Editor’s Note: The editorial below by Daniel Lacalle from The Epoch Times concisely explains why global debt is an existential threat. Unwittingly, he also makes the case for why central banks are buying up so much gold. It’s important for readers to know this was written as an editorial and not as a “sponsored” post; the truth is the best way to highlight why Americans should strongly consider moving wealth or retirement to physical precious metals as soon as possible. Here are the America First companies we recommend for this.
It should also be noted that massive national and global debt is why I am so adamantly opposed to Kevin McCarthy’s debt ceiling deal. It suspends the debt ceiling until 2025. It’s so bad I’m not certain default would have been worse. With that said, here’s Lacalle’s article…
Global debt levels soared by $8.3 trillion in the first quarter of 2023, climbing to $305 trillion, nearly the record high set in the first quarter of 2022, according to the Institute of International Finance. This means almost 335 percent of GDP.
Rising debt is a burden on growth, and soaring public debt means higher taxes, weaker productivity, and declining real wages as governments push inflationary policies to try to dissolve part of their enormous indebtedness.
Public debt is not a reserve asset for the public sector; it is a negative factor that crowds out investment and credit and erodes purchasing power from families and earnings from businesses as taxes rise. To make public debt a reserve asset, it would have to generate real economic return, just as is the debt of private businesses used for solid investments. However, governments use increasing debt for current spending with no real economic return, and this leads to lower growth trends and loss of purchasing power of its issued currency.
Private debt is paid by families and businesses, but public debt is also paid by the private productive sector. Therefore, the impact on the pattern of growth, job creation, and investment are significantly more negative when public debt rises.
There is no such thing as public debt. It is paid by you, always, with higher taxes, higher inflation, or larger budget cuts—maybe all at the same time.
Global markets have entered a perverse incentive mechanism whereby consensus investors favour rising public imbalances, expecting central banks to implement quantitative easing afterward. The main reason is that market participants perceive that it will benefit equity and bond valuations in relative terms. However, this is a dangerous bet. Those investors that hail public debt and quantitative easing continue to bet on an outcome that has not happened for years: low inflation and decent growth added to equity multiple expansion. Those market participants seem to want another fix of money printing, expecting 2009 to return. It is even worse, however. Demanding currency debasement and destruction of the middle class for a small expansion of multiples directly attacks those that invest for the long term.
Rising debt means gold remains as the only de-correlated and safe asset in an environment where currency destruction is likely to continue. Bitcoin and crypto assets are a different thing; in fact, they are highly correlated with nonprofitable tech.
Governments are not going to reduce deficit spending, and this means that public fixed income may be the riskiest asset for investors in an era of inflationism.
Investors can bet on one thing: The inflationist policies that have been modestly implemented since 2009 are going to be accelerated. This will not be pretty if it leads to a prolonged period of stagflation. Stagflation does not create multiple expansion and equity booms. It is bad for fixed income and equity markets.
You wanted high debt, more spending, and more central bank easing? This is the consequence: record debt, weaker growth, and inflation.
Article cross-posted from our premium news partners at The Epoch Times.
At Last, a Company With Integrity in the Gold IRA Industry
For several years, I’ve been vetting out precious metals companies in search of the best. I believe in gold and silver but it’s hard to find integrity in the Gold IRA industry. The vast majority operate with shady tactics and gigantic spreads that take advantage of Americans who simply want to protect their life’s savings.
I’ve found a handful that I like and I’ve worked with some of them. By no means would I “unrecommend” them because, again, I vetted them out and found them to be above the fold. Unfortunately, it isn’t hard to be better than the rest when the rest are so darn awful.
After years of searching, I finally found a company that truly operates with integrity. Augusta Precious Metals has three important attributes that set them far above the competition:
- Non-Commissioned Sales Team: I cannot stress how important and unique this is. With just about every other company in the Gold IRA industry, the sales teams make commission from every account they open. This means they steer their clients toward the gold and silver products with the highest commission. With Augusta Precious Metals, the team is solely focused on putting the best gold and silver for their clients into their IRA. They get paid to serve the best interests of the Gold IRA client, NOT their own commission pay.
- Incredibly Low Fees: Most Americans would be shocked if they knew the spread other Gold IRA companies charge. Augusta charges just 5% versus up to 45% elsewhere.
- No Pressure, No Gimmicks: There’s an understanding among most in the Gold IRA industry that fear and pressure is the way to go. Augusta Precious Metals takes a sober approach when working with clients because they hold integrity in the highest possible regard. This is why they don’t offer gimmicks like “free” or “bonus” silver. It’s also why they do not apply pressure tactics to get quick sales. Their educational and transparent approach to doing business is exceedingly rare in the Gold IRA industry.