Bill Bonner, from the southern shores of the Thames:"More Americans join pool of 'near poor'," runs a headline in today's International Herald Tribune.Over the weekend, Warren Buffet provided the evidence. He said that when he looked through the financial statements of lending companies he noticed that the entry for 'interest accrued but not paid' was rising.

What this means, he explained, was that people were having a hard time servicing their debt. And worse yet, the real estate casino on which they were depending is cooling off. Toll Brothers, one of the nation's largest homebuilders, says new orders fell 33% so far in the 2nd quarter.And so we return to a familiar theme, but one not quite exhausted: savings are available to serve you, debt is always your master."The debtor is slave to the lender," says the Bible.Dear readers may wonder whom we are arguing with, or what question we are answering.

It is an obvious one; you may want to neither borrower nor lender be but if you have to make a choice, it is better to be owed than to owe.That is the big difference between a trade deficit and a trade surplus. In the former, you gradually become a slave to your trading partners. The larger the deficits, the more you tend to owe them. In the latter, they gradually become slaves to you. That is what is happening with the Chinese and Japanese.

They have now become creditors of the US; they can enjoy income from their US paper while America struggles to keep up with the debt.But who will turn out to be the greater fool, the one who buys what he can't afford or the one who lends what won't be repaid?Americans, consciously or unconsciously, are betting on inflation.

They are hoping their favourite swindlers at the central bank will continue to engineer a gradual devaluation of the dollar so as to ruin their creditors rather than themselves. The dollar lost half its value during the Greenspan years alone. And now the Bush administration is adding more debt than all the other administrations in US history combined. Inflation looks like a sure bet, a 'done deal.'Commodities are rising.

Health care, education, housing, energy - everything measured in dollars that the Asians can't produce and supermarkets can't put on its shelves, is soaring. And gold is rocketing and outperforming stocks, commodities, bonds, the euro, housing - everything.How nice it would be if the empire's creditors would go gently into that good night! They must read the papers. They must see the dollar going down and gold going up.

Imagine yourself in the same situation; wouldn't you be tempted to shuck some of that green paper in favour of the yellow metal? Wouldn't you want to protect yourself?But, according to lumpen-American economic theory, the creditors just stand there, stock still, while the big inflation bus runs over them. Not only do they not sell their US bonds and dump their US dollars - they continue adding to their inventory, like collectors of Cabbage Patch dolls long after the fad has moved on.God bless 'em.

But we doubt the lenders are quite as dumb as the borrowers believe. In fact, there could come a time - any minute, in fact - when the lenders wise up. The dollar could end its gentle decline and drop like a stone. Then, the lending would cease too, the US economy would come to a halt and all those people who are finding it difficult to keep up with their payments would suddenly find it impossible. The defaults and bankruptcies would multiply. American debt may be wiped out by inflation, but Americans will probably be wiped out first.