Debt Cannot Be Ignored

A problem ignored is a problem solved has been the political solution in regards to debt for many years. The debt market has reached a point where the 800lb gorilla within the room can no longer be ignored; currency devaluation occurs under the back drop excessive money printing, debt issuance, and failing confidence.

The market is forcing its own solution to debt.

Total Credit Market Debt As A% GDP


The issuance of new debt is follow the law of diminishing returns.

Annual Gross Domestic Product (GDP) per Annual Total Credit Market Debt (TCMD):
Annual Income Growth per Debt Creation


Gold is acting appropriately to this development. Gold will continue higher when the fuel for the paper selling has been exhausted or swamped by incoming demand by new group of investors (stronger hands) that realize a problem ignored is NOT a problem solved.

Headline: Geithner says Congress must raise debt limit

Treasury Secretary Timothy Geithner said on Wednesday that there was no alternative except for Congress to raise the debt ceiling so that the government can keep borrowing.

"Congress has to do it. There's no alternative," he said in response to questions at a House of Representatives appropriations subcommittee.

He repeated a warning that it would be have "catastrophic" consequences for the economy if the debt ceiling was not raised and the country defaulted on its debt obligations.

Source: reuters.com