I'm going to start with the budget deficit and the ever growing American debt. If you take $7 trillion and divide it by 260 million people you come up with roughly $27,000/man, woman and child of debt in this country. For a family of four that is roughly $110,000 worth of debt per family. At what point in time, do we begin to recognize that this debt can never be repaid? Most importantly, how many people truly understand that this debt will have to be repaid? The difference between Japan and the US is that the Japanese own their own debt and we don't. How we can be so bold and naïve to believe that we can dictate, to the rest of the world, what our interest rates will be, leaves me totally speechless. We may feel that we are in control but, wait until the time comes that the rest of the world is sick and tired of losing billions, if not hundreds of billions, on our worthless paper. When these countries decide to DUMP our paper, Mr. Magoo will be totally helpless in trying to keep interest rates from rising. There will be no slow rise, they will explode. With the sharp rise in interest rates the derivative crisis shall begin, if not already in full bloom, and the real estate market will be in shambles. This will all come about when the rest of the world realizes they no longer need the USofA to buy their goods. Everything they are doing now is solely to increase their sales to the insatiable US market. Al this at the expense of their own currencies and the future solvency of their own countries. When they realize they too are doomed, they will begin to sell with a passion.

With dirt cheap interest rates, we had the opportunity to build new competitive plants in this country. We could have made ourselves partially competitive with the rest of the world. Instead we build plants overseas!

We have given these foreign countries our technology and our jobs. Now read very carefully, WHAT DO THEY NEED US FOR? We have given them everything they need to now service themselves. They have brand new manufacturing facilities; there will be no more trade, of this nature with them. They can now do it themselves. So, not only did we outsource our jobs, forever, but we gave them the ability to make the goods, we once sold, by themselves. How stupid can we be? But wait, it doesn't stop here! Now that we have awakened more than one sleeping giant, we now have to compete with these people for the dwindling natural resources of the world. Why has oil prices gone up? The demand from China and India is going to continue to increase. We have guaranteed this. We have awaken two sleeping giants whose future needs could dwarf ours. The rest of the world is taking full advantage of our insanity. Do you really think Saudi Arabia wants oil prices to come down? Do you want your stock prices to come down? I don't, why should they want oil prices to fall, when they are having no trouble selling everything they can produce?

Now go one step further and figure out what they could do with the trillions of dollars that they will have in our worthless currency. One option is gold, which I am not going to get into, no question gold prices will skyrocket, another option deals with the assets in the United States that they will be able to buy out of bankruptcy, for a song and a dance. Who will own whom? WE have sold our souls to Wall Street! The Morons on CNBC just don't get it.

Since 1982, our country has experienced the best of all times. Sure, there were pitfalls along the way, but by far and away, Americans would tell you that their lives were better off. So how come we never paid our debt down? If things were so good then why did we continue to run deficits each and every year? Don't be confused with the theft from Social Security, which I spoke about in an earlier article. Through the whole period of time, all we could manage, was more deficits. I remember sitting at my desk at a brokerage firm in 1980 reading how our countries' debt hit $1 trillion for the first time. "Ronnie", really geared us up. He ran deficits like a crazy paper hanger.

My main question is, If we couldn't run a true surplus during the best growth period this country has ever had, then how the hell do we ever create a surplus when we are sliding off the face of the earth? Get my point! We can't! Worse than all of that is the fact, which we have now embarked on a policy, which will multiply the debt that has taken over two hundred and twenty-five years to build. The spigots are wide open.

Historically, we have never had a better opportunity to show true growth economically. With interest rates at all time lows we should be thriving in a way that is unequaled in history. Three years of declining interest rates would normally have fixed most economic problems, if the problems were normal to begin with. So why have we not seen any measurable results? Simple, we have not been addressing the true problem. The true problem lies in the fact that debt is reaching its final limits. The rubber band may be about to snap. Consumers are totally leveraged, our govt. officials need to be committed and corporations are no different. And the answers to these problems are "more of the same." This is like throwing gasoline on a forest fire.

What Magoo and Wall Street have failed to realize is that recessions are absolutely normal and should be welcomed in viewing the long term economic picture. Recessions occur when the economy slows down. One of the basic causes of recessions is the financial over extension of the consumer. This means the consumer takes time off and makes paying his bills a priority. Once he has paid his bills down, he will then find himself in a position to start spending all over again. Once he has gotten his bills paid lower interest rates would be a totally welcome sight. These morons postponed the paying down of debt, in an attempt to resurrect "the good old days" in the stock market, and the American consumer fell for it "lock, stock and barrel." They have yet to see the error of their greedy ways!

With the hundreds of billions in red ink that is being generated, sure there is a creation of jobs, but what kind of jobs are they?

My next article will deal with manipulation in the metals market. I'm sure you will find it interesting. The only question I have is, will you do what you need to do after reading it!

Mike Hoy
mhoy@neb.rr.com

4 June 2004