19/03/2010 – Take Time from March Madness for 2010’s Most Important Investment Report

You want to know whether to prepare for inflation or deflation?
This report will answer your questions. Read this excerpt
to see what we mean. Oh, and try to forget that a No. 2
seed (Villanova) almost got upset in the first round and
that Georgetown, a No. 3 seed, got beat by Ohio University, a
14 seed.

* * * * *

States Are Broke and Approaching Insolvency
While state “regulators” clamp down
on profligate banks, the same states’ legislatures
continue to blow money. For years, state governments have
been spending every dime they could squeeze out of taxpayers
plus all they could borrow. (The lone exception is Nebraska,
which prohibits state indebtedness over $100k. Whatever
Nebraska’s official position on any other issue,
by this action alone it is the most enlightened state
government in the union.)

But now even states’ borrowing ability has run into
a brick wall, because the basis of their ability to pay
interest—namely, tax receipts—is evaporating.
The goose—the poor, overdriven taxpayer—is
dying, and the production of golden eggs, which allowed
state governments to binge for the past 40 years, is
falling. The only reason that states did not either default
on their loans or drastically cut their spending over
the past year is that the federal government sucked a
trillion dollars out of the loan market and handed it
to countless undeserving entities, including state governments.

“It’s hard to imagine what happens when stimulus
money runs out,” says a budget expert. (USA, 10/29/09)
But it is not at all hard to imagine what will happen. Conquer
the Crash imagined state insolvency seven years
ago. The breezy transfer of money from innocent savers
to state spenders is going to end, and when it does,
states will cut spending and “services” drastically.
They will also default on their debts, which will be deflationary.

Elliott
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