What are the ramifications of "debt explosion" in the Western world today? That’s the question that Niall Ferguson, Harvard Professor of History and Business Administration sought to answer recently.
The United States is actually worse off than the PIGS (Portugal, Italy, Greece, and Spain)
He said that in the coming years, "debt-GDP ratio …for the United States the equivalent figure is 450 percent. You don’t need to have a PhD in economics to see that that’s actually worse than all of the PIGS."
The illusion has been that the United States is something of the tallest midget in the room, but really, it’s just the fattest midget in the room. It has debt problems at least as bad as the worst in Europe. The only reason we’ve been saved from default is — as Professor Ferguson says, "we’re not in a monetary union with the Germans, and we can therefore print our way out of this."
He goes on to say,
"Maybe one of the lessons of history is that periodically paper currency loses credibility so much that we have to revert to commodity standards, and I think that may well be happening. When you look at what’s happening in the gold market, it’s not so much fundamentals that are driving gold up from a $1,000 towards $2,000. It’s a fact that more and more people feel that they should hold gold as perhaps 10 percent of their portfolios. If everybody thinks that, if that becomes a standard investment strategy, then gold is going to go a lot further than its present price. So I’ve really re-thought my attitude towards gold almost on that momentum basis."
Professor Ferguson happens to be in agreement with Ian Wyatt, Chief Investment Strategist of Wyatt Investment Research.
Ian recommends trading in your increasingly worthless dollars for profitable gold and oil companies. It’s not just a hedge against failing currency – it’s a way to vastly add to your net worth.