A Sea of Debt

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A Sea of Debt, BY TONY ALLISON

Excerpts:

Outwardly, the global economy has never been stronger. Historically however, economic excesses are praised and welcomed as the bubbles expand. Everything is just wonderful until one day it isn’t. But then it is one day too late. The tipping point is unknowable of course, but when it arrives, the markets just might react too quickly for an investor to calmly ponder his or her next move. Debt of this magnitude is like a tattoo; fun to have at first, but one day you realize it’s all a huge mistake. And tattoo removal, while painful and expensive, may be much easier than eradicating a debt burden that is on an exponential growth curve.

The solution is not to go the ostrich route and ignore the problem, but to take prudent action while you go on about your life. The drill should be familiar. While Uncle Sam can’t get out of debt, the average citizen would be well advised to do so, or at least lower one’s debt profile. Next would be to invest in areas that will mitigate against rising inflationary trends, such as the natural resource sectors and other tangible assets. Thoughtful, ongoing preparation is the key. It’s somewhat analogous to getting punched in the mid-section. If you know its coming and prepare yourself, the punch may hurt a bit, but it’s manageable. If you are totally blind-sided, you end up writhing on the ground, gasping helplessly for oxygen. If you believe inflation will be a major issue in the years ahead, now is a good time to get started on protecting yourself.

Noting the aforementioned wisdom of Warren Buffett, when the great global tide of liquidity finally ebbs into reverse, make sure you are one of the forward-looking swimmers dressed for the occasion.

“No generation has a right to contract debts greater than can be paid off during the course of its own existence.” George Washington to James Madison, 1789.

U.S. NATIONAL DEBT CLOCK

Excerpt:

The estimated population of the United States is 301,889,062
so each citizen's share of this debt is $29,219.27.

The National Debt has continued to increase an average of
$1.38 billion per day since September 29, 2006!

Comment: As one trained in Economics and Finance, the national debt concerns me. Our politicians do not care about this!