You probably were not glued to your TV for President Obama’s taped interview with ABC News George Stephanopoulos. Well President Obama apparently informed Americans, “We don’t have an immediate crisis in terms of debt. In fact, for the next ten years it’s going to be in a sustainable place.” Kinda takes your breath away, does it not? If not, my debt chart will do it for you. President Obama’s outrageous management of our economy has produced the jaw-dropping graphic I include for you here.
Do you see the unprecedented debt explosion? You are looking at a near parabolic chart pattern. Yet the president declares that there is no debt crisis. As the excellent article by Stephen Hayes linked here explains, “And today, like everyday, the U.S. government will borrow another $4 billion.” That works out to about $120 billion a month and $1.5 trillion a year. No crisis though, right?
And from whom is our government borrowing all this mega money? For starters, not from me. I am not buying treasuries, especially at the artificially low interest rates courtesy Fed chairman Ben Bernanke. Well the answer is that, aside from the Chinese, there aren’t many takers. No problem though, the Fed simply cranks up the printing presses, prints up all the dollars the Fed needs, and uses the print run to buy up government debt. Yup, the Fed loads its balance sheet up with billions and billions of dollars of government debt month after month after month.
Sorry, I know this sounds like a fairy tale, but while I have taken a little liberty dramatizing my printing press explanation (really digital transfers), you’re getting a pretty square shake on what our president and the Fed facilitators are up to. Seems to me that those who voted for four more years of the most mismanaged economy in my five decades in this business are getting what they deserve. But payback is coming. It’s baked into the cake. Just check out the bubble prices of high-end Manhattan/Hamptons/Miami/Naples real estate. Breathtaking.
In my monthly strategy reports, I advise investors how to prepare for payback. At our family investment management company, we do all the heavy lifting for you. To wrap up the week, I alert you that Monday is going to be a big day at richardcyoung.com. I’ll bring you part two of my The Most Important Person in America You May Never Have Heard Of series and a look at the Cato Institute’s special program with Fred Kaplan, the author of The Insurgents: David Petraeus and the Plot to Change the American Way of War. I am well into Fred’s new bestseller, a must read for all Americans. See you Monday. And have a great weekend.