Actually, we haven’t gotten to Bedford Springs yet. We’re still sitting in the airport lounge in Paris. Summer is over. It’s back to work…12 hours a day…just like we’ve worked for the past 39 years.

When we were in college we had no money. In the summer we had to work two jobs to try to save enough cash to continue. One summer, we worked in a boatyard in Annapolis early in the morning…then, we did an evening shift painting television towers. Painting the towers was such dangerous work our poor mother begged us to quit. But the money was good – $5.25 an hour – so we had to keep at it. More about that in a minute…

We’ve only got a minute before they call our flight, so we’ll make this short. Nothing much happened in the markets on Friday…except that the price of gold rose $11. Gold seems ready for another attack on the $1,000 level. Will it get there? Maybe…maybe not.

Humility! Humility!

We have to remember that the world economy has never, ever been in a fix like this. We don’t know where it will lead.

The big picture is that the credit cycle – expanding since the end of WWII – seems to be contracting.

“The joy of buying falls victim to recession,” says a headline in today’s International Herald Tribune. The article tells us how people are planting gardens again…saving money…making do.

This is likely to be a fundamental shift, not a transient one. But – humility! – what do we know?

What we suspect is that the upward trends of the last half a century have now reversed. We’re in a period when the excesses and mistakes of the boom/bubble period must be corrected. A new model for the world economy must be found – because China can’t continue to sell products to Americans if Americans can’t continue to buy them.

But there’s more to this big picture. Never before in history have so many government officials been so sure they could stop a correction. And never before have they had more ammunition at their disposal. The numbers are all over the place. And they’re huge. The Obama administration, for example, expects to run $9 trillion in deficits over the next 10 years – and that number is based on a recovery! Imagine what will happen if the economy doesn’t recover?

Here at The Daily Reckoning, we don’t expect a recovery, not now…not never. Because the old model no longer works. Debt got too big…too expensive…too risky. Something had to give.

But what gives now? What happens when a world economy of $50 trillion per year tries to correct and governments try to stop it? What gives when the world’s largest debtor borrows $9 trillion trying to prevent nature from taking her course?

Until tomorrow,

Bill Bonner

Source: A New Model for the World Economy