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New “Budget” Deal Has Debt on Track for $30 Trillion

Recently the mainstream media has been celebrating the news that the government has passed a spending deal and averted another shutdown. However as usual, the coverage avoids seeing the bigger picture. As well as why those who have invested in precious metals as a hedge against systemic risk can continue to sleep well at night.

The main reason for this is because as usual, the new deal didn’t include even the faintest hint of addressing the never ending deficits. But instead just provided more of the usual rhetoric that confirms there is no long-term plan in place.

In fact it has been interesting lately to notice how as the debt has passed the $20 trillion mark, now coverage of reaching $30 trillion is already being discussed. And the numbers are tossed around so nonchalantly that it’s as if we’re still talking about a few extra quarters here and there.

Yet keep in mind that this is an incredible escalation since just the turn of the century alone. Because when the second George Bush entered office in 2001, the debt was around $5 trillion. It nearly doubled to over $10 trillion by the time he left, before again nearly doubling to almost $20 trillion under Barack Obama’s tenure.

Now budgets are being set that could lead to the amounts hitting $30 trillion by the year 2028. And of course it’s worth keeping in mind that these are government projections, which have a history of being based on some rosy and usually unrealistic projections.

Meaning that these budget estimates likely don’t reflect the impact of the rising interest rate environment we’re now in, the downturn that will have on the stock and real estate markets, and of course how the government interest expense will also be rapidly rising as well.

Yet the budget deal gets passed and celebrated as if the crisis was averted. Which perhaps in today’s political mindset of focusing on the short term while hoping the consequences are left for the next guy to deal with might be a big win. But for the rest of us and our children and grandchildren who are still going to be around to deal with the mess, these deals are negligent, if not outright criminal.

Which fortunately does not necessarily mean that we have to be the victims to these policies. Yes, it’s less than ideal that our supposed “leadership” continues to make a series of decisions that are not in our best interests. However the fact that it’s become blatantly obvious where this is headed, and how there really is no exit plan in place, does at least give us the information necessary to make the proper financial arrangements.

While it has been a challenging time for gold and silver investors to watch all this unfold yet see the prices of precious metals flounder, the underlying reasons that made gold and silver a good investment in the first place are more pronounced than ever. Especially with so many of the traditional investing alternatives already at all time highs, if not in bubble territory.

Based on these factors it certainly seems like a great time to consider reallocating. Because while Wall Street and the government have an incredible ability to manipulate and prolong the inevitable, what they don’t have is a long term plan that keeps these markets distorted forever.

So when deciding between government paper and metals, just remember that the amount of paper is growing faster than ever, while the price of metals has miles to go to catch up. Based on the laws of supply and demand, which one would you rather own?

 

Chris Marcus