Bob Chapman: US is creating a stealth default on its debt by continuing to issue massive amounts of money
Bob Chapman, of The International Forecaster, has been predicting economic chaos since the early 2000’s (actually, since well before that, but who’s counting?). Mr. Chapman suggests that the US economy is much worse off than most Americans realize and that a totaly system collapse is in our future.
There is going to be massive inflation and what China should be doing is dumping dollars by buying gold. They have not anticipated the fall in US stock and bond markets and the derivative bomb. American assets, including bonds, will get badly trashed. We wrote of all this in June of 2002, but no one was listening. We could not even envision the affects of mark-to-model and the worthless balance sheets of corporate America, particularly in the financial sector. Within four years and more likely in two to three years the US will default on treasury and Agency debt. That should take the dollar in USDX terms to 40. It is now just below 80. China obviously feels the yields offered on US paper on the long end are not worth the play. They have been buying bills instead in the short-term market that the Fed has to support. Today investors cannot conceive how bad this depression is going to get.
Mr. Chapman is not alone, with well known investors like Marc Faber and Peter Schiff leaning towards the inflation/dollar collapse scenario as well. The end-game plan for the Federal Reserve is to print so much money, that our outstanding debt is easier to pay off with devalued dollars. It’s much easier to pay off $2 Trillion in debt when there is more money in the supply.Â This may also have the effect of taking the stock market to new levels — perhapsÂ 15,000 or 20,000Â on the Dow Jones. Sounds great, right? Â The negative effects, of course, will be much higher energy, food and consumer goods prices. If the Dow Jones is at 20,000 in the next 3 years, then you can fully expect a gallon of gas to cost $8 – $10, your electricity bill to double and a loaf of bread “cheap” bread to be around $5. Your only protection, in real terms, as Mr. Chapman suggests, will be precious metals investments in gold and silver bullion, as well as precious metals mining stocks, which have performed very well during times of instability historically.
Don’t believe that this can happen to the US dollar? No fiat currency in history has survived the test of time. None.
Keynesian inflationism is so engrained in economic orthodoxy that it is very hard to get a dissenting view. 90% of economists and analysts work for large corporations, which more often than not are run by Illuminists. IF you speak out of line you are out of a job. That is why few disagree. We just did about 30 interviews on Fox News and we were told we would no longer be allowed on the network to speak on the Federal Reserve.
Considering that Peter Schiff’s TV bookings in the mainstream media are down about 75% this year, we tend to believe what Mr. Chapman is saying about being banned from Fox.
Read the full article from Bob Chapman here…
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Date: May 28th, 2009
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