Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
How Stagflation Effects Stocks - 5th Dec 21
Bitcoin FLASH CRASH! Cryptos Blood Bath as Exchanges Run Stops, An Early Christmas Present for Some? - 5th Dec 21
TESCO Pre Omicron Panic Christmas Decorations Festive Shop 2021 - 5th Dec 21
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Socialist “Green New Deal” Points the Way to Hyperinflation

Politics / Government Intervention Feb 12, 2019 - 04:11 PM GMT

By: MoneyMetals

Politics

Socialist Venezuela’s economic collapse and hyperinflationary spiral serves as a warning for American investors. It’s what can happen when a government spends perpetually beyond its means and refuses to face reality.

Despite a U.S. economy that appears relatively strong and stable on the surface, its foundation is beginning to crack under the pressure of a $22 trillion (and growing) debt load.

Both Republicans and Democrats are to blame for that. But rising pro-socialist sentiment within the Democrat Party could turn our current debt danger into a clear and present disaster.


We are potentially just one election away from heading down a road to economic ruin – one that could bring about a Third World-style hyperinflation in the United States.

In his State of the Union Address last week, President Donald Trump specifically warned Americans of the dangers of socialism. He noted that it is gaining traction within some quarters of American politics.

He concluded, “Tonight, we renew our resolve that America will never be a socialist country.”

Tellingly, many Democrats refused to applaud in approval.

Bernie Sanders, who nearly won the Democrat presidential nomination in 2016 as an avowed socialist, scowled. His Senate colleague, Massachusetts ultra-liberal Ed Markey, sat stone faced with arms folded. Meanwhile, rising far-left star Alexandria Ocasio-Cortez tuned out Trump and plotted her next publicity stunt.

Cortez, Sanders, Markey, and 2020 presidential hopefuls including Cory Booker are pushing what they call a “Green New Deal.”

This radical proposal would be the biggest expansion of government size and power in history.
 Green New Deal
It would impose draconian, economically crippling restrictions on industry and transportation while authorizing trillions of dollars in new spending on everything from windmill farms, to universal college, to universal healthcare, to reparations for historically aggrieved groups, to “economic security” handouts to people who are “unable or unwilling to work.”

“The Green New Deal Would Spend the U.S. Into Oblivion,” blared a Bloomberg headline.

The article warned of “unrealistic and ruinously expensive economic proposals” contained in the Green New Deal. It would “take every big spending idea that has emerged on the political left in recent years and combine them into one large package deal, with little notion of how to pay for them all.”

The Green New Deal would plunge the United States into full-fledged socialism. If a champion of it like Cory Booker somehow wins the White House in 2020 and Republicans lose the Senate, there may be no stopping America’s march toward economic oblivion.

This political “black swan” scenario is just one among other potential triggers of hyperinflation. A world war or a systemic failure of the Fed-backed fractional reserve banking system are other potential triggering events.

A currency crisis of some magnitude (which may or may not reach the level of hyperinflation) appears to be inevitable even under favorable assumptions about our political and economic future.

The Congressional Budget Office (CBO), in its recent report “The Budget and Economic Outlook: 2019 to 2029,” projects an unprecedented surge in the size of the national debt relative to the economy.

Publicly Held U.S. Government Debt (Percentage of GDP)

ublicaly Held U.S. Gov't Debt

Source: Congressional Budget Office

This is just the CBO’s baseline forecast. Under more pessimistic assumptions (higher spending levels, lower tax revenues, and/or higher interest rates), the debt to GDP ratio could rise even more steeply.

And if a black swan event were to hit on the scale of a world war, the debt could hyperinflate – requiring a hyperinflation of the currency to service it.

As the CBO acknowledges in its report, “High and rising federal debt would reduce national saving and income, boost the government’s interest payments, limit lawmakers’ ability to respond to unforeseen events, and increase the likelihood of a fiscal crisis.”

All previous surges in debt, triggered by wars or economic crises, were unexpected and temporary in nature. The debt surge we now are in the midst of is chronic in nature – the result of decades of fiscally irresponsible policies.

It could have been avoided – and would have if politicians had been subject to the constraints of a sound money standard (gold and silver) all these years.

“Gold stands in the way [of]... unlimited spending... government... power.” 

    –Larry Parks 

As Larry Parks of the Foundation of the Advancement of Monetary Education said in a recent Money Metals podcast interview, “With paper money there is no limit to how much money you can spend.

And if you have unlimited spending you get unlimited government. And if you have unlimited government the people in charge have unlimited power. They like that. Gold stands in the way.”
Gold is an essential asset for investors to own as protection against a currency debasement and possible hyperinflation. Silver, though, may be more the practical precious metal to have on hand if a wrecked economy degenerates into black market and barter transactions.

In hyperinflationary Venezuela, locals treat the official currency, the bolivar, like toilet paper. As it depreciates by the hour, they eagerly swap bolivars out for more stable foreign currencies or alternative underground currencies including gold, silver, and cryptocurrencies.

Surviving hyperinflation requires flexibility and adaptability. It will impoverish those who rely on conventional sources of income and savings.

You won’t necessarily get rich by owning precious metals, even as their prices shoot up in nominal terms. But you will preserve your purchasing power over time, regardless of how many trillions or quadrillions the government adds to the national debt.

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