There is little chance that the United States will go bankrupt, but investors would like higher returns to compensate for this weak economy and the fact is that we will never be able to repay the National Debt. We will just keep rolling it over and over at higher and higher interest rates. If America were a person, we would be a loan shark’s best customer. Also, if the U.S. were one big corporation and issued bonds, Moodys would rate them as true “Junk Bonds.” They aren’t good investments. Just a few months ago the treasury offered bonds for sale and only 20% were subscribed. As these bond rates rise, the higher interest is passed down the line to borrowers. This robs consumers of buying power. If we can’t borrow money, then we’ll have to increase taxes to raise more money than we expect to spend. This is what Hoover and FDR did and resulted in the Great Depression. In so many words taxes rob the producers in a country and any incentive to risk their money to expand business, to increase production or extend credit to customers and clients. The result is a rise in unemployment claims that this country cannot afford to pay. If we can’t borrow or tax, the only other choice we have is to create more money. This is easily done by the Federal Reserve by just printing  more and using it  to buy the U.S. Bonds that were put up for sale. This way we owe it all to ourselves. This sure fools the American public but not the International Community. Nixon tried this and uncoupled the U.S. dollar from the price of gold which caused the dollar to devaluate 10% overnight and oil prices doubled. It’s the same as robbing 10% from the savings of every American and every American’s retirement plan. After Jerry Ford tried to pick up the pieces, he passed this shattered economy that Nixon created to Jimmy Carter who decided that if you can’t beat’em then join’em. Carter’s inflation set new records driving gold, housing and silver prices through the roof. People that owned real estate made a fortune while the rest of America became poorer. That’s about where we are today. President OBama is going to have to create money to pay for programs we can’t pay for with growth, taxes or credit. Those of us that buy houses at today’s steeply discounted prices will reap fortunes as inflation takes hold.  By   positioning yourself today with these house prices we are seeing, we stalk like subprime submarines lying deep while the hurricane rages around us. No matter how stormy the seas become, we wait patiently in still waters and strike at will in the midst of  the havoc. Good Hunting!!!
 

Chris Yatooma, President