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

To: Little Joe who wrote (27113)	1/26/1999 8:41:00 PM
From: Bob Dobbs	Read Replies (1) \| Respond to of 116764

Hi Little Joe: The problem is a very difficult one, like picking stocks or bull or bear markets. A debt meltdown is a very non-linear, unpredictable process. However, one key feature is now evident with world economies - a debt meltdown on a very large scale is already occurring - and it has not stopped its relentless movement. It is on a pan-country scale, much like the 1931 worldwide debt meltdown following the Credit Anstalt default. To contain another domino would take more resources than the world can muster, so now it becomes a question of how much additional damage will occur. In addition, the US debt loads on a relative, GDP normalized basis, are higher than any in the country's two hundred year history. Growth is a modest 2-3%, and balance sheets, especially for consumers, are inadequate for debt service should even a modest deflation occur. That's why I can make my predictions with some confidence. The US is extraordinarily vulnerable to a debt meltdown, as difficult as that is to recognize on the surface. This fact, together with the fact that the roller coaster abroad has already hit numerous countries, and will not stop at Brazil, is very weighty evidence. Tommy Holt wrote a good book - "How to Survive and Grow Richer in the Tough Times Ahead" (1981). I think he stated his economics well. But the slowdowns predicted were short lived and relatively shallow. Doug Casey predicted a depression in the early 80's. In 1980, there was no corresponding domino debt meltdown worldwide as there is today, while domestic debt levels are even worst, even though other factors like inflation and employment are better. However, when it comes to debt dynamics as opposed to growth dynamics, debt servicing ability and overall balance sheet are far more important than inflation and employment. This is why I'm concerned. I think it is inevitable that the fiat economy crashes, and money is rendered worthless, but when that will occur, I don't know. However, a debt meltdown could be the event that kills the dollar. The reason I say that is because today, unlike 1931, the US government is laden with debt. Should it be unable to service debt in a slowdown, ie. if it defaults on bonds, or if it has to print its way out, this could bring down the house. We'll see. Bob