So much said, its hard to know where to begin: so I guess I’ll start with the first sentence:

“The chart at the top of this article is the S & P 500 for the last ten years. As you can clearly see, if you had all of your money in an index fund you would be right back to where you started from ten years ago. So it appears that the only way America can grow wealth is by creating low interest-fueled financial bubbles.”

It may appear that way to you, but couldn’t you grow wealth by managing your investment in the index and not simply liquidating it after ten years when it is at a cyclical low? How does the cyclical nature of a specific index mean that wealth is not created?
What about growing wealth through fiscal policy (tight or loose)? And what if you didn’t have your money in an index fund, couldn’t you grow wealth through operating a business or investing elsewhere?

So much said, its hard to know where to begin: so I guess I’ll start with the first sentence:

“The chart at the top of this article is the S & P 500 for the last ten years. As you can clearly see, if you had all of your money in an index fund you would be right back to where you started from ten years ago. So it appears that the only way America can grow wealth is by creating low interest-fueled financial bubbles.”

It may appear that way to you, but couldn’t you grow wealth by managing your investment in the index and not simply liquidating it after ten years when it is at a cyclical low? How does the cyclical nature of a specific index mean that wealth is not created?
What about growing wealth through fiscal policy (tight or loose)? And what if you didn’t have your money in an index fund, couldn’t you grow wealth through operating a business or investing elsewhere?

You have often talked about the gargantuan increase in the US National debt and even U.S. Treasury Secretary Tim Geithner howls about it – at least publicly. Which stands at $12.1 trillion on the last reading?

But don’t you think that it is deep-seated belief not only in this Administration , but also all the previous ones that increasing the debt of the U.S., however, is the best way to get the jumpy and jolty economic times and flourish while doing so.

Everyone, including yourself, is worried that borrowing more money will make the dollar weaker. But that reality is already here. Though America is hell bent on the idea that it is best now to borrow the money when the interest rates are low. It thinks that it is best to borrow when money is cheap.

Everyone asks, “How would America pay back this debt?” But, that questions I don’t think bothers the American administration , because right now borrow as much as you like – and this borrowing itself over a period of from two to six years will substantially weaken, and hopefully even reduce the value of the dollar in half compared with a basket of other currencies. Another way to put this is that in real value, the American debt would get reduced in half.

This is what America did in 2001 or perhaps in 2002 and went on to fight the trillion dollar Iraq war.

Consequent to this trickery that America tries to live on free lunch (such as the petrodollar concept) many countries will stop lending to the US. Though this hasn’t happened as yet, despite the repeated use of this method. In this whole game, however the foreign countries that lend America the money will end up as losers.

But one remarkable thing that has happened is that China reduced its holdings of US government debt by the largest margin in nearly nine years in June, according to data from the US Treasury.

China is worried about this, and fears the stimulus efforts will fuel inflation in the US, reducing the value of the dollar.

You would remember U.S. Treasury Secretary Timothy Geithner in June of this year stated “Chinese assets are very safe,” Geithner had said it in response to a question after a speech at Peking University. And his answer drew loud laughter from his student audience, reflecting scepticism.

Omer Ismail

Basle Switzerland

You have often talked about the gargantuan increase in the US National debt and even U.S. Treasury Secretary Tim Geithner howls about it – at least publicly. Which stands at $12.1 trillion on the last reading?

But don’t you think that it is deep-seated belief not only in this Administration , but also all the previous ones that increasing the debt of the U.S., however, is the best way to get the jumpy and jolty economic times and flourish while doing so.

Everyone, including yourself, is worried that borrowing more money will make the dollar weaker. But that reality is already here. Though America is hell bent on the idea that it is best now to borrow the money when the interest rates are low. It thinks that it is best to borrow when money is cheap.

Everyone asks, “How would America pay back this debt?” But, that questions I don’t think bothers the American administration , because right now borrow as much as you like – and this borrowing itself over a period of from two to six years will substantially weaken, and hopefully even reduce the value of the dollar in half compared with a basket of other currencies. Another way to put this is that in real value, the American debt would get reduced in half.

This is what America did in 2001 or perhaps in 2002 and went on to fight the trillion dollar Iraq war.

Consequent to this trickery that America tries to live on free lunch (such as the petrodollar concept) many countries will stop lending to the US. Though this hasn’t happened as yet, despite the repeated use of this method. In this whole game, however the foreign countries that lend America the money will end up as losers.

But one remarkable thing that has happened is that China reduced its holdings of US government debt by the largest margin in nearly nine years in June, according to data from the US Treasury.

China is worried about this, and fears the stimulus efforts will fuel inflation in the US, reducing the value of the dollar.

You would remember U.S. Treasury Secretary Timothy Geithner in June of this year stated “Chinese assets are very safe,” Geithner had said it in response to a question after a speech at Peking University. And his answer drew loud laughter from his student audience, reflecting scepticism.

Omer Ismail

Basle Switzerland