These
changes transformed our economy and the nature of capitalism itself. No
longer would our economy be driven by investments fueled by savings. Instead,
our economy is funded by debt.
Debt of every kind has soared. Measured in inflation-adjusted dollars,
America's total debt has increased from $5 trillion in 1957 to more than $60
trillion today – a 12-fold increase. Meanwhile, our gross domestic product
has only increased from $2.5 trillion to $16 trillion, a six-fold increase.
As a nation, we've mistaken credit-fueled booms for true prosperity.
But
there is a major difference, of course. Credit must be repaid. While real
prosperity leads to greater abundances, increasing debt produces greater
burdens. The cost of servicing our debts has become so large that our
creditors now routinely buy our country's best assets using the debt-service
payments we send abroad. Ironically… the "butcher's bill" of
servicing our debts now includes the iconic building that launched America's
credit bubble.
On
August 16, the New York Times broke the story that One Chase Plaza was
for sale. JPMorgan Chase & Co., the successor entity to David
Rockefeller's bank, was shopping the building through CBRE, the international
commercial realty firm. Speculation at the time was that the building might
be converted into condominiums and fetch $1 billion. Yesterday, news broke
that Fosun bought the building for $750 million.
And
so… America has become just a little bit poorer. Our ability to generate
wealth has been marginally decreased. One of Manhattan's most valuable
buildings has been sold. The rents will now be sent overseas to China. The
real earning power of our currency has declined just a bit.
For now, the changes seem small and have such a minor impact that hardly
anyone notices. But the compounding nature of this shift in wealth is
incredibly powerful and very, very hard to stop. Over time… real wages will
continue to fall. Over time… our ability to service our debts without
additional inflation will erode. (That's why the Fed can't stop its
bond-buying program of quantitative easing.)
One
day, no one knows when, the world will simply decide that we're not
creditworthy anymore. We will have burned too much of the family furniture
trying to keep our house warm.
On that day, you won't want to be holding U.S. dollars or Treasury bonds… or
be dependent on the U.S. government. When that day comes, people will look
back on the sale of One Chase Plaza and realize… it was one of the last, most
obvious warnings, that something had gone badly wrong with America.
Regards,
Porter Stansberry
Baltimore, Maryland
October 18, 2013
Stansberry
& Associates Top 10 Open Recommendations
(Top 10 highest-returning open positions across all S&A portfolios)
As
of 10/17/2013
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