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Holding Precious Metals Amid Surging
Dollar Deficits
As concerns mount over the seemingly unending growth of deficits and national debt, experts are increasingly suggesting that investors hold a core position in precious metals. With the Congressional Budget Office (CBO) projecting trillion-dollar deficits for the foreseeable future, and the Federal Reserve’s balance sheet ballooning from $4 trillion to somewhere between $7 trillion and beyond, the signals for protecting one’s wealth seem clear.
A Tangled Web of Debt and Deficit
Understanding the relationship between deficits and debt is crucial. While debt is the cumulative result, deficits are the ongoing issue. It’s not merely a U.S. federal issue; state and local governments, other countries’ sovereign debt, and even corporate and private debts are factors. Globally, the world owes three times its GDP. In this complicated fiscal landscape, deficit spending remains the root problem, driven by fiscal policies set by both Democratic and Republican administrations.
More Than Just a U.S. Problem
Focusing solely on U.S. federal debt is a myopic view. State and local governments contribute to the problem, as do foreign governments and private enterprises. Cumulatively, this has led to a global debt that is three times the size of the world’s GDP. It’s an astronomical figure that should give any investor pause.
The Shift In Deficit Spending
Historically, the U.S. did have periods of high deficits, particularly during times of crisis like the Great Recession, but those were considered one-off events. After these crises, deficit figures seemed to be correcting themselves, even if the corrections were insufficient. However, in recent years, the U.S. has shifted to a long-term structural policy of multi-trillion-dollar deficits. This isn’t a short-term reaction to a crisis; it’s becoming the norm.
