Debt, Division, Dysfunction, and the March to National Bankruptcy
By: Stefan Gleason
GoldSeek.com
Thursday, 17 January 2019
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
The Rest…HERE
The Rest…HERE
