[UnderseaLcpl]

An interesting article, Sky, and one which I will grant is more or less correct on the major points, but its tone and hastily jumped-to conclusions reveal a narrowmindedness that is indicative of an agenda and the resultant bias. What this man wants is to discourage investment in US stocks and bonds, for no other reason than that he has a philosophical belief that it is right.

While it is true enough that depreciation of the dollar through public spending is harmful, and I've said as much myself, it's not quite the impending "DOOOOOOOM!" it is made to sound like. Before my fellow fiscal conservatives decide to have me flogged and burned as a heretic, let me explain.

As we should all be well-aware, government spending is almost always bad. Even the most hardcore proponents of state spending have to admit that it is both (a) expensive, and (b), never accomplishes much. You'd think they'd realize this implicitly since they are always asking for more money, but it just doesn't seem to occur to them. Go figure.

In any case, American policymakers, be they left or right, are not as stupid as their actions would encourage us to believe. There's a reason why they do not fear all this debt and spending, and it isn't just because they are shortsighted or pandering to voters today at the risk of tommorrow. It's not a good reason, and I don't approve of it, but it serves well-enough when it comes to deciding economic policy in a global environment.

What the people in Washington realize is that the US has monopsony power. Other nations will always lend us money because they rely heavily on us buying their products and granting them trade permissions. They know that if we go down, they will go down as well, and this lesson has been reinforced by the recent and ongoing economic slump. It sounds terribly arrogant and aristocratic, but without the huge demand created by US society, everyone has to take a few steps backwards. Even the socialists have to acknowledge that US demand generates the wealth that allows them to hold decent jobs and spare time to consider the injustices of society. It is consumerism that seperates that ideological college students from peasants in the fields.

Furthermore, they recognize the relative value of currency. Money is only worth what it can buy, and if you're the primary buyer, guess what? One thing that is not relative is that the US is an enormous nation with even larger demands per capita than most other developed nations. This is where politicians have room to be careless and spendfree. They know damn well that even if they default on debts, other nations will be forced to reconcile said debts because they can't afford the loss of the US as a customer.

I know you don't like hearing this, Sky, but there it is. It's not fair and it's not right, but the reality of the world is that competition, free trade, and consumerism are what push the world forward, doubly so when a huge nation is the driving force.
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As for investment implications, I would personally recommend that buyers forego long-term bonds for the moment as it is doubtful that they will remain ahead of inflation and taxation. That may change if the Tea-Party Republicans gain sway in the capital, but I wouldn't count on it. It is also an imprudent time to invest in precious metals. Better to wait until this whole crapstorm over the economic crisis has blown over and watch for the prudent to short-sell when they figure out that they've been duped by doomsayers. This, in turn, will grant an opportunity to short precious metals, which always increase in price when a major state does something stupid.