U.S.’s debtor status worsens dramatically
At the end of 2007, the U.S. net international investment position was minus $2.14 trillion. Thus, America’s net indebtedness with the rest of the world increased by $1.33 trillion, or 62 percent, during 2008. It was by far the biggest annual increase in data that go back to 1976.
Foreigners now hold nearly 50 percent of the federal government’s publicly held debt. If foreign investors significantly reduce their purchase of future U.S. Treasury debt securities, without even dumping their current holdings, U.S. interest rates could soar and the dollar could collapse, analysts fear.
Both the money supply and federal spending have increased at breathtaking rates over the past year, unprecedented in peacetime. The policy decisions made by the Federal Reserve Board and Congress virtually assure we will enter a period of 1970s-like stagflation.
The “green shoots” sighted by Field Marshall Bernanke this past Spring were a mirage. The 2010 economic “recovery” predicted by the same experts, authorities and financial boy scouts and cheerleaders who didn’t see the economic crisis coming is pure delusion. By 2012, even those in denial and still clinging to hope will be forced to face the truth. It will be called “Obamageddon” in America. The rest of the world will call it “The Greatest Depression.
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