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"the bankruptcy of the united states"

  1. 24,765 Posts.
    The Bankruptcy of the United States
    By Porter Stansberry...

    Its one of those numbers thats so unbelievable you have to actually think about it for a while

    Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And thats not counting any additional deficit spending, which is estimated to be around $1.5 trillion.

    Put the two numbers together. Then ask yourself, how in the world can the Treasury borrow $3.5 trillion in only one year? Thats an amount equal to nearly 30% of our entire GDP. And were the worlds biggest economy. Where will the money come from?

    How did we end up with so much short-term debt? Like most entities that have far too much debt whether subprime borrowers, GM, Fannie, or GE the U.S. Treasury has tried to minimize its interest burden by borrowing for short durations and then rolling over the loans when they come due. As they say on Wall Street, a rolling debt collects no moss.

    What they mean is, as long as you can extend the debt, you have no problem. Unfortunately, that leads folks to take on ever greater amounts of debt at ever shorter durations at ever lower interest rates. Sooner or later, the creditors wake up and ask themselves: What are the chances I will ever actually be repaid? And thats when the trouble starts. Interest rates go up dramatically. Funding costs soar. The party is over. Bankruptcy is next.

    When governments go bankrupt, its called a default. Currency speculators figured out how to accurately predict when a country would default. Two well-known economists Alan Greenspan and Pablo Guidotti published the secret formula in a 1999 academic paper. The formula is called the Greenspan-Guidotti rule.


    At with "More" linking to the article at

    My comment:

    What I also found interesting is that the article on Jim Sinclair's site was titled "The Bankruptcy of the United States" and was "From the November 23, 2009, S&A Digest"

    The link takes us to the article at with a changed title - "This Little-Known Rule Could Send Gold to $10,000" and changed date - Dec 2 2009 9:10AM.

    There's also an assumption made in the article which has every chance of being completely false as the alleged gold holdings of the United States at Fort Knox have not been audited in decades:

    "The U.S. holds gold ... It has 8,133.5 metric tonnes of gold (it is the world's largest holder). At current dollar values, it's worth around $300 billion."

    My take on that is in the context of billions of dollars worth of bail outs and the US$3.5 trillion mentioned in this article, US$300 billion seems like a drop in the ocean.
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