The great debt deal, which will save the Republic from… something… increasingly resembles a sad joke. Your morning chart, courtesy of Tad DeHaven, offers a sobering look at what the political class and its pilot fish consider a win on spending:
Somewhere, Pyrrhus of Epirus is smiling.
Now here’s another chart to ponder: It plots the price of gold versus hikes in the federal debt ceiling limit since 1994:
There are any number of reasons why gold has risen over the last 17 years — wars, uncertainty, demand, etc. The barbaric relic’s rise, though, does seem to fit neatly with the debt ceiling’s rise. Notice the long, flat period during the late 1990s for both gold and the debt? Those were the salad days, when the feds were running near or in the black. Not surprisingly, those were also the days of divided government, hyper-partisanship and the Clinton impeachment. And a tech bubble.
Oh Pets.com, how could you have gone so wrong?
It all falls apart during the Bush years, particularly in his second term, and becomes almost parabolic during the Obama years… which also coincide with the fed’s furious currency debasement.
Is it all a coincidence? Possibly. But this is the sort of chart that should make you wonder just how long the era of fiat currencies will last. Coupled with the first graph, it makes me wonder if that moment has already arrived.
