Now that we added another percent over the 100% of debt-to-GDP ratio in just 21 days (can anyone say exponential debt accumulation? Sure you can!), it is time to give kudos to Chuck Butler of Everbank for catching a good find today in his Daily Pfennig. Here’s Chuck:
“I read a great piece on Gold yesterday, by Jeff Clark of Big Gold who writes for Casey Research. Jeff did a great job in the article, and so I stole a snippet of it… Here, Jeff talks about “the downfall of every fiat currency (the dollar) are the two D’s. Debts and Deficits… So with that in mind, consider the following:
• Morgan Stanley reported that there is "no historical precedent" for an economy that exceeds a 250% debt-to-GDP ratio without experiencing some sort of financial crisis or high inflation. US total debt currently exceeds GDP by roughly 400%.
• Detailed studies of government debt levels over the past 100 years show that debts have never been repaid (in original currency units) when they exceed 80% of GDP. US government debt will exceed 100% of GDP this year.
• Investment legend Marc Faber reports that once a country's payments on debt exceed 30% of tax revenue, the currency is "done for." By some estimates, the US will hit that ratio this year.
• Peter Bernholz, a leading expert on hyperinflation, states unequivocally that "hyperinflation is caused by government budget deficits." Next year's US budget deficit is projected to be $1.3 trillion.
Chuck again… yes, debts and deficits… I’ve ranted over these for years, and people (non Pfennig readers!) are finally beginning to realize that deficits really do matter! And as long as we, as a country continue to go down this road of debts and deficits, I would look for Gold to remain the anti-dollar…"
Folks, you can almost feel the tears welling up, as THIS will end in tears. Debt accumulation at this pace destroys currencies. I agree with Jeff Clark. I agree with Chuck Butler! Want real gold, real physical gold that stands the test of time? Given what appears to be on the horizon, it is time to accumulate some gold coins. Time to call Lear Capital!