Hussman uses many words to say "Global Debt Ponzi"

John Hussman is a smart guy who knows how economic fundamentals work even if he knows little about market timing.  Zerohedge has a great article from him that is well worth your time to read.

"The dysfunctional economic system provides the illusion of prosperity for some segments of the economy. But in the end, the underlying instability will, as always, be expressed in the form of mass defaults, which effectively re-align the enormous volume of debt with the ability to service those obligations over the long-term."

When Madoff victims looked at their account balances they loved what they saw even though they questioned how it could be that good.  In truth, it only appeared to be good.  Most of the paper wealth in a Ponzi is fake, it literally does not exist except on the account statement.  It is a fictitious made up number.

The second economic system is dysfunctional. Consumers work for employers to produce goods and services, but because of past labor market slack, weak bargaining power, and other factors, they are paid meaningfully less than they actually need to meet their consumption plans.

Hussman is right about this as well but he does not say how this happens.  I'll just repeat what I have been saying since I started this blog: Ponzi finance is enabled by the acceptance of fake "feel good" money as if it were real.  The money has no value; that is how it can continue to be created out of thin air and handed to people in exchange for their goods and services.  But at some point even the cheap debt cannot be serviced because of its sheer size and then everyone has to admit that unpayable debts will not be repaid.  That is the collapse phase of the Global Debt Ponzi (GDP).