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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: long-gone who wrote (88904)	8/18/2002 11:48:23 PM
From: marek_wojna	Read Replies (1) \| Respond to of 116753

Are you trying to say people should love "addicts"? Maybe some in the world starting to realize US will never be able to pay it back to both - their citizens and investors abroad? <<America's Dangerous Addiction "...Things began to go awry 30 years ago when the United States went off the gold standard. No longer restricted by the amount of gold in its coffers, Washington was able to freely print, spend and borrow. The result was that total public debt began to soar..." -------------------------------------------------------------------------------- John Myers Cocaine users call it the train wreck. Others refer to it as the post-cocaine blues. The literature says it can linger for hours, sometimes days. The craving for drugs can be so primal that addicts will do almost anything for the next score. If all of this was not cruel enough, addicts face one further card in an already stacked deck - over time their brains become drug-resistant. When they reach this stage, they need drugs just to function. America also has an addiction, one that may prove more damaging than all the drugs on our streets. It isn't a pill or a powder, and gangs don't sell it on dimly lit corners. Instead it is our government's addiction to debt. Like the addict who needs more and more to keep going, our government is piling up more debt just to keep functioning. In fact, Washington must continue to borrow money just to pay the interest on its outstanding debt. To see just how deeply in debt our government has become, take a look at the debt clock (http://www.brillig.com/debt_clock/). It shows total public debt standing at $6.09 trillion, or almost two-thirds of the nation's GDP. That works out to a debt load of $21,176 per American. This sea of red ink is rising at a rate of $1,111 million per day. And that is just our government's liabilities. As recently as 1991 total public debt stood at $3.4 trillion. That means that over the past 11 years the United States has taken on almost as much debt as it accumulated during its previous 215 years of existence. Tracing the Cause Things began to go awry 30 years ago when the United States went off the gold standard. No longer restricted by the amount of gold in its coffers, Washington was able to freely print, spend and borrow. The result was that total public debt (which stood at less than half a trillion dollars in 1972) began to soar. Today the government's indebtedness is so high that it can't possibly pay it off. Gene Greer Jr., who posts The National Debt page (http://home.europa.com/~blugene/deficit/debt.html) explains: "Entitlements - direct government payments to individuals, like SS, Medicare, Medicaid, etc. - make up nearly half of all federal spending. Interest payments on the debt we've already accrued makes up nearly half of what's left. If you don't pay the interest, you default and the world economic system collapses. We've already decided we're not going to substantially cut entitlements. That means that in order to balance the budget, we've got to make all the cuts out of the one-quarter of the budget that's left. It's not going to happen. Dealing With the Debt But something has to happen. Not even the U.S. government can amass limitless debt without creditors questioning its ability to make good on it. So, what can we expect? First, the United States will not default on its debt. That would create a financial catastrophe. But Washington has another out. Since the Treasury creates money and the Federal Reserve determines its cost, the government can control the number and therefore the value of its currency. Easy monetary policies would allow the government to pay back the dear dollars it borrowed with the debased dollars it creates. Will this happen? It already has. Consider the investor who bought a $1 million, 30-year Treasury bond in 1967. At the time he received a 4.5% coupon, or $45,000 a year. Taxes would have taken roughly $20,000 out of the annual stipend, so that would have left him with $25,000 a year on his million dollars. And when his million-dollar Treasury matured in 1997? By that time our investor had forfeited four-fifths of its purchasing power - a lousy deal for the bondholder, but a bargain for the government. With federal debt at outlandish levels and with the easy monetary policies of the Fed still in place, what's to stop the Feds from devaluing the dollar again? Not a thing. Such action would devastate the bond market, as investors would rush to get out of fixed-income instruments. Prepare for a train wreck. For advice on how to negotiate America's troubled financial landscape, see: Tidal Wave of Cash Surprisingly Easy Profits From Wall Street's Forgotten Market John Myers - son of the great goldbug C.V. Myers - has been helping readers earn suprisingly lucrative returns in stocks largely unknown to Wall Street's wunderkinder since his early 20s. Our man on the scene in Calgary, John has his fingers on the pulse of natural resource profits - including oil, gas, energy and gold. To begin making money using John's profitable insights, you can subscribe to Outstanding Investments .