Raising The Debt
Ceiling Does Not Fix The Problem By Jim Sinclair|
July 20, 2011, at 1:20 pm
My Dear Friends,
The idea that an increase in the debt ceiling is a solution
to anything is nonsense. The event would be simply a can
kick forward for a very short period of time. Increasing
debt is not a solution to a debt problem. It actually makes
the problem worse It is an act of extending your Federal
credit card borrowing line so you can use it to pay your
mortgage.
Calling increasing the debt ceiling a solution to a debt
problem is too stupid to be stupid. The unwind is deeply
entrenched since the failure of OTC derivatives in 2008.
There has been no meaningful intervention in this economic
downward spiral at the level of the cause. The downward
spiral therefore continues unabated.
All downward spirals go to zero unless an intervention
takes place at the level of the cause of the problem in
the first place. OTC derivatives are what turned a four
year correction into the greatest economic accident in human
history.
OTC derivatives only go one way in size and that is up.
Changing the way nominal value is determined does not solve
the problem. All that does is add camouflage to the problem.
It does not solve it.
$1600 in gold is simply another round number which will
create drama, but no opposition to the increasing price.
Nothing additional is required for a higher price of gold.
The damage is done. The debt of the entire Western world
is beyond out of hand. The so called solution, just like
raising the debt ceiling, will be acts of kicking the can
down the road.
We have come to the end of the road. The result of no financial
discipline anywhere in the Western world is unfolding.
Gold will challenge $1764 where a hyperbolic price appreciation
will start.