Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Stock Market Stalls: Caution Ahead - 21st Oct 19
Stock Market Crash Setup? - 21st Oct 19
More Stock Market Congestion (Distribution) - 21st Oct 19
Revisiting “Black Monday Stock Market Crash October 19 1987 - 21st Oct 19
Land Rover Discovery Sports Out of Warranty Top Money Saving Tips - 21st Oct 19
Investing lessons from the 1987 Stock Market Crash From Who Beat it - 20th Oct 19
Trade Wars: Facts And Fallacies - 20th Oct 19
The Gold Stocks Correction and What Lays Ahead - 19th Oct 19
Gold during Global Monetary Ease - 19th Oct 19
US Treasury Bonds Pause Near Resistance Before The Next Rally - 18th Oct 19
The Biggest Housing Boom in US History Has Just Begun - 18th Oct 19
British Pound Brexit Chaos GBP Trend Forecast - 18th Oct 19
Stocks Don’t Care About Trump Impeachment - 17th Oct 19
Currencies Show A Shift to Safety And Maturity – What Does It Mean? - 17th Oct 19
Stock Market Future Projected Cycles - 17th Oct 19
Weekly SPX & Gold Price Cycle Report - 17th Oct 19
What Makes United Markets Capital Different From Other Online Brokers? - 17th Oct 19
Stock Market Dow Long-term Trend Analysis - 16th Oct 19
This Is Not a Money Printing Press - 16th Oct 19
Online Casino Operator LeoVegas is Optimistic about the Future - 16th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - Video - 16th Oct 19
$100 Silver Has Come And Gone - 16th Oct 19
Stock Market Roll Over Risk to New highs in S&P 500 - 16th Oct 19
10 Best Trading Schools and Courses for Students - 16th Oct 19
Dow Stock Market Short-term Trend Analysis - 15th Oct 19
The Many Aligning Signals in Gold - 15th Oct 19
Market Action Suggests Downside in Precious Metals - 15th Oct 19
US Major Stock Market Indexes Retest Critical Price Channel Resistance - 15th Oct 19
“Baghad Jerome” Powell Denies the Fed Is Using Financial Crisis Tools - 15th Oct 19
British Pound GBP Trend Analysis - 14th Oct 19
A Guide to Financing Your Next Car - 14th Oct 19
America's Ruling Class - Underestimating Them & Overestimating Us - 14th Oct 19
Stock Market Range Bound - 14th Oct 19
Gold, Silver Bonds - Inflation in the Offing? - 14th Oct 19
East-West Trade War: Never Take a Knife to a Gunfight - 14th Oct 19
Consider Precious Metals for Insurance First, Profit Second... - 14th Oct 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

Debt, Division, Dysfunction, and the March to National Bankruptcy

Interest-Rates / US Debt Jan 18, 2019 - 10:41 AM GMT

By: MoneyMetals

Interest-Rates

Never in our lifetimes has American politics been so marked by division and dysfunction.

The longest partial government shutdown in history occurred after the Democrat-controlled Congress wouldn’t compromise with President Trump on a border wall. The impasse is but one symptom of a deeper malady – one that threatens to wreak wider social and financial instability in the years ahead.

Put plainly, the pillars of the American system as we have known it are eroding.

No longer are we unified in support of the Constitution and a (more or less) free market economy. A growing faction within one party favors socialism and outright rejects foundational American principles such as free speech, gun rights, and limited government.




No longer are political solutions even possible for insoluble problems such as the $22 trillion national debt and the tens of trillions of dollars more in unfunded liabilities. The U.S. debt to GDP ratio now – when times are supposedly good – comes in at the highest non-wartime level in history.

Investors who have no stake in sound money (gold and silver), and who are instead banking entirely on conventional financial assets such as stocks and bonds, are making some dangerous assumptions.

They are assuming the government will be able to keep its promises, that the Federal Reserve will step in to prevent any financial crisis, that the U.S. dollar will remain globally trusted, that American capitalism will remain resilient in the face of growing political risk.

Avowed Socialists Ascend within Democrat Ranks

The reality is that the American economy is potentially only one election away from being taken over by socialists. That’s not hyperbole. At the base of the Democrat Party today are radicals that support Bernie Sanders and Alexandria Ocasio-Cortez – open socialists.

According to a recent Gallup poll, more Democrats than ever – a majority – say they consider themselves to be “liberal.”

As recently as 12 years ago, more Democrats fashioned themselves as “moderate” than “liberal.” The moderate Democrat is a dying breed.

Consider the positions espoused by newly elected Congresswoman Ocasio-Cortez.

She wants taxpayers to spend $40 trillion on expanding Medicare and making college tuition “free.” She wants to hike the top tax rate to 70%. She wants to ban the use of fossil fuels which run our economy.

To be sure, old guard Democrats are trying to rein her in, but they refuse to denounce her ideology.

She has become a media darling and social media star. “AOC,” as Ocasio-Cortez is known on Twitter, has the potential ability to mobilize millions of far-left followers behind whoever she endorses as a 2020 presidential candidate (she’s not yet Constitutionally eligible to run, being under age 35).

Of course, you can tune in to Fox News or read the Wall Street Journal for a warning to investors about any given candidate’s far-left ideology.

What you’re less likely to see in either the “liberal” or “conservative” wings of the establishment media is a warning to investors about the unsustainable status quo.

Recent history shows that regardless of whether Democrats or Republicans are in charge of Congress or the White House, government spending grows, the national debt grows, and unpayable entitlement promises grow. More bipartisanship is no solution to a structural policymaking defect that has deep bipartisan roots.

To paraphrase Barry Goldwater, bipartisanship in pursuit of national bankruptcy is no virtue.

As trillion-dollar deficits pile up in 2019 and beyond, interest on the national debt will become the largest single item in the federal budget.

Mathematical realities will eventually force a harsh reckoning of the political fantasies both parties indulge.

Since there is unlikely to be any consensus in Washington on cutting spending… and since no marginal tax rate increase would bring in the kind of revenues needed to close long-term fiscal gaps, the only politically viable outcome is inflation.

By getting the Federal Reserve to monetize U.S. Treasury debt through the power of unlimited currency creation, the political class can avoid making the tough decisions, for now.

How Hard Money Can Protect Your Wealth from Growing Political Threats

Unfortunately, a central bank bailout of the federal government could be disastrous for investors stuck in conventional financial assets.

Yes, a default on Treasury bonds would be averted. But the consequence would be a default on the value of the currency in which U.S. bonds and stocks are denominated.

The U.S. appears set to more closely resemble South American countries in terms of its politics and economics – veering toward socialism, going through severe crashes and inflations, becoming vulnerable to authoritarian reactions.

That’s not to say we’ll become another Venezuela. But we could become another Argentina.

Once the richest, most advanced country on the continent, Argentina succumbed to socialism and fell into hyperinflation, destroying vast amounts of wealth.

Argentina is still a nice place, though, for those who know how to cope with the political threats and periodic economic upheavals.

One of the most critical strategies for investors in bracing for financial turmoil is to reduce counterparty risk. That means limiting exposure to financial assets.

Third-party promises – whether from bankers, brokers, insurers, or politicians – may turn out to be empty.

Precious metals held in physical form carry zero counterparty risk. Gold and silver serve as real money and stand to gain greatly during a U.S. dollar crisis.

Stefan Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2019 Stefan Gleason - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules