"That is why I don't think in the overall scheme of things the US debt is all that important."
You would not get an argument from the establishment who only see blue skies. But every once and a while, you hear the odd whisper here and there even from the highest source. The latest was Bush himself, who promised to reduce the unsustainable spiral of government borrowing. Before that, Greenspan shocked the world recently in Berlin when he opined that the rest of the world wouldn't be supporting US debt forever. You might argue that these are mere words, without any intent to change fiscal and monetary policy. But if that was the case, why indeed would anyone ring the warning bell?
Although economists and bankers express little concern, I know of none who believe that debt has no limits. It is therefore only a question of how much debt can be accumulated.
But, like you, I don't believe the debt will ever be repaid. The only solution is default on a world wide basis. The debtor will be forgiven, and those to whom the debt is owed will lose. The world will go on, and what was built will still be there. But in that process, all assets and financial markets will be wiped out, and the common folk will pay through their labour and personal assets.
"the US is not going to change its ways, come hell or high water. Economists can cry debt, inflation and end-of-the-world till they are blue in their face and it will not make the slightest difference."
If you truly believe the above, I can't think of a better circumstance for gold as an investment. Inflation in housing, financial markets, banking, and commodities will therefore continue unabated. The DJIA is heading to 100,000, to 1,000,000 a little while later. And it will cost $100 for a cup of coffee. And no one will notice or care?? |
