Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
WESTERN DIGITAL WDC Stock Trend Analysis - CHIA! - Risk 1 - 23rd Jun 21
AMC Is the Best-Performing Stock in America: Don’t Buy It - 23rd Jun 21
Stock Market Calling the Fed‘s Bluff - 23rd Jun 21
Could Bitcoin Price CRASH Target A Bottom Below $7500? - 23rd Jun 21
Bitcoin and cryptos: Your 'long-term investment'? - 23rd Jun 21
Unlocking The Next Stage Of The Hydrogen Boom - 23rd Jun 21
USDT Ponzi Scheme FINAL WARNING To EXIT Before Tether Collapses Crypto Exchange Markets - 22nd Jun 21
Stock Market Correction Starting - 22nd Jun 21
This Green SuperFuel Could Change Everything For the $14 Trillion Shipping Industry - 22nd Jun 21
Virgin Media Fibre Broadband Installation - What to Expect, Quality of Wiring, Service etc. - 21st Jun 21
Feel the Inflationary Heartbeat - 21st Jun 21
The Green Superfuel That Could Disrupt Global Energy Markers - 21st Jun 21
How Binance SCAMs Crypto Traders with UP DOWN Coins, Futures, Options and Leverage - Don't Get Bogdanoffed! - 20th Jun 21
Smart Money Accumulating Physical Silver Ahead Of New Basel III Regulations And Price Explosion To $44 - 20th Jun 21
Rambling Fed Triggers Gold/Silver Correction: Are Investors Being Duped? - 20th Jun 21
Gold: The Fed Wreaked Havoc on the Precious Metals - 20th Jun 21
Investing in the Tulip Crypto Mania 2021 - 19th Jun 21
Here’s Why Historic US Housing Market Boom Can Continue - 19th Jun 21
Cryptos: What the "Bizarre" World of Non-Fungible Tokens May Be Signaling - 19th Jun 21
Hyperinflationary Expectations: Reflections on Cryptocurrency and the Markets - 19th Jun 21
Gold Prices Investors beat Central Banks and Jewelry, as having the most Impact - 18th Jun 21
Has the Dust Settled After Fed Day? Not Just Yet - 18th Jun 21
Gold Asks: Will the Economic Boom Continue? - 18th Jun 21
STABLE COINS PONZI Crypto SCAM WARNING! Iron Titan CRASH to ZERO! Exit USDT While You Can! - 18th Jun 21
FOMC Surprise Takeaways - 18th Jun 21
Youtube Upload Stuck at 0% QUICK FIXES Solutions Tutorial - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations Video - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations and Trend Analysis into Market Correction - 17th Jun 21
Stocks, Gold, Silver Markets Inflation Tipping Point - 17th Jun 21
Letting Yourself Relax with Activities That You Might Not Have Considered - 17th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21
AI Stocks Strength vs Weakness - Why Selling Google or Facebook is a Big Mistake! - 14th Jun 21
The Bitcoin Crime Wave Hits - 14th Jun 21
Gold Time for Consolidation and Lower Volatility - 14th Jun 21
More Banks & Investors Are NOT Believing Fed Propaganda - 14th Jun 21
Market Inflation Bets – Squaring or Not - 14th Jun 21
Is Gold Really an Inflation Hedge? - 14th Jun 21
The FED Holds the Market. How Long Will It Last? - 14th Jun 21
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Is There Really a Debt Crisis?

Interest-Rates / Global Debt Crisis Jun 13, 2010 - 01:40 AM GMT

By: Clif_Droke

Interest-Rates Best Financial Markets Analysis ArticleOne of the most debated topics today concerns the level of debt as it concerns consumers, corporations and governments. Government debt has commanded a particularly large share of the limelight in recent weeks. Among those who are concerned that debt levels have reached "crisis" proportions, there's seems to be a consensus that the debt balloon has reached well night the bursting point, and further, we have reached the point of no return when it comes to the servicing of the debt.

In this installment we'll examine the issue of debt and will address the particular issue of whether in fact we've reached the "point of no return" in terms of being able to pay off the debt. From the standpoint of arithmetic, one could easily construct a one-sided case against today's high levels ever being paid off. The mathematical approach, however, is too narrowly hyper-literal to be admitted to any reasonable assessment of the debt situation. For a true picture of how the present debt problem is likely to end, we must consult the history books. One would be hard pressed in surveying history to find a single instance of an empire or great nation that ever completely extinguished its debt in the honest sense of the word. Indeed, most debt is ultimately serviced through either one of two ways. Regardless of the chosen path, debt is always eventually "serviced," as we shall see.

The mainstream media has had an extended field day in stoking the public's fear over the debt "crisis." At some point a few years ago, the media gatekeepers decided that debt levels were "too high" and that something must be done to combat this problem before it carried everyone away to economic perdition. Specifically, we're told that existing debt must be completely amortized before America can see anything in the way of economic recovery. Like most of the ideas propagated by the mainstream press, this is a fallacy.

Another fallacy that enjoys currency is that today's must be extinguished, else the burden upon posterity will prove to be crushing. In his classic treatment of the pathological aspects of debt, Freeman Tilden ably answered the question, "Does posterity pay for our debts?" Presenting the question as a syllogism, he wrote:

1. We are posterity.
2. We do not pay.
:. Posterity does not pay.

"It is obvious that we, the present generation, are somebody's posterity. Our progenitors left us a rather burdensome debt, a public debt composed of national, state, country and municipal obligations," wrote Tilden in "A World in Debt." "And it is interesting to note that those who create great public debts, on the grounds that posterity will enjoy the fruits of the expenditure, never thinks it necessary to wait until posterity can exercise its own choice as to what benefits it prefers to enjoy."

As Tilden said, we are posterity and while we do pay in an extremely limited way, we clearly don't bear most of the previous generation's burdens. "What we do," says Tilden, "is to keep the service upon the debts from default -- and this, most fortunately, we are sometimes able to do by reason of the constantly increasing facilities of modern production, and by modern deftness in the use of credit in commerce. But, further than that, we are naturally intent upon spending a little money ourselves....We borrow against the payment by our posterity. You may be utterly certain that if our posterity are not stopped in some singular way, they will rely upon their posterity to settle. And so it goes."

Much lip service is given to the "day of reckoning" which looms over the debt-plagued U.S. like the Sword of Damocles. What most debt alarmists seem not to realize, though, is that the day of reckoning never arrives. Debt has a peculiar way of being extinguished without the due fulfillment of the obligations on the part of debtors. As the French writer Maurice Vion wrote in 1932, "The State, a debtor of private always armed with the prerogatives of public power. It can, whatever its creditor, call upon the limits of its capacity of payment, or simply choose not to pay. In the final analysis, the execution of force [in calling upon the State to pay] has little effectiveness against the State." [Source: Dettes Politiques et Dettes Commerciales, translation mine]

As Freeman Tilden wrote in commenting on the government's prerogative of debt cancellation, "Every government borrowing, therefore, carries with it the political germ from which a repudiation may more easily develop than in loans to individuals." This is an extremely important point that seems to be overlooked by debt crisis commentators.

In his book, "Jubilee on Wall Street," David Knox Barker details the Roman debt crisis of A.D. 33 as chronicled by Lightner. The crisis began by a series of money panics attended by a number of runs on Roman banking houses. The crisis was solved by the emperor Tiberius, who "suspended temporarily the process of debt and distributed 100 million sesterces from the imperial treasury to the solvent bankers to be loaned without interest for three years. Following this action, the panic in Alexandria, Carthage and Corinth quieted." Indeed, history is rife with instances of the "temporary" suspension of the process of debt. Debt suspension is in fact one of the primary tools by which debt crises are alleviated.

Citing the experience of the Roman Empire in attempting to outlaw usury, Tilden comes to the conclusion that "if a man could have the longevity of Methuselah, it would pay him to be never out of debt, for he could count on a political upheaval which would relieve him of his burden every so many years." In the final analysis, as Tilden concluded, debt will likely never be prohibited and there will always be "credit crises" followed by debt cancellations in which the creditor class is mulcted.

If history teaches us any lesson it is that debt levels at any given epoch are always "too high." The contraction of debts on the part of individuals, corporations and governments beyond their ability to pay them is an unfortunate tendency of human nature and will most likely always continue to plague the human race until the end of time. Even more unfortunate, there will always be a tendency for the creditor class to continue to loan their capital to unworthy borrowers (including governments) under the fallacious assumption that others know best how to return a profit on money that they themselves accumulated through their superior efforts. In consequence of this, there will always be the established tendency for debtors of all classes to find ways of not paying their debts due their creditors.

As Tilden would say, "And so it goes."

Gold Price Trend

Turning our attention to the yellow metal, the gold ETF price was down for three straight trading sessions this past week before finally bouncing higher on Friday, June 11. The lack of buying interest was attributed to a diminution of fear and safe haven buying on the part of investors, particularly as the euro currency has been rallying of its recent lows. But the trend for the euro remains down as defined by the relationship of the price to the 15-day moving average; conversely, the gold price trend remains up. The SPDR Gold Trust ETF (GLD, 120.01), our proxy for the gold price, remains above its 15-day and 30-day moving averages (which correspond to the 6-week cycle) and successfully tested these important trend lines as you can see in the chart here. The uptrend remains intact for the gold price.

How to Trade the Most Profitable Chart Pattern

One of the most profitable chart patterns is also one that receives virtually no recognition from market technicians. The pattern I’m referring to is the “channel buster,” which can be either a bullish or a bearish pattern depending on how it manifests in the charts of actively traded stocks and commodities. This highly profitable pattern was aptly named by stock market veteran Don Worden, editor of Worden’s Weekly Reports. As its name implies, the channel buster involves a price breakout (or breakdown) either above or below the outer extremity of a trading channel.

The channel buster can be highly profitable if you know how to spot it. It’s a chart pattern that is commonly seen in bull markets and bear markets alike and is the ultimate “all weather” money maker for short-term oriented traders. In my book, “Channel Buster” How to Trade the Most Profitable Chart Pattern,” I explain the mechanics of this amazing chart pattern and how you can spot it an almost any actively traded stock or commodity. The book also provides rules for entering and exiting a trade based on the channel buster method. This is the only book available that deals exclusively with the channel buster. The channel buster is a breakthrough in the trend analysis of stocks and commodities.

The book was written so that retail traders might be able to understand and practically apply these useful methods of market analysis. The book is now available for sale at:

By Clif Droke

Clif Droke is the editor of the daily Gold & Silver Stock Report. Published daily since 2002, the report provides forecasts and analysis of the leading gold, silver, uranium and energy stocks from a short-term technical standpoint. He is also the author of numerous books, including 'How to Read Chart Patterns for Greater Profits.' For more information visit

Clif Droke Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


christian pickett
13 Jun 10, 07:13
creditors have the political power

in this finanicial crisis was it not clear to you where the political and thus economical power was held.....with CREDITORS

Post Comment

Only logged in users are allowed to post comments. Register/ Log in