The Greatest Trade of All Time

From Sprott Asset Management, this is a must read if want some perspective on our present economic position and likely trajectory.

Stop and think for a moment about how many hours of labour, manufactured goods and non-renewable resources the United States has been able to acquire over 3.5 decades in exchange for paper promises that promise nothing but additional paper. It is truly remarkable.

“[US dollars] have value because everybody thinks they have value. Everybody thinks they have value because in everybody’s experience they have had value.” – Nobel laureate economist Milton Friedman8

Exporting nations have willingly financed this $8 trillion trade deficit by accepting US dollar denominated paper promises in exchange for tangible goods sold. But perhaps most important of all, they’ve continued to hold and accumulate these paper promises rather than exchange them for real assets.