I just finished reading John Mauldin’s weekly newsletter. He has a very interesting graph that I’m reproducing below.
This year there’s an expected $5.3 Trillion dollars in new sovereign debt issuance! He asks a great question – where is this money going to come from? Most of this money is going to bank bailouts and increased government spending. The resulting decrease in imports and increase in government spending will of course make our GDP look rosier than it actually is. So there’s a good chance we’ll hear news reports of the economy improving even though there’s absolutely no improvement whatsoever!
So even though I’m concerned that the US is printing money hand over fist, it seems everyone is just doing the same thing. Unfortunately, we’re “winning”. I still think we’ll see hyperinflation during this cycle and even though the USD may not weaken against foreign currencies, it should depreciate against real assets like gold and silver, and towards the tail-end of the cycle maybe real estate too. I strongly doubt we’ll see any sort of quick recovery any time soon. And if you want to read an entertaining article on why you should short the US, proceed on to Ahlgren Multiverse.