The Will Hunting Of Wall Street - "He's Wickid Smawt"

Readers of my blog are very well acquainted with

As of November 19, 2008, the total U.S. debt stood at $10.6 trillion, or $37,316 per person.

Bailout-mania and now infrastructure-mania will no doubt add significantly to that figure. While no dollar figure has been stipulated with Obama’s infrastructure development plan, his identification of “roads, bridges, internet broadband, schools, health and energy” as target segments represents the largest infrastructure investment in the United States since the 1950’s.

In another example of New Deal history repeating, Obama said he wanted strong financial oversight of banks, credit ratings agencies, and mortgage brokers to make them “much more accountable and behave much more responsibly”.

Well that sounds fine for banking, but who will oversee government? At what point does the unsustainable compounding of debt upon debt explode in the spendthrift’s face?

As you can see from the chart above, projected debt load at spending levels relative to GDP become increasingly incomprehensible in the decades to come. Is this outcome plausible? It would seem to suggest that logic has no bearing on American fiscal policy, and the solution to all of our problems is the continuous installation of larger capacity printing presses.

So how does this affect the upward pressure still building on gold? Well, besides the many reasons expressed on this web site on a daily basis, the continuation of the policy debasing the currency through endless printing diminishes the amount of gold that currency can purchase, and so the dollar value of gold expressed in that currency increases. At least, that’s what happens if there is no tampering with the price of gold.

The idea of suppression of the gold price as a mechanism of fiscal and monetary policy by the United States government continues to gain acceptance in the mainstream, as evidenced by articles published recently in the New York Post and New York Times.

Disregard the spot price as quoted by COMEX for a moment. Demand for physical delivery from futures contracts traders has risen from a traditional average of 1% to over 16% last Friday, and the price of gold for delivery in the future is cheaper than the spot price is now – a situation known as backwardation, and indicative of traders preferring retaining gold in favor of a paper profit. It is symptomatic of a confidence crisis building in the abi