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发帖数: 901 | 1 At Jim Grant's recent conference in London, David Stockman, director of the
White House Office of Management and Budget under Ronald Reagan, explained
why credit exploded:
American lawmakers have been freed of the classical monetary constraints.
There is no monetary squeeze, and there is no reserve asset drain. The Fed
always supplies enough reserves to the banking system to fund any and all
private credit demand at rates which are invariably low.
By 1990, the total debt-to-GDP ratio in the U.S. had grown substantially to
2.6 times GDP. It reached 3.6 times by 2007 – even before the financial
crisis. Today, total debt in the United States stands at $56 trillion – 3.8
times GDP.
That's $180,000 in debt for every man, woman, and child in the United States
. That's nearly $700,000 in debt per family in the United States. The
interest on these debts is more than $3.5 trillion per year. To give you
some idea how much money we're spending on interest alone… just consider
the total budget of the U.S. federal government is also $3.5 trillion. Again
, $3.5 trillion just covers the interest!
These debts are completely unaffordable. How many families in America do you
know that can afford to finance and repay $700,000 in debt? Not many…
Certainly not the "average" family.
This debt crisis leaves us in a difficult position. Should we default on our
debts (many of which are owned by foreign investors) and risk a collapse of
our economy? Or should we simply print more money to pay for these debts,
and risk a massive inflation?
So far it seems clear our political leaders are choosing inflation. That's
why the Federal Reserve is printing trillions of dollars – aka "
quantitative easing." It's buying around 70% of all new debt issued by the U
.S. Treasury. This is greatly expanding our monetary base, in hopes the
resulting inflation will make it easier to repay our debts.
In our view, this is complete madness. What's the point of paying our debts
if the resulting inflation impoverishes the entire country? That's clearly
what's happening.
America is in the early stages of a massive debt crisis and currency
collapse.
We created this economic tragedy over the last 40 years by abandoning the "
American system" Buffett references. We have abandoned, willingly, our core
economic advantages. Our leaders, including Buffett, convinced us these
things didn't really matter… and we could succeed without them.
They will be proven wrong.
You can see for yourself what's going to happen. The dollar is crashing.
Against other major currencies, it has lost 35% of its value in the last 10
years. Against a standardized basket of commodities, it is down more than 50
%. To bail out our banks and profligate housing speculators, we are burning
the family furniture. As the currency crumbles, the value of every asset in
America declines. As the currency crumbles, so does our standard of living.
And we are increasingly at the mercy of our foreign creditors.
And for what? We've gone three generations into debt for mortgages on houses
we don't need. We spent almost $100 billion to save a car company whose
products no one wants. We spent perhaps hundreds of billions of dollars to
bail out a handful of Wall Street firms – the same companies whose
financial products got us into so much debt in the first place. Then in our
spare time, we became the proud overlords of Iraq and Afghanistan, where $1
trillion and thousands of destroyed lives gets you… nothing.
Inflation will soar. The bond market will get wiped out. Our standard of
living will plummet. Just imagine what the historians will write about the "
American Empire" in 100 years.
Ten years ago, America sat on a pinnacle of power almost unimaginable even
50 years ago. We controlled the world's reserve currency. And it was just
paper. We had no military rival. We invented the computer and built the
Internet. Our military, our corporate brands, and our banks dominated the
world economy like no other empire in history…
And then we went broke.
How could that have happened? It is as if our success and power convinced us
we could break the laws of economics with complete impunity – while
breaking all history's blood rules, too.
Down payments? Who needs those? Everyone deserves a home. Home prices never
fall. Besides, we'll just get AIG to insure those bonds. What could go wrong?
Afghanistan? The Graveyard of Empires? We can handle it.
What about a civil war-prone country (Iraq) with Stone Age infrastructure,
three rival indigenous tribes, and a unifying, religious-based hatred of
Americans? Why not? Let's invade. We'll get the British to help. They had
such success last time…
And why bother managing all these government employees? Let's let them set
their own wages and benefits. What could go wrong?
Health care? Of course we can afford it. Let's toss in Viagra and other
prescription drugs, too. That'll get us some votes.
Taxes? Nobody wants those. We'll cut 'em. How will we pay for all this? The
rich will pay. Oh… that doesn't work? Well, we'll just keep borrowing from
the Chinese. Have you seen what interest rates they'll accept? What a bunch
of fools… Besides, everyone knows deficits don't matter.
And so it went… for nearly 10 years.
You couldn't have written a piece of fiction with a more absurd twist. It
doesn't make any sense. But that's exactly what's happened. Like Charlie
Sheen on a bender, we've jumped head first into more bad ideas over the last
decade than perhaps any other country in modern times. And now we've come
to the logical conclusion… The day of financial reckoning is here for the
global paper currency system.
The solution is simple for anyone interested in preserving their wealth
through all this: Own the money that mattered in the original "American
System." Own gold. |
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