Where would the $600 goes ? Wal-Mart, targets, and more storage in the garage ? This is plain suicide…

I cannot agree with more of what Bud Conrad has to say about :

From the 1990s until today, Americans have maintained their life style by borrowing. As the American consumer is about to find out, the bill for that life style is coming due.

So where will that lead the U.S. economy? Simply stated, surveying the landscape of current events, many of which are a direct consequence of excessive debt and an inevitable slowdown in consumer spending, we expect stagflation ahead. Loosely defined, that term refers to a general economic slowdown – a recession – but coupled with rising prices triggered by massive infusions of liquidity into the market.

That liquidity can come from governments – witness the billions upon billions now being thrown into the fray by the world’s central banks – or it can come from, say, some percentage of the 6+ trillion in U.S. dollars held by foreigners coming home to roost. On that latter point, in recent weeks there has been almost daily news about foreign corporations and sovereign wealth funds unloading their greenbacks in exchange for shares in some of America’s largest financial institutions. Doug Casey has correctly pointed out that it is when the trade deficit starts to shrink, which it recently has, that you need to look for cover… because, among other things, it means the tide of U.S. dollars is beginning to wash back up on U.S. shores.

Our view that the stagflationary scenario is the most likely is supported by a steady stream of data. For instance, despite an obvious slowdown in 2007 holiday season shopping, the Bureau of Labor Statistics reports that producer prices in November increased at the fastest rate in 16 years.

We are fried ! This nation is gone…

Read more about what Bud Conrad has to say here.

This entry was posted on Sunday, January 27th, 2008 at 9:38 pm and is filed under ZMisc. You can follow any responses to this entry through the RSS 2.0 feed.