Debtor Nation

http://www.kitco.com/ind/Turk/turk_apr052010.html ^ | April 5, 2010 | James Turk

[mlocher]

Only a few decades ago, the United States was the world’s largest creditor nation. American capital spanned the globe financing all types of investments in virtually every country. But that dominance began to erode in the 1960s because growth in consumption in the United States was starting to outpace new production. Wealth built up over generations was being consumed.

To compensate for the resulting decline in living standards, the nation turned to debt, rather than hard work and savings. This trend continued through the next decade. A focus on consumption and a seemingly unstoppable reliance on debt at all levels of American society had become the dominant force in economic activity.

By the 1980s, the inevitable happened. As generations of accumulated wealth disappeared, a line was crossed. America now owed more to the rest of the world than the world owed to it. The United States had become a debtor nation, and it has continued to run up the tab in the decades since.

The mindset of policymakers today continues to be one of debt and consumption instead of savings, investment and production. We see this way of thinking in their pronouncements and actions. Worryingly, the tipping point appears to have been reached. Not only is the United States living beyond its means, it is now borrowing beyond its means, as graphically illustrated in the following chart prepared by Nathan Martin. http://economicedge.blogspot.com/

[mlocher]

There is a great chart embedded in the article at the web site. It shows 40 years of the ratio of GDP to debt ratio, with that ratio heading linearly south. The 2H09 has a "falling off the cliff" look to it.

[familyop]

"Only a few decades ago, the United States was the world’s largest creditor nation. American capital spanned the globe financing all types of investments in virtually every country. But that dominance began to erode in the 1960s..."

That's true, and it's one of the reasons that the new dishonesty and hysteria in political speech angers me. It's cover for thieves who betray their country while regulating and legislating against competition in many ways.

[familyop]

BTW, relief from big government and its robber-boss favored constituents could come after the default. ...depends on how we, as voters, handle that most worthy timing opportunity for doing something political. Will we support political correctness then, as Argentina has? Or will we, as Americans, acknowledge our mistakes and do as our forefather did (get moral and right)?

[Jack Hydrazine]

How do you protect yourself against the coming default? Buy gold? Stock up on food?