Are You Ready for the US Debt Spiral?

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Wed, 10/13/2010 - 11:52 | 646284 yipcarl
yipcarl's picture

Rook...LOL that's what they are taught to say and have been saying for 70 years, it's how they get paid.  Isn't that what it's always about?


Come on.

Wed, 10/13/2010 - 11:47 | 646258 the rookie cynic
the rookie cynic's picture

I was speaking with a Baby-Boomer financial planner a few days back. I shared some of my concerns about: the devaluation of the dollar, trade imbalances, sky-rocketing U.S. government debt, and corruption in Washington and Wall Street.

She took it all in stride. "Oh, our country has been in worse shape before: WWI, the depression, WII, the energy crisis in the 70s...don't worry, stay the course, fund your investment accounts. The market hasn't been based on fundamentals for years.  We've had doom and gloomers all along. (She mentioned Howard Ruff being the chief doom and gloomer of her generation.) It's going to be okay."

I'm sorry but it doesn't feel okay. It feels different: more corrupt, less resilient, desperate, uncertain, scary...


Thu, 10/14/2010 - 10:31 | 649123 ebworthen
ebworthen's picture

I feel the same way.

They MUST tell you that everything is going to be o.k. if they want to have a job.

My impression of America 50, 75, 100 years ago is not of parasitic healthcare industry, welfare society, declining manufacturing, outrageous debt spending, and bailing out corporations with taxpayer dollars.

I'm pretty sure we used to allow companies to go bankrupt, and that you could spend a week in the hospital without having to mortgage your house.

I'm certain we had the greatest innovation, quality, and production rates and efficiencies in the world.

That has all been sold out for the sake of a quick buck versus prudence, humility, and restraint.

What we have lost is the American Family, the Character Building of individuals, and a personal and national dedication to improvement versus sloth and greed.

Certainly there are still good families and people with good intentions, but we have passed a tipping point where a majority in society are living for the moment.

I don't want to invest in that.

Wed, 10/13/2010 - 11:41 | 646220 yipcarl
yipcarl's picture

Let me get something straight.


We have a mortgage problem, I think?


Loans are at the lowest level in decades, I think?


We have never had a foreclosure problem this bad in America’s history, I think?


A moratorium has been called to stop all foreclosures in this country, I think?



Now  JP Morgan, the biggest ‘BANK’ in the United States came out this morning with blowout earnings.  


Now the market is going nuts.  


This all makes perfect sense and I'm sure you will get at least 100 posters on CNBC to tell you why this is perfectly normal and how stupid I am for not 'getting it'.

Wed, 10/13/2010 - 11:24 | 646132 ebworthen
ebworthen's picture

For what Wall Street has done, they would have to hire some gutless immoral swindlers and drug dealers who left their conscience in Kindergarten.

Hell, I remember in 1987 my young Wife and I being hustled into a 10% home loan that was 55% of our income "Don't worry, in a year or two you'll be making more money and if the rates are lower you can re-finance."

Nearly killed us making those payments, jerks!

Wed, 10/13/2010 - 11:14 | 646066 sbenard
sbenard's picture

But Wall Street is happy!

If these people aren't delusional, there IS no such thing!

Wed, 10/13/2010 - 10:59 | 646000 Captain Kink
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"The inflationism of the currency systems of Europe has proceeded to extraordinary lengths. The various belligerent Governments, unable, or too timid or too short-sighted to secure from loans or taxes the resources they required, have printed notes for the balance."  J.M. Keynes on Weimar Inflation


Even Keynes understood that this is no way out. Not to mention the dis-incenting message that it sends to anyone capable of working and/or investing in the US going forward. 

Wed, 10/13/2010 - 10:52 | 645975 alexwest
alexwest's picture

#US is expected to run a $1.7 trillion deficit in 2010

well well well .. finally someone got federal deficit right.. my congratulations  SIR... no more assholes ..


Wed, 10/13/2010 - 10:28 | 645886 Dadoomsayer
Dadoomsayer's picture

Yet we march on and on.  Rome didn't fall in a day or a year, it took decades.  Same will happen to the US.  It will take decades.  Enjoy waiting for your fall, won't happen in our lifetime.

Wed, 10/13/2010 - 11:48 | 646263 Calmyourself
Calmyourself's picture

I agree with reservations, those being black swans, they do happen.  The larger system is incredibly resilient but could go down quickly with the right shove on a load bearing portion.  It is always smart to be moderately prepared; a little food, a little defense a little fuel, a little PM's. 

This is not mako's world, the JIT system will not shut down for lack of credit overnight.  It will get slower and cracks will show well in advance if it happens at all..  The Black swan will not be on a local level it will be national systems, local systems are even more resilient.

Wed, 10/13/2010 - 11:19 | 646098 Vendetta
Vendetta's picture

the difference between then and now Rome used silver for money which was diluted over time, we're using total fiat with no record in history of fiat lasting more than 41 years.

Wed, 10/13/2010 - 10:59 | 645999 Spastica Rex
Spastica Rex's picture

Got it. So, please tell me, what do we use for the start-date of U.S. decline? Knowing that date will help a lot. Was it yesterday, or the day before? Or?

Wed, 10/13/2010 - 11:26 | 646144 snowball777
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August 15, 1971?

December 23, 1913?

May 10, 1886?

Sep 17, 1787?

Wed, 10/13/2010 - 19:13 | 647747 Shell Game
Shell Game's picture

D.  I choose D, since there was no 'all of the above'.

Wed, 10/13/2010 - 10:27 | 645872 web bot
web bot's picture


I largely agree with your decline of an empire assessment and I enjoy your posts. In my sock puppet assessment, the only "out" for the US Gov't is hyperinflation... along with all of the other niceties that it brings... such as social unrest.

With hyperinflation, the US can literally dissolve its debt and emerge on an equal footing with the others major powers who will also experience the medicine. This in my view, still ensures a level playing field once this event is over.

Many talk about hyperinflation as the end... but in fact, it is the only real alternative since the debt level is unsustainable.

Sounds draconian, but may work.



Wed, 10/13/2010 - 14:15 | 646790 MrSteve
MrSteve's picture

So the real end game is a new currency at some revalued standard. In the past, a gold standard was opposed because the USA didn't want mineral-rich states like South Africa and Australia determining our money supply. That's Congress' job!


Maybe now there will be a reconsideration of the gold standard, though that didn't stop of Bank of England or Spanish Empire from going broke.


If the dollar goes away via hyperinflation, what will happen to the US Constitution, the dollar's enabling legislation? Tea Party and cable news quippers are fighting over it right now, though only with words for now. If bailouts and contract abbrogation / strategic default and struggles over legitmacy / vote counts keep growing, then maybe the Constitution will join the formerly almighty dollar in the discard pile of American history, next to the continental dollar.


Maybe one hedge is better than none against that day, whenever it comes. Gold has been that hedge for thousands of years, so time is always on its side.

Wed, 10/13/2010 - 19:10 | 647739 Shell Game
Shell Game's picture

We must return to a gold standard. But... more importantly, we cannot have central bankers in charge of said new, gold-backed currency. That is the most important caveat.  Ergo, revolution is the only way forward.

Wed, 10/13/2010 - 17:35 | 647419 web bot
web bot's picture

My understanding of constitutional law is that while most people hold it as a fixed document, history shows that this is not the case. The Constitution "in total" is the sum of the constitutional document along with important precedents and case law that has emerged over time. The Amendments are but one of many examples.

If default happens, you will simply see some aspects of the constitution morph to accommodate. Not something that many want to hear, but it is a fact.


On another note, I am amazed that people are thinking that gold and silver are in a bubble. In the old normal, when bubbles are popped, they collapse... but in those cases, this liquidity moves to other holdings. Don't they realize that when default of the USD happens, gold and silver will simply be the recipients of this flood of liquidity until a new standard emerges.. which could take several years.

Wed, 10/13/2010 - 10:23 | 645860 snowball777
snowball777's picture

Do we really think that America and Greece are comparable in the "digging out of the hole" department?

Is America tied to a currency it can't debase?

Can Greece, at 1/3 the population of CA, really milk their new Chinese sugar daddy sufficiently to grow?

Apple vs Orange?

Nectarine vs Plum?

Wed, 10/13/2010 - 10:19 | 645844 Bitch Tits
Bitch Tits's picture

Where does this author get his "facts"? Please, do show us how you compiled these figures. Or, did you make them up?

Wed, 10/13/2010 - 10:48 | 645951 RockyRacoon
RockyRacoon's picture

What?  And give you more data to quibble with?  No way.

We like our news stripped to the bone without all that annoying "fact" stuff.

Wed, 10/13/2010 - 10:19 | 645843 Temporalist
Temporalist's picture

I have to disagree with "endless foreign military excursions that bring nothing to the country;" as foreigners flying planes into buildings in city centers and military headquarters is not nothing.  Don't forget all the enemies that have been created too.  Also the military industrial complex has grown so large surely all the overstuffed pockets and bank accounts of insiders are not "nothing."



Thu, 10/14/2010 - 10:29 | 649140 fallst
fallst's picture

Yes, We can chase the BoogyMen, but not spend Trillions.

No need to take over 2 countries. Too Expensive.

Need to be cost effective here.

So, Homeland Security has 250,000 employees?

All chasing OBL?

Wed, 10/13/2010 - 10:18 | 645841 Jim B
Jim B's picture

"All of these sound pretty clever and complicated, but in reality they consist of nothing but throwing VAST amounts of money at every issue that arises rather than allowing the junk debt in the system to be cleaned out. Consequently, NOT ONE move that’s been implemented has been positive for the US Dollar OR the US balance sheet."


Agree completely!  The FED is trying to mitigate the problems, but they are actually prolonging and making the eventual pain worse!

Wed, 10/13/2010 - 10:16 | 645835 Kina
Kina's picture

The US economy is like Mr Creosote. One tiny bit more of QE, Market pumping or deficit can't hurt.



Wed, 10/13/2010 - 10:12 | 645823 fallst
fallst's picture

Dear World:

              Somebody's Kid Stole Dad's Country in 2000, and went on a Joyride. Dismantled all institutions, now buying land in Paraguay.

               So, after 7 years with his regulatory capture and strategic global initiatives(PNAC), there was some mischief, and wall st got drunk.

              Oh, and the national debt doubled from 6.3 to 13 Trillion. Which was Obama's fault. Right.

              So now we are inflating our way out of this. We were hoping you wouldn't notice.

Wed, 10/13/2010 - 09:57 | 645800 sushi
sushi's picture

Debt spiral? Like Greece? What have you been snorting? You forget we have Benny and the Fed!! We is mashers of de univers.


Hey Yip:

How come we share the same email address?

Wed, 10/13/2010 - 11:42 | 646229 Calmyourself
Calmyourself's picture

We also possess 10,000 nuclear warheads (not all assembled), the worlds most powerful Armed Forces and the best resource mix inthe world.  This will take much, much longer to truly fall than mako or any other doomer predicts.  I count myself among the eventual doom and gloom guys..

Everyone has bought into this sytem and will do anything to keep preserving it as it currently pays the bills and feeds the kids..

Wed, 10/13/2010 - 11:19 | 646095 ebworthen
ebworthen's picture

"Be-Be-Be-Benny and the Feds"

(Benny and the Jets)

If I had the time this morning, I'd write a re-do.

Picture Ben Bernanke in Elton John's Yellow Brick Road getup, dancing along throwing out Fiat Dollars, with the Treasury, Congressional (must have Barney Frank in there), and Wall Street clowns joining in.

Wed, 10/13/2010 - 10:29 | 645887 yipcarl
yipcarl's picture

sushi...i wish i knew.

Wed, 10/13/2010 - 09:46 | 645776 yipcarl
yipcarl's picture

Yea if you can tell me when the market finds out we have problems that would be great.  You can email me at


Wed, 10/13/2010 - 10:22 | 645856 Sudden Debt
Sudden Debt's picture

aren't you the same guy that hosts and ?

How do you come up with all these names for those sites?

You must be very creative and have a lot of fantasy!


Wed, 10/13/2010 - 09:57 | 645798 Commander Cody
Commander Cody's picture

The market (FED, big banks, hedge funds, liquidity providers) does not have a problem they can't fix (used in more than one context).  Until debts can no longer be paid or kicked down the road, the farce will continue.

Do NOT follow this link or you will be banned from the site!