Growing up in the NY area allows you to come across many walks of life. Johnnie was a great guy who loved life. Johnnie loved to spend and loved to borrow from every loan shark in town. Johnnie was a friend and asked me for a small loan. I asked Johnnie if this loan would get him out of his debt trouble once and for all. He assured me it would. I knew it wouldn’t but friends try to help when they can. I gave Johnnie some money which was a lot for me at the time. I never saw Johnnie alive again. I guess the extra credit I gave him didn’t solve the long term problem. They found Johnnie dead in an alley. The next time I got to see him was at his wake in a coffin. Johnnie was dead, the debt problem wasn’t solved, and I was out of my money. Issuing more debt to someone or something in a serious debt situation won’t fix the debt problem.
World Bank says global debt surged to 99% of GDP last year
Global debt in 1971 was $5 trillion. Global debt in 2000 was $80 trillion. Global debt in 2006 was $120 trillion. Global debt now is $280 trillion. There is a pretty obvious pattern here. Global debt has grown by $19.5 trillion during the pandemic. Global debt surged to 99% of GDP last year for the first time in history. Debt is surging due to federal government spending on relief such as direct payments to individuals, unemployment insurance, and regional aid. Developed countries have led up the spending spree of late but emerging and developing markets are hurting and crying for help. Markets like Chad, Zambia, and Ecuador are among the hardest-hit and most in need of help according to the World Bank. The World Bank cautions that these developing markets are close to defaulting on their debt already. Food and energy shortages are only a couple of problems facing these hard-hit areas. These developed countries have lost decades of income growth due to the pandemic. The World Bank says that low interest rates and payment forgiveness in certain circumstances are masking the real damage. Inflation and a rise in interest rates are truly going to set off a financial debt tsunami. Issuing more debt to someone or something in a serious debt situation won’t fix the debt problem.
US debt climbing with no end in sight
When Ronald Reagan took office in 1980, the US had roughly $800 billion in debt and President Reagan took it to $2.6 trillion. President George HW Bush took debt to $4 trillion by 1992. President Bill Clinton took US debt to $5.7 trillion by the year 2000. President George W Bush took debt to $10 trillion in 2008 and handed it off to President Barack Obama who took debt to $20 trillion by 2016. President Donald Trump took debt to $28 trillion in four years and now hands it off to President Joe Biden. There is a pretty obvious pattern here. As stated before, a liquidity problem began in September of 2019. The Fed has been buying $120 billion a month in debt to support the markets. The Fed is now purchasing bond ETFs and now discussing buying stocks. The Fed has overstepped its boundaries and charters. The Fed held $830 billion on its balance sheet in 2006, $2 trillion of assets in 2009, and now $7.2 trillion or so. Janet Yellen has a credit card with no spending limit. If you spray money around it may work temporarily, but the long-term problems only get bigger until the bubble bursts. Issuing more debt to someone or something in a serious debt situation won’t fix the debt problem.
Many more trillions in debt to come
The US has already thrown $5 trillion against this pandemic fight. President Biden in his first week of office is moving ahead with $1.9 trillion and already talking about more in March. According to the NY Times,
“Democrats are preparing to bypass Republican objections to speed President Biden’s $1.9 trillion economic aid package through Congress, rather than pare it back significantly to attract Republican votes, even as administration officials and congressional moderates hold out hopes of passing a bill with significant bipartisan support.”
Foreign countries own roughly $7 trillion of US debt led by Japan and China. The conversation today revolves around stimulus checks, helicopter money, free rent, loan cancellation, climate control, and economic inequality. Political, economic, and social unrest is building again and has shown its ugly head frequently over the past year. Social media now has the stock market up in arms. Hedge funds and banks are bracing for the next social media assault. The only answer according to our leaders is regulation, control, and more printed money. The US government and corporations are taking on more debt than ever. Issuing more debt and exerting more government control and dependence won’t fix our debt problem. It will only make it worse.
We are in the middle of a great global debt spike. The pandemic has made the mother of all debt bubbles even bigger and more deadly. When inflation and interest rates increase, game over. Game over for bond debt, the assets that back this debt, the leveraged consumer, stock speculation, the US dollar, and our republic. The clients of Midas Gold Group will not accept this without at least putting together a financial plan. A plan to sidestep the next financial crisis due to the debt implosion. One asset has been the only real money for 3000 years. One tangible asset has no third-party risk, isn’t dependent on the electrical grid, has no leverage, and can’t be hacked by cyber thieves. To protect your nest egg against the reckless politicians, the unrealistic bankers, the broken monetary system, and the unfixable debt situation move some of your assets into physical gold. Learn how to transfer your paper assets into gold and hold it in your possession or in your retirement account. Own gold while the price is still low and the product is still available. Call Midas Gold Group today at 480-360-3000 or 805-601-6000 and get your plan in motion. Every investor was a beginner at one time. Call Midas Gold Group today at 480-360-3000 or 805-601-6000 and allow the nation’s #1 veteran-owned gold dealer to educate you on your options to make your nest egg bulletproof. Once the rug is pulled out from under the markets it’s going to be too late to do anything about it. Those important decisions to preserve your wealth need to be made now.