A Mountain of Debt

This is depressing:

What's surprising about the nation's debt is that it has continued to rise despite record numbers of mortgage refinancing from 2001 to 2003, many of them yielding cash that consumers have used to pay down credit card balances.

…

Consumer bankruptcies have exceeded 1 million a year since 1996, hitting a record of 1.54 million in 2002. Bankruptcy filings totaled 1.25 million during the first nine months of 2003 and could set a new record when full-year tabulations are done by the Washington-based American Bankruptcy Institute. [source]

I know it's perilous to make financial predictions, but let me have just a little bit of peril.

Please remove your AFDB for a moment, to enhance reception.

The end of 30-year treasury bond issuance, the willingness of the Fed to hold interest rates at 45-year lows, Fed Governor Bernanke's startling way of talking down of the dollar, the enormous deficit spending of the Bush administration, and same administration's in-words-only support of a strong dollar are all related.

The plan <furtive glance> is to take advantage of the US dollar's role as the world's reserve currency to go massively into debt at low interest rates and then to steeply devalue the dollar in order to to repay those debts in a depreciated currency. It's a gargantuan swindle at the expense of foreign holders of dollars. <evil cackle> Domestic holders of dollars will be stung by the resulting inflation, but have (unwittingly) hit upon the winning strategy — by also going into debt as individuals, the increased quantity of money will make their debts easier to repay in real terms.

The thing that doesn't fit is that all the common measures of money supply (M1, M2, M3, and MZM) began to fall — which is bizarre even in the absence of a conspiracy theory — in Q3'03. Why apply the brakes? Or have people simply stopped borrowing? (Did they figure out the swindle?)

Maybe someone with experience looking at monetary figures would comment, and reassure me that the currency manipulation going on today isn't as nakedly wicked as it seems? :)

UPDATE 2004-01-06 07:19:06 UTC: There are black helicopters circling my house right now. I'm hoping they're here for a Friedmanesque money drop, but if you don't hear from me for a while, it must have been for something else.