The U.S. Government debt recently topped an astounding $22 trillion reaching a new debt milestone. The debt is composed of two components: debt held by the public and debt held by government agencies.
The public debt is continuously marketed to investors all over the world. This debt is used to fund the deficit as well as to pay off maturing debt. Because investors demand a return on their investment, public debt is subject to interest charges, furthering the ongoing deficit.
For a government to manage its debt effectively, it is imperative that the debt is reasonable compared to the size of the country’s economy. In other words, a country must have a large enough tax base in order to service its debt. This is where the widely discussed debt-to-GDP measure comes into play. As of last year, it has been reported that public debt to GDP in the U.S. stood at approximately 74 percent.
There is no specific level at which debt-to-GDP becomes a concern, but rather it may be the upward trend in this measure that is a source of concern. Estimates for this measure over the next decade have ranged widely but could end up from over 92% to over 105% if current trends continue.
When the next recession hits, whether its next year, the year after or five years from now, the government could potentially be in a far-weaker fiscal position. This could lead to an even deeper and longer recession, or perhaps even a massive depression.
The rising debt may also lead to further battles over the debt ceiling, more government shutdowns and general economic chaos.
Put simply, the current path of U.S. fiscal policy is not sustainable over the long-term, and eventually, it could lead to serious consequences. It is not clear how the government will address the debt problem, or even when it may consider formulating a plan. AS the debt swells to record levels, the government could eventually find itself with one option and one option only: currency debasement.
Regardless of what action is taken, significant measures to tackle the debt issue could have serious implications for financial markets and the dollar.
The time to try to get ahead of this problem is now, and one way to do it may be to build a significant allocation in physical gold.
Gold is considered by some to be the only true form of money left. It has been widely used as a store of wealth and value for centuries, and unlike fiat currency carries no counterparty risk. As the debt burden becomes unsustainable, investors could potentially ditch paper assets in favor of hard assets like gold, and prices could potentially increase many times over from current levels.
Gold may be considered an excellent long-term value at current prices, and the time to get involved is now before the next major stampede begins.
Speak with an Advantage Gold account executive today about the potential benefits of gold ownership and to learn more about how this asset class may play an important role in the years and decades ahead. Our associates are here to answer any questions you may have and can even show you how to build a significant allocation using your IRA account.
Don’t wait for this debt milestone to cause significant economic damage before acting. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: add gold to my ira, advantage gold, best way to buy gold, debt burden, debt-to-GDP, fiat currency, government debt, invest in gold now, long-term value, paper assets, us fiscal policy