Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
How to Protect Your Site from Bots & Spam? - 20th Aug 19
Fed Too Late To Prevent A US Housing Market Crash? - 20th Aug 19
Gold and the Cracks in the U.S., Japan and Germany’s Economic Data - 20th Aug 19
The Gold Rush of 2019 - 20th Aug 19
How to Play Interest Rates in US Real Estate - 20th Aug 19
Stocks Likely to Breakout Instead of Gold - 20th Aug 19
Top 6 Tips to Attract Followers On SoundCloud - 20th Aug 19
WAYS TO SECURE YOUR FINANCIAL FUTURE - 20th Aug 19
Holiday Nightmares - Your Caravan is Missing! - 20th Aug 19
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

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