If there is any question of where our deficit spending is headed, I think Japan is a good primer. REVENUES: 92.6 trillion yen Tax revenues: 43.0 TY
Other revenues: 4.0 TY Government Bond Issues (borrowing): 42.8 TY EXPENDITURES: 92.6 TY National Debt Service (interest & bond redemptions): 22.2 TY Social Security: 29.1 TY Other: 41.2 TY 43 in tax revenues for income. 29 spending on social security and 22 to service the debt. Anyone see a problem with this? This is where we are headed. Japan just has a head start. If there is any question about our government needing to print more money to pay the bills, this gives us a glimpse of our future. When does direct monetization of debt show up as decreased purchasing power of the currency in some sort of severe way? Wish I knew. This WILL affect the valuation of the products we sell as the US pushes the envelope even more in the future.
Above figures from this article: Anatomy of a failing state I think Jim Rickards has it figured out. Not the timing, but the end game.
I expect a collapse in the value of currencies relative to real goods, real assets and real services. This will happen to all currencies, not just the dollar. I don’t expect a word where people lose confidence in the dollar and the euro does really well. On a relative basis, I’ve been bullish on the euro for some time. In the endgame, however, if people lose confidence in the dollar this will be inflationary in all countries around the word and I don’t think that any currency will be able to withstand it. When I say ‘the death of money’ what I really mean is the loss of confidence in the purchasing power of money. That’s very likely to be a global phenomenon not confined to any particular country.
The above from this interview.
John
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The value of the dollar
