able to do so. Among those concessions, we have these three shining gems.

1. The Freedom Caucus controls the Rules Committee. The Rules Committee decides, in this Congress, and among numerous other duties, which bills are allowed to come to the floor for a vote. Pelosi ruled the House with an iron, autocratic fist: she alone kept the power to decide what would come up for a vote. That is not the situation in this Congress.

2. The three-day rule. The three-day rule means that any bill, no matter how urgent, must be debated for a minimum of three days before coming up for a vote. This dramatically shortens the true deadline. As I write this, we have 8 days until the money runs out and the US defaults on something. If the Democrats want to negotiate another bill - they don’t, but let’s play pretend - McCarthy has plainly stated that this rule will still apply. If they were to somehow convince the House to vote on, and pass, a “clean” debt ceiling bill, then they must do so within the next five days. This will also give us three days’ notice that we do, in fact, stand at the cliff-edge: once that deadline has elapsed, the House couldn’t pass a “clean” debt ceiling bill in time if they wanted to. Separating the deadlines is going to make for some interesting partisan brinksmanship, as the only answer at that point will then be either signing the already-passed House bill that contains major cuts, or some doomed gimmick like the 14th Amendment or the trillion-dollar coin.

3. The vote of no-confidence. This is the true Sword of Damocles hovering over McCarthy’s head, and this is what truly grants the Freedom Caucus full control of the House and everything that happens, or doesn’t happen, therein. If McCarthy were to bend to the Democrats’ demands - or the RINO demands - a single Representative, most likely Matt Gaetz, may force a vote of no confidence. If that happens, Speaker McCarthy is no longer, and all House business promptly ceases until such time as a new Speaker is elected. That could go on for quite a while, depending on just how hard the Republicans dig in their heels, but one thing is certain: there won’t be any new bills passing the House until that’s resolved, and certainly not a clean debt ceiling bill.

So, we’re putting a lot of faith in the likes of Matt Gaetz and Jim Jordan here. What makes them so special? Why are we presuming that they’re going to take this game of chicken to the messy conclusion when neither party budges?

Well, for starters, you could ask McConnell. In last year’s session, the lame-duck Congress, with the Senate led by McConnell and the House by Pelosi, passed a $1.7 trillion budget for the next year. That is a rather unusual action. Congress’ primary means of oversight and control is the “power of the purse;” that is, the power to spend, borrow, or prohibit same. By passing that budget in the lame-duck session, using undemocratic tricks to ram it through an otherwise skeptical Congress, McConnell, RINO extraordinaire that he is, worked with the Democrats to kneecap the incoming Congress. Why would he take such an extreme measure? Why would he deny the new House any power of negotiation, any reason for the White House to talk to them or take them seriously, for so long?

Why indeed.

Furthermore, these Republicans are the very same that have formed and are heading up the Select Subcommittee on the Weaponization of the Federal Government, better known as just Weaponization. They’re going after the corrupt FBI, DOJ, CIA, IRS, so on, and so forth - tomorrow, Durham will be facing some very difficult questions regarding both the extensive criminal conspiracy to frame Trump, and why, exactly, he has apparently decided not to lay any criminal charges for those actions. This is not entirely unprecedented, but I can’t imagine the Swamp appreciates their many and varied crimes being aired out for all to see. These guys are fully informed of the depth of corruption, criminality and treason of the Biden Administration, and they know the stakes of allowing this supremely corrupt administration to continue wielding the awesome power of the federal government. Continuing to fund it is not exactly high on their list of priorities.

Beyond that, I don’t really know what else to tell you - if you think Matt Gaetz is going to fold on this, then you go right ahead and believe that, and we’ll see who stands where come June. For all the clownery around “patriots are in control,” for once in our lives, that statement is true. At least insofar as control of the House.

A US government default is going to be an extraordinarily disruptive event, socially, economically, and politically, and we have a traitor for a POTUS that is almost assuredly going to go out of his way to make it as painful as absolutely possible. If you are reliant on government money, programs or support, in any way, I would strongly suggest that you should do what you can to prepare for that to go away, for at least a little while.

In the worst case, we could emerge into a whole new world.

Thank you for reading, and I hope you learned something - this time is definitely not like all the other times. As we get closer to the deadline over the next few days, I expect it will become rather quite clearer than it is right now - I’ll be tracking the developments on Twitter. I do have another couple of articles in the works, regarding both vascular health, in light of the extensive damage caused by the spike protein, and compensating for lacking immune function, of varying severities, due to the same; you might be surprised to learn that research takes time, and I can’t really just rush out a new article every few days. (I could, but I can’t imagine they would really be worth reading.) We’re also a month or two away from my next update on East Palestine, and the fallout in surrounding areas, which I know a few of you have been waiting for; I am waiting for the effects to begin appearing before I revisit that again. With the continuing craziness of events this month, I have been very busy. Your continued support is greatly appreciated, and it makes all the difference to us.

Stay tuned, and see you on Twitter!