JMR Terry L sent an interview with Dr
Steven Keen, who can be found at debtdeflation.com
and who is an economist for the University of West
Sydney. He "specializes in long term
macro-economic trends with expertise in debt
deflation, a rare economic and monetary process
now taking place in the US, UK, Australia and
other countries".
Dr Keen says, "Notice
that the USA's debt to GDP ratio peaked at 215% in
1932 - three years after the Great Depression
began - having been 'just' 150% when the Great
Crash occurred."
If you are like me, then
you are instantly bored with this history lesson
crap, and you are anxious to either learn how to
make a lot of money as fast as possible, or get a
burrito and a couple of
yummy
tacos as fast as possible. It's an "either-or"
situation utterly devoid of historical education.
But again we seem to have been too hasty
in dismissing Dr Keen so cavalierly, as he deftly
connects us to what happened 70 years ago, and
says, "For the record, the USA revisited the peak
for the non-financial debt to GDP ratio in 2005",
and even worse than that, the real record was
broken a long time ago, as "the ratio including
the financial sector debt exploded past even the
Great Depression's peak in 2000." Yikes! Higher
than at the height of the Roaring Twenties!
I immediately thought, "Hmmmm! I wonder
what is the level of non-financial debt to GDP
right now?", and cleverly figured to use this
query as a way to insert myself into the spotlight
by asking that very question, and maybe pitch a
few theories of my own, to kind of show off.
But no sooner did the plot hatch in my
mind than he answers, "It is now 278%, versus 150%
in 1929, and 215% in 1932." My brain was
immediately stunned at the revelation, and as if
in a dream I heard him go on to ask, "Why is the
US economy crashing?" and "Why now?"
I was
afraid that he was asking me, and I had no idea.
So I was relieved when he answered his own
questions by writing, "The answer is, simply, that
the world has never in its history carried the
level of debt that it is carrying today. The
remedies that worked when America's private debt
to GDP ratio was a mere 150% are inadequate when
that ratio is 275%."
Instantly, my keen
Mogambo Analytical Brain (MAB) discovers that as
interesting as this is, it is still some stupid
history lesson that has neither profit nor lunch
potential, and I am wasting my Valuable Mogambo
Time (VMT).
Again, I find that I may be
too hasty, as he says, "The real fun on the
markets will begin in three months' time," because
this is when all the new credits extended "by the
expansion of the liquidity window" is supposed to
start being repaid. Hahaha! Like THAT will happen!
Hahahaha! Fun! Hahaha!
The only fun that
will be had is when gold, silver and oil go to the
freaking moon that you get so rich that can you
Super-Size those fries at every meal! Whee!
So why isn't gold going like gangbusters
right now? A lot of people have a lot of theories
as to why gold is going down, when the theory and
the entire history of economic mankind say it
should be going up, and most of them are right, to
one degree or another, as there are as many
reasons for acting as there are actors, and there
are 8 million stories in the naked city.
I
think that most of them involve ordinary
stupidity, and my Personal Mogambo Theory (PMT) is
that some powerful, rich people one day woke up in
a cold sweat after having a nightmare about how in
the hell they are going to pay their bills when
food, living expenses, bribes, corruption and
everything connected with being rich and powerful
are going up and up, until it seemed like a cancer
that was eating away at the body economic, and
they realized, "Oh, my God! That Raving Lunatic
Mogambo (RLM) was right! I've got to get me some
gold, right now!"
But instead of going out
and buying gold at the market price, they make
some phone calls to make sure that the price of
gold goes down before they buy. And since this
new, powerful theory of mine involves scumbag
politicians, corrupt bankers and money, I figure
it must be true.
Like I said; there are 8
million stories in the naked city, and this is one
of them.
Richard Daughty
is general partner and COO for Smith Consultant
Group, serving the financial and medical
communities, and the editor of The Mogambo Guru
economic newsletter - an avocational exercise to
heap disrespect on those who desperately deserve
it. (
Republished with permission from
The Daily
Reckoning .
Copyright 2008, The Daily
Reckoning.)
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
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