Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Shocking Numbers Show Government Crowding Out Real Economy

Economics / US Economy Oct 20, 2021 - 02:22 PM GMT

By: MoneyMetals

Economics

The stampede of dollars into the gold and silver markets has not yet begun. There is record demand for coins, rounds, and bars, but institutional money is still ignoring precious metals, for the most part.

Anyone wondering why, can find a clue in the current makeup of the U.S. economy.

The large majority of the nation’s spending, and wealth, is handled by people who don’t have much in common with gold bugs – at least not yet.

Let’s start with some data.


Federal outlays are now 31.35% of the GDP. That percentage was just under 21% in 2019.

State and local governments spent $3.2 trillion according to the latest report. Total GDP is at $21 trillion, so this spending represents 15.2%.

The Finance, Insurance, and Real Estate (FIRE) sector added 22.3% in 2020 and will likely capture a higher percentage of GDP this year.

To summarize the concentration of these three sectors in total GDP:

   31.35% - Federal Government
   15.2% - State and Local Government
+ 22.3% - Finance, Insurance, Real Estate
   68.85% - Total

Government, banks, real estate, and insurance now comprise nearly 70% of our economy. Government sectors alone are approaching 50% (HALF!) of GDP.

This sort of information should make Americans seriously concerned about the direction of the country. They don’t even have to know GDP statistics to understand the economy is very sick and that it isn’t working for a majority of Americans.

Most of us know instinctively it is not sustainable for half of all spending to be done by people who produce nothing. Politicians tax productive people and borrow the rest. And they take care of their friends on Wall Street.

When this travesty is the “business model” underpinning so much of our economy, it makes sense to buy guns and gold.

However, lots of the people with an oversized stake in GDP have a different take. Their share of the pie has grown dramatically. They invest accordingly.

They love conventional assets. Why leave the equity markets, or the bond markets, when they know Jerome Powell has their back?

The past decade was a bonanza in terms of their personal net worth.

Many hope it can continue forever. They won’t spend too much time parsing the unsettling GDP data.

Instead, they listen attentively when Powell says inflation is transitory and the U.S. economy is fundamentally sound.

We shouldn’t expect this crowd to allocate any assets to precious metals until, perhaps suddenly, they discover Powell (or his replacement) is wrong.

By Clint Siegner

MoneyMetals.com

Clint Siegner is a Director at Money Metals Exchange, perhaps the nation's fastest-growing dealer of low-premium precious metals coins, rounds, and bars. Siegner, a graduate of Linfield College in Oregon, puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals' brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

© 2021 Clint Siegner - 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.


© 2005-2022 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