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Weekly Touchpoint: Report: Just 5 Years to Nat’l Debt “Death Spiral”

Posted By Isaac Nuriani |

Global debt continues to explode at all levels, putting the stability of the worldwide financial infrastructure at tremendous risk. Ballooning sovereign (government) debt is obviously a big part of the problem. In fact, a recent government report reveals the U.S. is now on the verge of a point where all the money it borrows will go to simply servicing its debt. It’s an astonishing revelation – one that doesn’t seem to have caught the eye of mainstream news outlets. But astute observers will understand the significance and take steps now to protect their portfolios by acquiring safe-haven alternative assets such as physical gold and silver.

  • Here’s some ominous news from the Foundation for Economic Education (FFE): According to the U.S. Treasury, America is a paltry five years away from reaching the point where every new dollar borrowed will go toward covering nothing more than the interest on the national debt which is now climbing toward $23 trillion. Once that happens, we will be officially in what has been termed a national debt death spiral. And if you think that’s just talk designed to scare people, think again. It is likely to lead to very real consequences. The FFE points out that many cities and territories in the United States that have crossed a similar crisis point have either gone through bankruptcy proceedings or the equivalent.
  • At the recent annual meeting of the International Capital Markets Association (ICMA) in Stockholm, Sweden, bond bankers and investors sounded another alarm about how the continued “heavy reliance on debt financing and slow economic growth” are conspiring to create a debt bubble for the ages – one that could bring the entire global financial system to its knees if it is subject to a big enough economic shock. ICMA board member Frank Czichowski of KfW, Germany’s third-largest bank, reminded attendees that leverage in said system has increased 50% to 60% since last decade’s financial crisis. He added that “there is no banking system in the world that can cope” with the fallout if interest rates move up enough to cause debt levels to become truly unsustainable You’ll find more details at Reuters.
  • President Trump does not appear quite finished with the idea of nominating gold standard advocates to the Federal Reserve’s Board of Governors. Trump, who famously said during his 2016 campaign that a return to the gold standard would be “wonderful,” struck out with his two most recent pro-gold prospective nominees, Stephen Moore and Herman Cain, when each withdrew his name from consideration. Undaunted, Trump now appears ready to nominate economist and noted gold fan Judy Shelton. Shelton recently took the opportunity to publicly deride gold-standard critics in a Wall Street Journal op-ed, saying that “mainstream commentators have made a point of dismissing anyone sympathetic to a gold standard as crankish or unqualified. But it is wholly legitimate, and entirely prudent, to question the infallibility of the Federal Reserve in calibrating the money supply to the needs of the economy.” For more, click over to FXStreet.

It’s hard to think of something much worse than a “death spiral,” and yet here we are, potentially just a handful of years away from entering a national debt death spiral wherein America’s obligations finally begin to collapse on top of us. And as bad as that is, it’s hardly the only news out there informing us of the global economy’s worsening fortunes. There may be plenty of scrambling by Washington over the next several years in an effort to keep the nation’s economic seas calm, but it is appropriate for people to question how effective any of that will ultimately be. Some are taking their financial security out of the hands of politicians and central bankers and protecting their portfolios with what they believe are the only real safe-haven alternative assets available: physical gold and silver. To learn more, call Augusta Precious Metals at 800-700-1008 or visit Augustapreciousmetals.com.

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