Peter Schiff has a great interview with Yahoo’s techticker.

The fiscal stimulus bill being debated in Congress not only won’t help the economy, it will make the recession much worse, says Peter Schiff, president of Euro Pacific Capital.

…the difference is that the economy is in a much worse state going into this depression than it was in the 1930s… and without the discipline of gold, we have a central bank that could create massive inflation. So we could have an inflationary depression.

Gary Schilling saw it coming in 2007. What does he see coming now?

The WSJ hits the Bush/Obama bailout mentality hard in their editorial “Barack Obama-san.” Politics aside, it’s a sobering review of what has happened to the Japansese economy after real estate and stock market bubbles burst and the government responded with multiple bailouts.

Here’s the chart that compares Japansese and US government debt as percentages of their respective GDPs:

This is a troubling reminder. Not a road to go down, right?

But we’ve already gone down that road. And I’m not talking about AIG or TARP.

You see, this editorial focuses on government debt. But the total national debt that includes individuals and businesses has already bloated!

A recent Morgan Stanley presentation highlights the spike of total debt in the US (on slide 6). Since the turn of the century alone, it has spiked from roughly 250% to 300% of GDP!

The lesson to be learned is more than the ineffectivity of public stimulus, which the WSJ rightly highlights. It is that, regardless of the source or destination of largess, its tantilizing short term benefits are dwarfed by its subtle, long term poison.

Just like binge eating, the pounds remain after the pleasure, and make it that much harder to cut back in the future.