Comstock Partners, Inc.January 27, 2010
"The Total Debt to GDP Trumps Everything Else" was superb.
"The Total Debt Relative to GDP Trumps Everything Else" was superb. Henry Van der Eb, portfolio manager for the Mathers Fund (whom you probably know, given that you are both part of the Gabelli group) got me stewing about the consequences of excessive total U.S. debt more than ten years ago; and he still pounds the subject in every quarterly report to stockholders. For most of that time I presumed excessive federal debt would lead to serious inflation, perhaps even hyper-inflation as described in Harry Figgie's book, Bankruptcy 1995.
The case for deflation now seems more credible than the case for inflation - and WHAT could be much more important for investing than getting that projection right!
Thanks for sharing your knowledge on so important a subject.
John Maudlin, author of the "Outside the Box" newsletter, just covered the same subject with the same conclusions. Now the question may be, "If enough people understand what dangers they are headed into, will their collective response mitigate the problem, or will it just exacerbate the problem?" Chew on that during your next flight.