You and I are witnessing perhaps the greatest bubble in world financial history. And yes, it’s the amazing American credit bubble. Honestly, no one knows exactly how large this credit bubble is. We have already run up a national debt of roughly $16.432 trillion. Further, we have unfunded future liabilities of anywhere from $50 trillion to $100 trillion (I have seen estimates of both figures – Niall Ferguson claims our unfunded liabilities are $238 trillion). I’m afraid the gigantic credit bubble is doomed to topple over and splatter. It will burst when the credit of the United States is no longer accepted by our creditors.
The US will never default on its debts. That would be an unthinkable admission of sovereign bankruptcy. No, the US will, and is, following a different and time-tested method. The US will devalue the dollar, and thus attempt to pay off its debts with billions of devalued “mini-dollars.” Of course, this is a form of subtle, legal robbery.
Suppose you just borrowed a thousand dollars from a friend to be paid off in the year 2030. In 2030 you pay off your debt in devalued “mini-dollars.” Your friend screams, “This is thievery – what the hell are you giving me? I can’t use this junk!” You smile and say, “C’mon, I borrowed a thousand dollars from you, and I’m paying off my debt with a thousand newly-minted dollars, just as I promised you. I paid you off, so what are you squawking about?” Thus ends our friendship.
Read More at lewrockwell.com . By Richard Russell.
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