The Economy – Signs of Weakness, and Observations on America’s Debt Condition

The Economy – Signs of Weakness, and Observations on America’s Debt Condition

**PrudentHome Note/Request**: Please keep the Jim Rawles family (survivalblog.com) in your prayers as they are contending with the significant illness of Mrs. Rawles.

Signs of Weakness: Breitbart.Com today posted this Sara Lepro piece: “Signs of weakness in economy boost Treasurys”. The article discusses America’s debt condition via Treasury prices and here are some of the articles highpoints;

• “On Friday, a government report revealed more weakness in the economy, sending investors in search of safe-haven assets like Treasurys.
• “The Commerce Department said the nation’s gross domestic product, a measure of the economy’s total output, fell at a slower than expected pace of 1 percent in the second quarter. But the revised first-quarter GDP contraction came in much lower, at a 6.4 percent from 5.5 percent, the worst quarterly reading in nearly 30 years.
• “The report also said consumers cut spending by 1.2 percent in the second quarter, after a slight increase in the  previous three-month period.”
• “One of investors’ biggest concerns this year has been whether there will be enough demand to support the massive amounts of debt being pumped into the system to fund the government’s economic stimulus program. If demand were to continually fall short, the government would have to bump up the returns it offers investors on bonds in order to attract enough buyers. That could send borrowing rates higher on loans including mortgages.”

Observations on America’s Debt Condition: On 7/30/09, Mike Folkerth (King of Simple) posted  this on his blog (mikefolkerth.com): “Please Mr. Chinaman; Can you Spare A Dime?”. The article is an observation piece on American debt history and some of it’s consequences for today. Here are a few of Mr. Folkerth’s gems:

• “Thomas Malthus explained every negative aspect of unchecked population growth in 1798, including the relationship between diminishing per capita employment and population density. Along came the delusional likes of economist John Maynard Keynes and his buddy Franklin Roosevelt, who said Malthus was all wet and set out to prove it by enacting the New Deal; prove that is, that you really can run a finite planet on exponential growth, debt, and over population. Wrong.”
• “The pyramid scheme of massive social programs and increasing the non-productive sector of government under FDR (following Keynes guidelines) rocked along until the unfortunate 1970 catastrophic event of peak U. S. oil, which was a show-stopper for a country that based their entire existence on never ending domestic expansion and exponential growth (commonly known as , the buy now, let someone else pay much later without the benefit of natural resources, plan).
• Of course the above arrangement was designed to fail and certainly didn’t disappoint. The new scam that replaced exponential growth was one of fiat-debt-capitalism of exponential growth of debt under a non-backed paper money scenario. This plan was designed to faol abd once more did not disappoint even one little bit. After 39 years on the new fiat-debt-capitalism-plan, the U.S. has now run the debt-well completely dry and we have now lowered ourselves to begging the COMMUNIST CHINESE and ARABS for help!!! Bad, bad plan.”

Until next time: keep your eyes on the horizon as the weathers changing fast.