Re-inflating the Debt Balloon
Aug 4th, 2008 | By Doug Casey | Category: Politics & EconomicsOnce again, America owes far more than it produces. With the debt balloon re-inflated to new extremes, how much greater will the next depression need to be to fulfill this business supercycle?
This chart is not an all-encompassing measure of U.S. debt. It ignores the big government debt that ballooned in World War II and grew in Vietnam and now. Many of the leveraged items of derivatives – not described as debt today – would qualify under a broader definition of debt, and don’t forget the $6 trillion of international debt built up through the trade deficit, none of which existed at the previous peak.
This chart illustrates how a long-lasting depression was required to deflate the private debt built up in the 1920s and early 1930s, and that we should fear the consequences of the return to more sustainable levels of debt across our financial system.
Source: Re-inflating the Debt Balloon
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Doug Casey is a contrarian investor, sought-after public speaker and author of several books. His work "Crisis Investing" held the position of # 1 bestseller on the New York Times list for 26 consecutive weeks. Doug's unusual views on the economy - and just about everything else - have gained a huge following in the investment community, and it certainly helps that his stock recommendations of undervalued junior exploration companies have made his subscribers millions. Now in its 27th year, Doug's monthly newsletter, the International Speculator, is one of the most established and esteemed publications on gold, silver and other natural resource investments. Together with the Casey Energy Speculator, it covers a broad range of carefully selected stocks with the very real potential of double- and triple-digit returns within 12 to 24 months.