The scary part of interviews like this is that the CNBC people clearly don't get it.
I went through this today; I was on the air for an hour talking about the gun debate and the debt ceiling (about half the time on each) and after doing the interview with the host the second call came from a nice old lady who proceeded to tell us that since the stock market had done so well if she had put her $100,000 in medicare taxes in there she'd have plenty of money and therefore the government had to pay up.
So I spent the rest of the show explaining a few things to the audience. Like, for instance, that if you are 20 now, and wish to retire at 65 (45 years), and we maintained the stock market returns from the 1980 timeframe to roughly 2000 (when it peaked) so you could "get the same returns" the DOW would stand at 651,017.
No, I didn't copy that down wrong. I merely asked if any of the listeners believed that would happen.
Next, I pointed out the ugly facts on federal medical spending (upon which I had spent most of the rest of the debate on) -- $53 billion in 1980 to $850 billion (approximately) in 2011 -- I don't have 2012 numbers yet.
At that same rate of growth (about 9%) if you're 50 and die at 85 (35 years) the Federal Government will spend $17.352 trillion on medical care in 2048 as you are gasping for your last breath.
Do you believe that will happen either?
Of course it won't.
The expansion of our so-called "economy" and "markets" has been driven by a gross public fraud -- the expansion of debt leverage and the replacement of economic surplus (that is, what you earn less what you must spend to remain alive) with borrowing against tomorrow's output.
But this is a Ponzi Scheme, since the repayment requirement lowers your available economic surplus for the second year, which in turn requires that you borrow even more to maintain the same standard of living.
The longer you do this the worse the economic outcome is when you stop.
Jim Grant gets this.
You can only conclude that either (1) the CNBC people do not, or (2) they do and they're intentionally lying.
Those are the only two possible explanations, because were they to understand it and speak honestly of it there is no possible way they could ever pontificate on "a new bull market" or "housing recoveries" or "GDP grew by 'x' and is expected to for the indefinite future" or any other such expression of indefinite exponential growth.
Ps: Mr. Grant is wrong about gold constraining the emission of credit. Were he correct there would have been no national debt during the time before Nixon closed the gold window. But there was. The issue is that this is an exponential function and those always appear to be benign at the beginning -- but they never, ever are later on.
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