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Wednesday, 7 August 2013

The Jim Rogers Blog: Shale Oil not enough to solve Americas Debt Problems

(more video)

Shale's Big Shoes to Fill

No kidding? In fact, we have done this analysis once before using Bill Gross's (PIMCO) numbers that puts US total debt closer to $100 trillion once all contingencies, guarantees  and other unfunded future liabilities are thrown into the pot. And that's present valuing related assets using today's long-term treasury rates. What happens when they double?

So what would it take to pay off the US debt - you would  think that one trillion barrels in  world -wide oil reserves would do it?  Under strict assumptions it does, but then how do you run the future economy? To be fair, this assumes too, that all US debt is owed to foreigners. It isn't. The vast majority is owed to other citizens that Keynesian economists believe we should  not fret about under the theory  - it is just money you owe  to yourself. That could be a hard one to explain to pensioners if one day that debt is cancelled for whatever reasons.

Still. we are on-side with Mr Rogers, as it is going to take a lot more than shale oil to pay the debt and keep the "physical economy" running for a few more decades. Think about it!

First Financial Insights 
August 6,2013 

Another set of NUMBERS

This is what happens when you ignore physical balance sheet accounting, before you know it - you have no national resources to physically pay back everything you owe to whomever. Keynes was right "in the long run we are all dead" and poor economic accounting and theory just assures that we get there so much quicker. 

Well at least Bill Gross gets it.

Dr Peter G Kinesa
August 7,  2013

This guy never will...

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