Great Depression Online Archive Issue:

An Ominous and Profound Symbol of Things to Come

Great Depression Online
Long Beach, CA
July 24, 2009

Inside This Issue You Will Discover…

*** Becoming Wealthier, Smarter, and Younger
*** The Next Bubble
*** An Ominous and Profound Symbol of Things to Come
*** And More

Becoming Wealthier, Smarter, and Younger

There’s nothing like an inflating market bubble to soften the brains and warm the hearts of men to ideas that would otherwise be impossible.  There’s no time to think, you see, when you can get something for nothing…when the Holy Grail is within reach…

Who didn’t like to check their stock portfolio back in the late 1990s each day and see that – once again – it had gone up?

And why wouldn’t it have gone up…it was a New Era.  The internet was making us all rich.

Mutual fund investors fancied themselves as Warren Buffett protégés.  With each inflated quarterly statement they felt wealthier, smarter, and younger too.

~~~~~~“The Fleecing of America”~~~~~~

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~~~~~~~~~~~~~~~~~~~~~~~~~

And during the recent housing bubble just by living in a house…you became rich.  For house prices always go up.  Everyman was Donald Trump.  It was a marvelous time to be alive.  The smartest among us knew just exactly how to parlay it… 

They cashed out their home equity and ‘put it to work’ in the stock market.  What could possibly go wrong?

The Next Bubble

How things have changed.  The stock market, after all, turned out to not be as advertised.  And the millionaire next door just had his house foreclosed on.

What’s more, in the midst of the worst economic crisis since the Great Depression, the President throws like a girl and wears mom jeans.  Not only that, he’s hard at work inflating the next bubble.  In fact, the next bubble may already be here…

‘“The U.S. government is largely deranged,”’ explained Marc Faber, editor of the Gloom Boom & Doom Report, to Moneynews.com’s Dan Mangru last week.

He was commenting on the next bubble, which, according to Faber, “is already here.”

“This time it’s government spending and fiscal deficits….”

To consider government spending a bubble is a clever insight to say the least.  Yet why shouldn’t government spending be considered a bubble?

Like other manias, the government’s obsession with expanding fiscal deficits has reached bubble territory.  Just this year, they’re spending $1.8 trillion of future tax payer revenues…four times last year’s record deficit.  And like other bubble’s it can only expand for so long before it must contract.

In this instance, the government will only be able to increase fiscal deficits until inflation takes hold and interest payments spike up.

An Ominous and Profound Symbol of Things to Come

While government spending is increasing, the Federal Reserve is trying to stimulate the economy by lending out money to the big banks for practically free.  The Federal Reserve wants the banks to lend out this cheap money to businesses, home buyers, and whoever else.

So far the banks, after being devastated by wave after wave of bankruptcies and defaults, are actually doing their job…they’re considering the borrowers future ability to repay a loan.  And when the banks gaze out into the current economic landscape, they see more unemployment, bankruptcy, and default.  Thus they hold the Federal Reserve’s cheap money back from the real economy.

Yet even if the money does eventually make it into the real economy, we presume it won’t flow entirely back into the housing or jobs market like the government would like.  Rather, it may inflate food, energy, and essential living items…inflicting misery on all who live paycheck to paycheck.

Or, as can happen to over indebted economies with dwindling asset values, the money could get sucked into the vortex of deflation…where government deficits continue to expand, causing the Federal Reserve to print money to buy government debt.  In this instance, which we seem to be tail spinning into more by the day, we could be in for a long nauseating economic slog…

For example, in 1992, following Japan’s protracted credit induced asset bubble, President George H.W. Bush, while visiting in Japan, leaned over to Prime Minister Kiichi Miyazawa, perhaps to whisper some ancient Yankee secrets for orchestrating a financial bailout.  Then, in an ominous and profound symbol of things to come, he barfed on his lap.

Japan’s economy has yet to recover.

Sincerely,

M.N. Gordon
Great Depression Online

P.S.  While the rising tide of a market bubble won’t make you any younger, some folks in their 40’s, 50’s, 60’s and beyond are enjoying better health, greater strength, and juicier sex now more than ever before.  Don’t settle for “golden years” when your “glory years” are still waiting for you.  Learn how to Turn Back the Clock.

 

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