debt per person

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sczech's picture
sczech
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debt per person
  1. Chris:

the quoted figures for debt per person do not make sense. You say in 1953, total debt per person was at $76,000. Today, the corresponding figure is at $183,000. But the graph suggests a debt increases by a factor of 20 which would mean that the population of the US would have grown by a factor of 10 during the past 50 years. We know that this is not true. So something is very wrong with your figures.

In your discussion, you do not consider the possibility that society at large consciously goes into debt with no intention of ever repaying this debt. Yet that is precisely what is happening. Since the late 1970's we know that the US economy is unsustainable - president Carter made that point repeatedly. We decided to ignore his warnings and continue business as usual hoping that a miracle will save us.

You claim in your discussion that there are only two outcomes possible for the present debt crisis. That is not true. There is a third option which you ignore. Interest rates are steadily decreased to rates approaching 0%. As long real interest rates stay at 0%, the debt crisis can be postponed indefinitely without default or hyperinflation. I believe that is the solution which will prevail. Moderate inflation together with slightly negative real interest rates will resolve the crisis long term. There is no reason why interest rates have to be 5%. How about 0.1% like in Japan? The "hockey stick" curve can easily be deflated by decreasing the interest rates.

Finally, regarding gold and precious metals as a storage device for wealth: The problem is that there is not that much gold around. The total amount of gold per person in the US is somewhere between 1 and 2 ounces of gold. At present market prices, the equivalent of less than $2000 per person which means that the option to escape from monetary crises exists only for a small minority. There is not enough gold for everybody. Same problem as with oil. There is not enough oil for everybody on earth. Not even enough for the US. The real problem is not debt. The problem is overpolulation. So advising people to go into gold creates only another bubble (the gold bubble).

To sum up, your series is excellent. Thanks for making it public.

Robert

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gimik
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?

szech:

regarding your comment about a third resolution to the debt crisis, interest rates are not a release valve without consequence.. in a scenario with ever decreasing interest rates, the value of the dollar is also adversly affected, creating additional inflation if not pushing the currency toward collapse.

as for your comment about over-population as the source of the issue.. that is half of the problem--the other half is not managing the production/consumption of that population properly with respect to its capacity (i.e. debt!). maybe i missed something in the video series, but i did not get the impression that martenson was advising people to invest in gold. obviously lots of people doing anything creates tidal/bubble effects that cannot be sustained. as i understood it, he was illustrating the historical ability of past currencies to rely on physical goods to back up value (an ability that was stripped from the dollar in the 70s).

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cmartenson
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The quoted figures for debt

The quoted figures for debt per person do not make sense. You say in 1953, total debt per person was at $76,000. Today, the corresponding figure is at $183,000. But the graph suggests a debt increases by a factor of 20 which would mean that the population of the US would have grown by a factor of 10 during the past 50 years. We know that this is not true. So something is very wrong with your figures.

 

HI there Robert.

 

I appreciate your eye for detail. What I did, and I admit this probably went by a bit too fast in the presentation, is I adjusted the figures for BOTH population and inflation. Obviously both have grown considerably since 1952.

Next, when real interest rates go below zero, as you mention, that creates the conditions for inflation, which, as I mention, I consider to be a form of official default. Inflation is just a way for the government to sidestep its obligations.

Finally, I do not consider the amount of gold to be any sort of a problem at all. Does it matter if we measure it in ounces, grams, or some new measures I'll call 'specks' and 'motes'?

No, not really. The main thrust of my series is that I want people to consider the possibility that it is not gold's measure in dollars that matters, but rather the dollar's measure in gold. Or oil. Or wheat. Or anything else tangible and limited. I honestly don't care which.

I do know that in a 6,000 year sweep of history there is exactly a zero % chance of your gold (or silver or wheat) becoming functionally worthless while there is a 3,800 to zero chance of you paper currency retaining it's value forever.

Chris Martenson, PhD.

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kcr2304
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Re: ?

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