Richard Russell – 2013 & The Greatest Bubble In World History
January 1, 2013
With 2013 now upon us, the Godfather of newsletter writers, Richard Russell, told his subscribers they are now living through the greatest bubble in history. Russell also discussed gold and the important breakout in the closely-watched VIX. Here is what Russell had to say in a note to subscribers: “You and I are watching, or I should say living through, the greatest bubble in world history. What could it be? Is it the world population growth? Is it the explosion of world communication? Is it the progress in health?”
Richard Russell continues:
“It might be any one of those, but no — it’s the credit bubble. Think of it. The US now has a national debt of over $16 trillion. That doesn’t include incurred debt that is not on the books. The question is — how will this enormous debt ever be handled? (1) It might be refinanced, meaning that it might be (if possible) kicked down the road like an old tin can.
(2) It might be reneged on, which would be a default (unthinkable, since this would be an admission of sovereign bankruptcy. (3) The debt could be addressed through devaluation, meaning destroying the purchasing power of the dollar. The third is by far the most likely way that the debt will be addressed, since we are already on this path. Politically, it is the most palatable way, since it is the way that attracts the least attention from the voters.
Right now sophisticated investors are protecting themselves from the diminishing purchasing power of the dollar. How do they do it? Easy, they swap their Federal reserve notes for tangible items of value — million dollar apartments in New York, fabulous works of art, rare gems and jewelry, property such as thousands of acres in New Mexico or Montana, classic automobiles such as rare Ferraris or Mercedes, hundreds of acres of arable farmland, collectibles, and silver, platinum and gold.