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A Rope of Sand: Sovereign Debt Defaults and You

Saturday, April 10, 2010, 10:35 AM
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The terminal phase of the game that we are all currently participating in, thanks to your local central social engineering firm (er, uh, I meant central bank), happens to be sovereign debt defaults.

The only open question is whether that default happens suddenly in the form of an actual default (like Argentina in 2001) or occurs a bit more slowly via the back-door default mechanism known as inflation.

You see, the worst-kept secret out there is that it is now mathematically impossible for real debt to be repaid in current dollars, at least not through any hopeful combination of growth and tax increases that a sober person could possibly concoct.

I really thought Jim Rickards of Omnis Research did a very nice job of expressing these ideas in this recent piece (and to whom the title of this report is credited):

 

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