Guest Post: Dr. Lacy Hunt On Debt Disequilibrium, Deleveraging, And Depression

Tyler Durden's picture

Via Lance Roberts of StreetTalkLive,


May 3, 2012?

If you have not read the notes of the first three presentations here are the links to Niall Ferguson on "Civilization", Dr. Woody Brock on "American Gridlock" and David Rosenberg from Gluskin Sheff. The last presentation I will report on from Day 1 of the conference is Dr. Lacy Hunt from Hoisington Research. Dr. Hunt was a previous member of the Federal Reserve board and is the Executive Vice President of Hoisington Investment Management who has run arguably one of the best performing bond funds over the past 25 years. With that I present the notes from Dr. Lacy Hunt.


I want to begin by taking us back to the economic classroom. In any economic model there are two basic conditions - "Equilibrium" and "Transition"

For many years professors have drummed into students that equilibrium is the dominant condition and that transition occurs but it is generally smooth, unimportant and short. The commonest example is that of an airplane. When the airplane is on the tarmac it is at equilibrium. The takeoff and climb to altitude is the transition which is a generally short period relative to the overall trip. Once the plane reaches cruising altitude it is again back at equilibrium.

However, what we have learned is that equilibrium, in relation to economies, is very short. It is the transition periods that are long in nature. Economies consistently move towards equilibrium, achieve it temporarily, then began to transition again.

In the U.S. today, along with the rest of the world, we are currently engaged in "debt disequilibrium".

Currently, we simply have too much debt relative to GDP. This is not just a domestic problem. Excessive indebtedness is a global problem. Furthermore, as we take on consistently more debt, each additional increase in debt is becoming less effective, due to the law of diminishing returns, and eventually will produce a negative return. The reality is that for debt to be effective it must produce a positive return.

In the U.S. today the current debt to GDP ratio is roughly 360%. This is not the first time that debt to GDP has peaked. In 1875 the debt to GDP ratio peaked at 156.4% after the panic of 1873 following the collapse of the railroad boom. After that peak the economy remained in malaise for a very long period of time until the excess leverage was reduced. The process was repeated again in 1916 as debt to GDP hit 170.4%. This in turn led to the 1920-1921 depression where Federal spending was reduced by 50%, deleveraging happened very quickly and the economic cycle began to recover. However, this time the re-leveraging cycle quickly ensued in the roaring 20's which pushed debt to GDP to the next peak in 1933 at 299.8%.

Of course, the following gestation period and debt deleveraging cycle took a very long period of time as the psychological impact of the "Great Depression" changed behavior. It wasn't until 2003, 70 years later, before the debt to GDP ratio breached the 1933 peak at 301.4%. Debt since then has continued to soar rising another 80 points in 2009 to a peak of 382.8%. The debt deleveraging process has only just begun and if history is any guide it will be a very long and arduous process.

As stated previously by Dr. Woody Brock the addition of debt is acceptable as long as it produces a positive rate of return. Unfortunately, the U.S. has engaged in massive increases in the levels of debt but the average standard of living has not risen. The "debt disequilibrium" problem has now reached the point of producing negative impacts on the economy.

This is not just a domestic problem. It is a global problem. The Eurozone is at 450% of debt to GDP - which roughly 100 points higher than the US. The UK is at 470% and Japan is at 500% of debt to GDP.

Furthermore, Japan is the template of the US experience. This is not a popular view and is widely dismissed under various assumptions. However, Japan has done everything that the Keynesian and Freidmanite schools of thought have asked them to do. The results are not good. Yet, the current administration has failed to understand the consequences of those actions and have engaged upon the same path over the last decade.

The current debt problems occurred primarily between the years of 1998 to 2006. The issue that has yet to be realized is that you cannot solve a debt problem after the fact. It has to be resolved before it reaches critical mass.

In the early stages of a rising debt buildup it leads to both rising income and asset prices. It is in these early stages where actions should be taken to limit the debt buildup. However, since the corresponding increases in debt lead to a rise in incomes and asset prices - no one is willing to stop It The problem then becomes the crushing reality of declining prosperity as the negative ramification of excessive debt sets in.

"Debt is a two-edged sword. Used wisely and in moderation, it clearly improves welfare. But when it is used imprudently and in excess, the result can be a disaster." Stephen Cecchetti

Let's take a look at the U.S. versus China


    Debt To GDP = 16.3%
    Hidden Liabilities as % of GDP = 144%
    Total Debt and Hidden Liabilities as % of GDP = 160%
    PCE as % of GDP = 30%
    Investment as % of GDP = 70%
    China's growth target for 2012 = 7.5% - slowest in 22 years


    Debt to GDP = 102%
    Hidden Liabilities as % of GDP = n/a
    Total Debt and Hidden Liabilities as % of GDP = 102%
    PCE as % of GDP = 71%
    Investment as % of GDP = 16%

China is an unsustainable model. The critical danger is their rapid deceleration in growth. While many people are looking at external factors to influence China's economy the reality is that the system can be disrupted purely by internal factors. It has clearly happened in the past.

4 Archetypes of the Deleveraging Process - McKinsey Global Study of 32 Countries.

There are only 4 major ways for a country to deleverage itself based on the study of 32 countries.

    "Belt Tightening" — most common. (50% of countries studied)
    "High Inflation" — (25% of countries)
    Massive Default
    Growing Out of Debt

Types 2-4 were relatively rare and occurred in conditions that are not present today in the mature economies. The record suggests that today's mature economies are most likely to deleverage through a belt tightening process as deflationary forces keep a lid on inflationary pressures even as currency printing increases.

The massive increase in debt in the U.S. economy over recent years is now having deleterious effects on the consumer. The personal savings rate is declining as consumer debt is being made available. In recent quarters we have seen huge increases in debt to fuel consumptive spending due to the stagnation of incomes and rising cost pressures.

What is very interesting to look at is the massive surge in student loan debt that is now becoming another concern. Student loans are increasing but not because there has been a sudden increase in the number of people attending colleges. The student loans have been going to fuel consumption.

If you want to know how weak the economy really is all you need to do is look at the 30-year bond. It is one of the best economic indicators available today. If economic conditions are robust then the yield will be rising and vice versa. What the current low levels of yield on 30 year bond is telling you is that the underlying economy is weak.

"The 30-year yield is not at these low levels DUE to the Federal Reserve; but in SPITE OF the Fed," Hunt said.

The actions of the Federal Reserve have continued to undermine the economy which is reflected by the low yield of the 30 year bond

The "cancerous" side effects of nonproductive debt are being reflected in real disposable incomes. Just over the last two years real disposable incomes slid from 5% in 2010 and -0.5% in 2012 on a 3-month percentage change at an annual rate basis.

This is critically important to understand. While the media remains focused on GDP it is the wrong measure by which to measure the economy. A truly growing economy leads to rises in prosperity. GDP does NOT measure prosperity — it measures spending. It is the measure of real personal incomes that measures prosperity. Prosperity MUST come from rising incomes.

GDP, on the other hand, can be distorted through government spending, which masks the effects of declining prosperity through weaker incomes. GDP does NOT lead to a increase in prosperity.

This brings us to the issues with various debt driven stimulus and liquidity programs. While they may have a short term positive effect they ultimately all have a diminishing rate of return over time. Take a look at the effect of the QE programs on the stock market.

    QE1 - stocks increase 36.4%
    QE2 - stock rise 24.1%
    Operation Twist (Stealth QE 3) - stocks gain 12.9%

While the liquidity interventions by the Fed have increased stock prices — it has also continued to create pressure on the average American by deteriorating prosperity.

The Velocity of Money

The velocity of money is at what speed is money moving through the economic system. The commonest measure is: GDP (nominal) = Money X Velocity

The velocity of money tells you the effectiveness of debt relative to the overall economy. From 1953 to 1980 the velocity of money was stable which was showing that the loans being made by banks to individuals and businesses were being put to productive uses. Today, as debt is taken on, it is no longer the case as additional bank lending produces little return. In other words there is relatively little return for each dollar lent.

The increases in debt without a productive return will ultimately lead to a larger proportion of government debt in the economy, versus private debt, with no relative increase in GDP. To put this into perspective - without changes to the current system government spending will reach 40% of GDP by 2050. This will not happen as the system will collapse long before then.

While we should be in the process of working off debt and deleveraging the system — in actuality we are doing the opposite and in 2013 we will be at 110% of debt to GDP.

To put this into an investment perspective let's take a look at "20 Year Periods With A Negative Risk Premium" A negative risk premium is when there is a negative return between the total return of stocks versus the total return of bonds. This will not be the first time this has happened.

    1874-1894 = S4.4% in stocks vs. 5.4% in bonds = -1% equity risk premium
    1928-1948 = 3.1% vs. 3.9% = -0.8% equity risk premium
    1991-2011 = 7.8% vs. 8% = -0.2% equity risk premium

The bad news is that with the massive total increases in debt combined with the current policies being implemented under the current administration it is very likely that could extend the current 20 year cycle much longer. This has profound investment ramifications for individuals going forward.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
lolmao500's picture

Hidden Liabilities as % of GDP = n/a

Well it's over a quadrillion...

gangland's picture

“In the economics of development, there is an iron-clad rule that “income is all”.

a low-wage economy is an underdeveloped economy because it keeps aggregate consumer demand below its optimum level,

causing overcapacity in the economy that needs to be absorbed by export.

Workers income is the key factor in generating national wealth in a country.

Export through low-wage production is merely shipping under-priced national wealth outside the national border without adequate compensation by under-pricing labor within the nation

This “income is all” rule has been mostly obscured in recent decades during which globalized foreign trade promoted by neoliberals has pre-empted domestic development as the engine of economic growth in all market economies around the world.

low local wages retard domestic economic development by reducing aggregate purchasing power in the domestic market to cause overcapacity that rely on export.

This epic of financial capitalism has produced little real wealth

but it has been an effective tool for shifting existing wealth from those who produced it to a small group of plutocrats via a state / financial nexus.


The only proposed solutions emanating from the plutocrat / state are for more of the same policies that have destroyed the American economy, polity and culture.


The sad truth is that the economic elite benefit from our declining wages and the looting of our social resources in direct proportion to what we lose.

The economic elite has launched a class war against us and they have indicated every intention of seeing it continue.


As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth,

and the next 19% (the managerial, professional, and small business stratum) had 50.5%,

which means that just 20% of the people owned a remarkable 85%,

leaving only 15% of the wealth for the bottom 80% (wage and salary workers).

In terms of financial wealth (total net worth minus the value of one's home), the top 1% of households had an even greater share: 42.7%.



gangland's picture

whereas early post-war reforms had favoured the productive over the speculative use of capital,

this priority was reversed as the controls that had restricted the international movement of financial capital during the 1950s and 1960s

were gradually loosened and as, in the process, finance and industry were increasingly de-coupled.

It also sparked the transformation of what had, in effect, been a public international monetary order

into what became essentially a private network. Financial re-liberalization had begun.

In general, liberal market economies have deep and liquid stock markets

in which widely dispersed shareholder ownership makes it possible for investors to use the take-over mechanism as a means of profiting from under-valued companies

During the 1960s, the theoretic identification of the stock market as an ‘efficient market’ for corporate control and the development of Agency Theory combined to legitimize the stock market’s role in restructuring industry.

This increasingly focused management’s attention on financial markets and the delivery of ‘value’ to shareholders – diverting their attention from the strategic development of the enterprise itself

Especially in the UK and the US, this resulted in a wave of hostile takeovers –

financed through debt from the increasingly resurgent financial markets –

and requiring asset stripping to repay the leverage.

This ‘hollowed out’ industry on a massive scale, shifting the focus of business from making ‘things’ to making ‘money’.

In turn, the habituation of consumers to high levels of indebtedness not only fuelled bubbles 

it also made consumption increasingly sensitive to changes in monetary policy.

Financialization and its destabilising influence were thus becoming all pervasive.


Market players have by now become seasoned to the "risk on, risk off" ("Roro") dynamic.

The investing world then turned essentially bimodal with the Lehman Brothers collapse.


Assets now behave as either risky assets or safe havens, and their own fundamentals are secondary.

In a world where most asset classes are synchronised, it becomes very difficult to achieve diversification.

It also means that since most individual assets are dominated by a common price component,

it becomes increasingly futile to invest in them based on their usual fundamentals.

The [post-Lehman] uncertainty helped turn investing bimodal, where every price has been contaminated by systemic risk.

Everything became a bet on whether we were closer to a global recovery or to deeper crisis.

this does a respectable job of explaining why markets have evolved into pathological trend-following speculative bubbles

- everywhere - and why hedge funds, exchange-traded funds and other market wagering vehicles proliferate.

And the bigger the bubbles inflate, the greater the systemic fragilities -

and the more confident the speculators become that policymakers have no alternative than to continue delivering the goods.

And, at this point,

the powerful sophisticated players just love that "Roro" holds policymakers securely hostage.



SloSquez's picture

Your swastika scares me, your mind gives me comfort. Very prescient, I'm sure. 

Thomas's picture

Those are the words of Doug Noland, one of the truly brilliant souls who really did (honestly) see it all coming from years back.

SloSquez's picture

Maybe, I don't know who that is.  I just let it pour.  It was a good post, I thought and I responded.  Nothing more.

hornster's picture


Yes it seems finance has replaced industry.

However, you can still squeak by making $8.25 stocking shelves with imports thanks to the "job creators".

AnAnonymous's picture

a low-wage economy is an underdeveloped economy because it keeps aggregate consumer demand below its optimum level,


But without that and the rest, how can we support the aggregate demand by US citizen middle class?

The elite do the bidding of the US citizen class. Their own elite aggregate demand is amply satisfied.

mjk0259's picture

Confuse-us say you are really out of it. If elite was doing the bidding of US middle class, they would be increasing taxes on themselves and making wild speculation much more regulated to increase productive investments. Also, they would not be sending out jobs and technology to China, India, Mexico, etc. They might even have actual border controls so that there isn't 20 million illegal immigrants bidding down the price of their labor.

John Law Lives's picture


Meanwhile, buyers of muni bonds are having a difficult time finding sufficient quantity.  Despite dire warnings from Meredith Whitney, demand for munis is outstripping supply:

smb12321's picture

The purchase of both treasuries and munies continues for one reason - the general populace (I refuse to use that idiot "sheeple") have some kind of faith in the US and our various levels of government.   All those panting for economic gloom and doom fail to realize this central point - as long as folks think the dollar is sound and the government is the safest investment, no real changes will come.   When it does, the effects will be almost instananeous and profound. 

LawsofPhysics's picture

Less talk, more action.  Prosecute the fucking fraud already.

NotApplicable's picture

Just how does fraud go about prosecuting itself?

LawsofPhysics's picture

Better ask JP Morgan about that.

NotApplicable's picture

Oh, that ole "your money, or your life" routine. Gotcha.

Stoploss's picture

We don't even have a growth target.. LOL!!

He lost me with "the debt should be used wisely and moderately" line.

Nope, not how it was designed. But hey, he has a PHD. OOoooooooooooooo.

NotApplicable's picture

Got to give him credit though for discussing the disaster that is the negative marginal utility of debt. He even linked it to the student loan bubble funding fuel consumption.

That's pretty brave for a status-quo guy, when they only know they need more debt, or they're toast.

Stoploss's picture

Yeah, it's what he's been taught and what he believes, not him personally, but through flawed education.

If you are taught wrong, you don't know it because there is no reason to check, coupled with the fact there were no

computers, so checking meant a whole lot of leg work and speed reading in the library. It was there, but who has time?

SloSquez's picture

After burners bro...physics still rule. 

Vendetta's picture

the law joined the fraudsters

q99x2's picture

Arrest him. Redistribute his stolen wealth.

Spastica Rex's picture

His wealth is in paper, I'm sure. Take as much as you want.

q99x2's picture

Oops got the wrong guy. Thought he was a different Hunt.

Release Lacy Hunt. Free Him. Great Post Dr. Hunt!

Based on the below we will have a 1% or less rise in stock prices if QE 4 is used to transfer the wealth of US citizens to the banksters. Hopefully they are working on something better than QE4. Like shrinking FED Government and arresting the Fraudsters that are taking down this country.

 'QE1 - stocks increase 36.4%

 QE2 - stock rise 24.1%
 Operation Twist (Stealth QE 3) - stocks gain 12.9%'

smb12321's picture

You are absolutely wrong on intent (the FED wants to transfer money to banksters, etc)  The FED desperately wants markets to rise specifically for the general populace a la the dot come boom so that consumer spending can expode.  The 1% (a term that annoys me more than "going green") will do well regardless. They don't need a rise in stocks.  The markets rise not only on technical data, news and QEs but also on perception.  If you THINK the market is going to rise you will hazard an investment. 

NotApplicable's picture

For someone who was on the Fed board he seems to have a good grasp of the issues. A rarity, I'd say.

I don't follow his logic on the 30 yr bond, though. In my world, growing prosperity pushes down the cost of long-term debt, as default risk should be diminished. Then again, he's talking about "default-proof" Treasurys, so is the rate pressure he speaks of the competition between government and industry for financing during the good times?

smb12321's picture

I think Mr. Hunt meant, instead of higher rates, market-priced rates (which to him are the same thing).  Whenever we try to buck economic trends (5-7% interest rates) all we do is build up pressure for a new explosion.  What's happening is a complete rewriting of economic history.  In the past, the FED gave markets wiggle room, allowing rates and money flows to rise and fall naturally, but now central planning has taken over and that necessarily involves trying to manage the tiniest details. 

jimmyjames's picture

If you want to know how weak the economy really is all you need to do is look at the 30-year bond. It is one of the best economic indicators available today. If economic conditions are robust then the yield will be rising and vice versa. What the current low levels of yield on 30 year bond is telling you is that the underlying economy is weak.


I don't believe that is correct-

Look at 2001-bond yields fell when they opened the credit spigots and gunned the housing bubble which enabled the CDO market to flourish and the economy was rocking and yields fell and have remained low-i sometimes wonder how high or if at all yields would actually spike if the Fed stopped buying-

What the 30 yr bond reacted to was the same thing gold reacted to at the same time-which was credit risk-and (imo) it's what's keeping both the long bond and gold on the same track today-

Rainman's picture

I'm tired of seeing all this whining about gubmint debt. It is only an issue if you one day intend to pay it all off....which is impossible.

Clint Liquor's picture

At some point, servicing the debt becomes the issue.

SloSquez's picture

Yes, but no model can grasp the influx and reverberations of current policy.  All of the bailouts, FNM, FRD, SLM to be...The hilarity, is it doesn't matter any more.  The servicing is just an entry away...into the future we go.  Might I suggest, Rome.

NotApplicable's picture

Only in a ZIRP-free world. Which I don't think we're going to see anytime before it all blows up anyway.

SloSquez's picture

Just out of curosity, now is different how?

razorthin's picture

Like death.  Oh it's coming.  But today I breathe therefore there is no death.

LowProfile's picture


I envy thy muse...

Logans_Run's picture

...and which they never intended to do! Just completing your thought.

hornster's picture

The "transition" he should be discussing is this globalization monster that was unleashed.  Like if were going to get cheap crap from China, how are we going to pay for it, like maybe becoming energy independant or smart tarriff or tax policy or someone with an idea that isn't just the tax cut extension.  No it's all anarchy and we're all stupid and need more education I know.

Caviar Emptor's picture

GDP, on the other hand, can be distorted through government spending, which masks the effects of declining prosperity through weaker incomes. GDP does NOT lead to a increase in prosperity.

This is another way of understanding Biflation: declining incomes (we've been saying) in the face of increasing government spending (which takes many forms). All of which leads to declining "prosperity" (incomes plus net worth) in the face of rising prices (when rising GDP just reflects more inflation and not organic growth)

Spastica Rex's picture

But it makes for good television before the election.

Caviar Emptor's picture

@Spastica : lol. Biflation is the net result of the abrogation of the supply/demand relationship. When there's an infinite supply of helicopter-delivered dollars intereacting with a world full of finite limits (on resources, time, people etc...). Economic theories have bumped up against reality. 

smb12321's picture

"This is another way of understanding Biflation: declining incomes in the face of increasing government spending...which leads to declining "prosperity" in the face of rising prices"

Bravo!!  If there was a better description of our current situation I have yet to read it.  Notice that we have stopped talking about "making it big", getting the big car and large house, taking the vacation to Europe.  It's the atmostphere of lowered expectations that is so damn depressing.  Worse, the attitude comes right from the top - "we can take care of you your whole life and all you have to do is vote for us".  This attitude is an extraordinary break with our aspirational past.

disabledvet's picture

Hahaha. Ridiculous. I can buy a used Jaguar sports car that would have cost 70,000 new for 10 grand. hell when people start dying what's gonna happen to all that stuff in their garage? the fact of the matter is i'd rather have the problem of interest rates too low than interest rates too high. at least i know the problem: spending that promotes economic development and growth. since the bulk of government in the USA today merely "redistributes wealth" such that the politician can get the votes to increase his/her wealth dramatically it's really hard to see how this "electioneering model of development" is sustainable. A simple example: the State of Illinois is going to go broke....more than likely sooner rather than later. Does it matter? Not really. Given the massive amount of capital appreciation in the US over the past decade (and that includes the most valuable type of capital namely government capital) the folks will simply move to Iowa, Wisconsin and Minnesota while their hapless officials "go through the reset." Bankruptcy would probably be the best option...but i'm sure the others presented here would be considered as well (tolls have already doubled thanks to the President's great "infrastructure build out.") There is no substitute for honesty in public policy...let alone accountability (in anything?)...and we have none of that right now. Public schools will have to be closed, public works will have to sold (probably to foreign interests thus giving them all the money), highways and airports will be privatized, prisons shut down, the war machine will grind to a halt...etc, etc. i don't find any of this as part of a "disequilibrium" at all however but simply a simple rationalization of over-promising and over indebting in order to deliver. once interest rates (and not gold in my view which is purely about capital appreciation...all of which has been moving along quite nicely at all levels thank you very much) issue the "coup de grace" by surging higher then the true cost of these "promises" will be seen and born out...and hopefully once recognized can then at least be solved. We're still living in "Age of Delusion" however and i have no hope for those who simply take a formulaic approach to the issues rather than focusing in on the data and trying to include as much "theory" as possible in order to explain it.

zerotohero's picture

its friday - FUCK THIS SHIT.

exartizo's picture

I don't know anything about the DHS issue you're writing about.


Interestingly,, a relatively large online purveyor of weapons has curiously run out of most of their stock of AR weapons about two months ago.

All of a sudden, every line of Sig Sauer weapons was completely sold out within about two days and has yet to be replenished. Nearly two months have gone by, and TopGun has not gotten ANY Sig tactical weapons back in stock.

When I called and asked them about the apparent loss of their entire inventory of a product that is likely in increasing demand in the market place.. they gave me the run around and said that they don't have a clue when they will get the next shipment of what are arguably one of their larger product lines back in stock.

Just sayin'

smb12321's picture

I continue asking this question:  Why in the world would our government (composed of friends, neighbots, teachers, union leaders, doctors, etc) spend the time and effot to wage war on the American people?  (real war - not the financial war) And why would it take seven years?  They could subdue most cities in a few days with tanks, howitzers and planes.   

More to the point, does anyone with an atom of sense think a police state results in future prosperity?   The 1% would be the first to oppose such nonsense since they realize that if brute force is all that matters, they are high on the agenda. 


max2205's picture

Is just me, but I don't see anyone except some households de leveraging

It HAS NOT started yet and won't until TSHTF and it too late.

tony bonn's picture

although i do have material objections to parts of the article, i will commend you profusely for this superb observation, "...GDP does NOT measure prosperity — it measures spending..."

and to make the point clearer, people should provide a companion to per capita income - one which removes the top 1% and top 10% income before dividing by the constant denominator......the latter two numbers will be paltry in comparison to the general raw number which covers up the greed and filth of the plutocratic class....

and i can hear the whining asshole bernie marcus mew about how he is busy creating value while everyone else is sitting on their butts looking for a free handout - to which i reply bullshit. someone needs to occupy his penthouse.

Yen Cross's picture

 Can someone please /Cc. Jamie Coleman @ this post?  That ass hat doesn't get it!

Bruce Krasting gave him a"talking to. The post;

JR's picture

These are excellent points and go to the core reasons Fed policies have limited true growth and favored corruption in the system leading to the dot com disaster, the mortgage and housing bust and, now, the coming legal robbery of investors through the Jumpstart Our Business Startups or "JOBS" law signed April 5 that lifts the limit of the sale of unregistered securities, Reg D securities, from $5 million to $50 million before requiring SEC registration.

Says Richard Benson of Benson’s Economic and Market Trend regarding JOBS: “Having spent 30 years on Wall Street, we know how this story plays out. Indeed, if Goldman Sachs and Citibank creating bad mortgage securities to profit by selling them to suckers is still fresh in your memory you should know how this story ends...

“Those targeted by these investment scammers selling slimy securities will certainly be the older Americans who survived the last two bubbles, but are getting zero interest at the bank. Retirees can't live on zero interest so they are ripe to be sold hope and Ponzi-style investments that pay them interest with their own money until the principal is gone.”