Borrowing: People need to think about borrowing. What does it mean? There is more borrowing going on right now than at just about any time in the past sixty years. The problem is that most people aren’t sixty years old. And those who are sixty years old, don’t remember very well. Most people don’t remember very well what happened a few years ago, let alone sixty. Sixty years ago the idea of buying a house with no money down and paying an interest only mortgage would have been looked upon as almost completely psychotic. The sign of someone who had lost his marbles. Today it is still not considered crazy. Even after all we’ve recently been through. And this is key. People still don’t look upon such thinking as reckless, just no longer easy to act on. Many are like the adulterer who got caught and is already planning his next conquest. There’s no remorse. There’s no sorrow. What do we need: A good old fashioned castration?

I am reminded of an interview Ian Gordon did with Jim Puplava in 2002.

"Well, when the Kondratieff Cycle starts (and our present cycle started in 1949 with the beginning of Spring), debt has been cleansed from the economy during the previous winter. People are very, very wary. They’re scared that the depression will come back. Everything is paid for in cash. But, as the economy starts to regain some strength, as spring moves a long, some people start to borrow money for their major purchases like housing, but it’s mainly corporations borrowing to expand in line with demand. During the Summer, borrowing picks up pace in line with increasing confidence. Corporations borrow quite heavily to expand their enterprises. So that borrowing goes to what I call a worthwhile cause because it goes to expand the capital goods area of the economy. When the recession hits at the end of Summer and the interest rates peak. The Federal Reserve gets very, scared about what’s happening, so it start to bring down (the) interest rates, quite dramatically, and it pours money into the banking system in an effort to revive the economy. What happens then is that most of the corporations have already borrowed throughout the Summer, really don’t need to borrow that heavily, so a lot of the borrowing is done by consumers. Because banks have all this money, they’ve got to make it available to somebody, so they make it available to the consumer."

Sound like any economy you know? You probably cannot imagine existing without debt. What if you had to? Could you? Of course you could. You just can’t imagine it, and that makes you very unprepared for what is ahead. Imagine a society where everything is paid for in gold. Human beings have existed in such societies much, much longer than they have not.

Think about this: Also from the Ian Gordon interview:

"I think that given what I believe is going to happen to stocks -- and I think we’re still in the initial stages of the Bear Market -- given what I believe is going to happen to stocks, I would be very wary about staying in the stock market. If we want to use a parallel again between 1929 and 1932, the Bear Market there basically took 90% off the Dow. If that were to happen again, it would mean the Dow would be around about 1200. There’s no reason for me to believe that things this time will be that much different given that the Bull Market that preceded this Bear Market was 2 1/2 times bigger than the Bull Market of 1921-29. So, I’d be very wary about being in the stock market right now. Basically, I’d be wary about being in what I call any “paper investments” because they’re all based on debts and that would extend to the real estate market. I’m not talking about people who own their homes. I’m talking about people who are invested in real estate and so on. And I’d be wary to some extent about being invested in the bond market because I think we will see interest rates rise as the demand for credit is far outstripping the available capital to supply that demand."

Scary Stuff. Don't be scared, be ready. As Hamlet said, “The Readiness is All.” Exactly: "If it be now, 'tis not to come; if it be not to come, it will be now; if it be not now, yet it will come: the readiness is all." Bull