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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (25054)	1/20/2005 4:04:45 PM
From: russwinter	Read Replies (2) \| Respond to of 110194

Hoisington practices more bogus Keynesian demand is the key economics, but could you put the chart they have on fuel as a % of household expenditures into your ild file?

To: ild who wrote (25054)	1/20/2005 4:13:42 PM
From: ild	Read Replies (2) \| Respond to of 110194

Date: Thu Jan 20 2005 15:20 trotsky (Knapper) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved your analogy of designating one's salary as a sort of 'personal GDP' makes no sense. one's 'personal GDP' is of course far higher than just the salary one receives. GDP is supposed to decribe the TOTAL ECONOMIC OUTPUT of a nation, not just the profits derived from said output. if you compare the debt to the actual profits the economy produces, the data look a lot more scary. but i would agree that a federal accumulated deficit approaching 70% of GDP is not really worrisome. after all, Japan has an accumulated deficit approaching 165% of GDP. now THAT sounds like an impending state bankruptcy. however, the focus on the federal budget is also misguided. it is the total credit market debt that should give rise to worries. at roughly 360% of GDP it now eclipses the previous historic record of 1929 by 70%. in spite of the fact that interest rates have spent the past few years near multi-decade lows, the percentage of household income that has to be spent on debt service is at a record high. in short, the fiat money system that was implemented in full in the early 70's has laid a long term egg in the form of a debt mountain that has no historic precedent. as i've previously mentioned, the fact that this hasn't produced major adverse consequences up to now is meaningless - the argument is on a par with judging Nasdaq 5,000 not to be a dangerous level for this index because up to that point it had not suffered a serious correction. the question is not IF this credit bubble will collapse, but WHEN.