The US debt has grown from $1 trillion in 1981 to $37 trillion today, with a projected $130 trillion debt by 2055 if no changes are made to entitlements or taxes.
David Stockman warns of a massive economic collapse due to the unwillingness of politicians to address the US debt crisis, driven by entitlements and demographics.
The Fed’s reluctance to engage in open-ended money printing after inflation peaked at 9% in June 2022 has created a new era where private investment will compete with government borrowing.
The Fed’s massive monetization of debt since the 1980s, peaking at $9 trillion in 2022, allowed the US to avoid a debt crisis by absorbing debt with credit created out of thin air.
The US debt crisis is a global problem, with the Fed’s balance sheet growing from $200 billion in 1981 to $9 trillion in 2022, and other central banks’ balance sheets expanding from $3 trillion to $45 trillion.
The Federal Reserve’s monetization of debt has enabled fiscal profligacy, allowing politicians to spend without consequence, but this arrangement is unsustainable.
Stockman criticizes the administration’s growth strategy as based on unrealistic assumptions like no recessions, no inflation, and no interest rate increases for 40 years.
The Republican party is delusional in thinking that cutting taxes enough will solve the fiscal problem, as there’s no evidence that tax cuts generate $5 of additional GDP for every dollar of tax cut.
The true effect of supply-side tax cuts is to change the mix of GDP, not the level of nominal GDP, meaning the same amount of revenue will be generated regardless of the mix of real and inflation growth.
Stockman believes the US is heading for a deflationary era due to the end of central bank credit printing, as private savings are scarce in developed economies.
Gold is suggested as a safe haven for investors due to the impending crisis of central banking and turbulent future for financial markets.
The level of financial literacy on Capitol Hill has not improved over the past 50 years, with only a few members having a good grasp of economics.
The UK and G7 nations are on the brink of insolvency due to unsustainable debt levels, with the UK’s debt-to-GDP ratio over 100% and the US’s over 130%.
Rising gilt yields signal a sterling crisis in motion, causing foreign investors to flee UK bonds and creating a self-reinforcing debt trap cycle.
The collapse of equity values, rise in bond yields, and subsequent bankruptcies are inevitable due to the lack of political mandate to address the debt situation.
Central banks are quietly stockpiling gold while suppressing its price, indicating an imminent monetary reset and potential gold revaluation.
Financial repression is destroying private wealth through currency devaluation and artificially low interest rates, benefiting governments at the expense of savers.
BRICS nations may front-run the West with a new gold-based trade system, challenging the dominance of G7 currencies.
The gold-silver ratio is expected to fall to around 50, reflecting historical averages and signaling a potential surge in silver prices relative to gold.
The abandonment of the gold standard in 1971 has led to significant currency devaluation, with the purchasing power of fiat currencies plummeting compared to gold.
COMEX delivery failures in silver and gold could potentially shut down derivatives markets, exposing shortages and market manipulation.
The Fort Knox gold reserves may be a mirage, with difficulties in verifying authenticity and denied access to foreign central banks.
Inflation is considerably higher than official statistics suggest, with base metal prices expected to rise sharply in the near future.The UK property market has seized up due to increased stamp duty, leading to a halt in buying and renovating houses.
A $2 trillion credit bubble in private credit and opaque lending could pop like 2008, threatening zombie companies that rely on borrowing to stay afloat.
The US dollar’s strength is causing trade deficits and inflation, with a predicted weaker dollar potentially leading to improved business conditions and lower interest rates.
Gold serves as a safe-haven asset, rising not only during inflation but also when faith in the system cracks, making it crucial during times of deep systemic uncertainty.
Jerome Powell and the Federal Reserve have been instrumental in preventing economic catastrophe through QE and QT, effectively controlling inflation despite criticism.
Clem Chambers is bullish on gold in the current inflationary environment, predicting it will rise in both notional and actual value as the economy enters “lumpy, bumpy times”.
The economy is heading into “very lumpy, bumpy times”, with a potential credit bust fueled by opaque private lending and overleveraged companies, reminiscent of the 2008 scenario.
Cut through the clutter and mainstream media noise. Get free, concise dispatches on vital news, videos and opinions. Delivered to Your email inbox daily. You’ll never miss a critical story, guaranteed.