U.S. Economy Is Becoming A Ponzi Scheme

by JASmius



Am I truly a prophet, or is it just that obvious?:

The United States has evolved into a nation with a Ponzi economy, in which the continuous expansion of debt is the only thing that keeps prosperity alive, according to Federal Reserve critic John Hussman.

In his weekly commentary, Hussman, founder of the eponymous Hussman Funds family of mutual funds, said the U.S. economy appears fine on the surface, but that capital accumulation and labor force participation have buckled below – with dire prospects for the American future.

"Over time, growth in the standard of living is chained to and limited by growth in productivity," he wrote."

When the most persistent, most aggressive and most sizeable actions of policymakers are those that discourage saving, promote debt-financed consumption and encourage the diversion of scarce savings to yield-seeking financial speculation rather than productive investment, the backbone that supports a rising standard of living is broken."....

In recent years, he noted, "financial repression by the Fed has held interest rates at zero, discouraging savings while encouraging households to go more deeply into debt." The same mentality has allowed the government to go even more deeply into debt while expanding unemployment compensation and other assistance to obscure the damage.

"As long-term economic prospects have deteriorated, the illusion of prosperity has been maintained through soaring indebtedness, coupled with yield-seeking speculation in risky assets that has repeatedly (albeit not always immediately) been followed by crashes throughout history." [emphases added]

Mr. Hussman is really infringing on my gimmick, ladies and gentlemen.  Which means he's absolutely right.  And how much would you be willing to bet that the next crash will come within the next two years?  After all, the last one is what inflicted Barack Obama upon us to begin with; the next one could stick us with him forever.

Or, in other words, yes, it really is that obvious - to anybody actually paying attention.