The United States has seen bad decades before. According to a recent Forbes.com article, however, the worst one yet may be on the way. Financial expert and New York Times bestselling author John Mauldin proclaims a corporate credit crisis will be the trigger this time in his piece, titled “The 2020s Might Be The Worst Decade In U.S. History.”
Much of the debt, he says, lies in the lowest tier of the corporate credit market – high-yield bonds. High-yield bonds, or so-called “junk” bonds, offer attractive yields but also can carry tremendous risk.
Credit Crisis May Cue a “Lost Decade”
The International Monetary Fund (IMF) says corporate debts have been “booming,” with corporate debt-to-GDP enormous right now – roughly 45%. As defaults mount, which Mauldin fully expects to see happen as this decade closes out, stocks will suffer and banks will greatly limit their lending to business, which he expects will lead to a recession.
That recession, says Mauldin, will usher in more obscene levels of quantitative easing as the government spends like crazy in an effort to fix America’s economic woes. Mauldin believes the public debt will rise to an astonishing $30 trillion during this period.
This enormous debt burden, he says, will put private capital markets under tremendous pressure and prompt taxes to go up for everyone.
Companies searching for ways to cut costs will turn increasingly to automation, further crushing the job market. Mauldin says a “populist backlash” will ensue, resulting in a Democratic president and congress who will implement policies that lead to a second recession during the decade. Unemployment will be in the “high teens” by the end of the next decade, Mauldin predicts, and “GDP growth will be minimal at best” in his scenario.
Mauldin thinks the misery will end with central banks and world governments agreeing to a “reset” of basically all debt – because debt will be so ridiculously high there’s no way it would ever be repaid. Mauldin also believes the implementation of universal basic income will occur by the end of the troubled decade.
Physical Gold and Silver: Safe Havens in Challenging Decades
Whether events unfold as Mauldin predicts remains to be seen. The good news is that America has seen dismal decades before, and precious metals such as gold and silver have thrived amid the carnage.
The 1970s were known as the decade of the “Great Inflation,” with persistent double-digit inflation and unemployment. But gold and silver soared. From January 1970 to January 1980, gold rose 1,500% and silver skyrocketed roughly 2,100%.
The early 2000s were characterized by a variety of challenges to the economy, from the burst of the dot-com bubble to 9/11, the rise of global terrorism and global recession. But, from April 2001 through April 2011, gold and silver rose 500% and 1,000%, respectively.
Had an investor weighted their portfolio significantly in gold and/or silver during the 1970s and early 2000s, the return likely would have been substantial during those decades.
The addition of physical gold and silver to your asset base could be a very prudent move. To learn more about how inflation-protected gold and silver can help protect your IRA or 401(k) from the fallout of a lost decade, call Augusta Precious Metals at 855-242-4121 and speak with one of our knowledgeable gold and silver professionals. We can get you a free customized investment kit with all the information you need. We look forward to helping you protect your assets with gold and silver ownership!
If you’re not frightened by the prospect of a lost decade as the result of a corporate credit crisis, maybe you should be. Moreover, the lost decade Mauldin is predicting could begin anytime now.
It’s safe to assume an economic downturn of that duration will negatively – and, in some cases, permanently – alter the fortunes of many Americans. With physical gold and silver on hand, it is not necessary for you to be one of them.