Forget about patriotism. Listen to what Senator Judd Gregg said after Congress voted down the fiscal commission he and Sen. Kent Conrad proposed: America is going broke.
With $56.4 trillion in unfunded obligations in 2008 — including $36.3 trillion for Medicare, $6.6 trillion for Social Security and $13.5 trillion for the national debt, retirement benefits and other liabilities — the burden comes to $184,000 per person and $483,000 per household. And that $56.4 trillion figure is growing by $2 to $3 trillion a year. Do you have the money? I don’t.
Isn’t it time we quit depending on politicians to solve this problem and instead take steps to save ourselves?
Don’t invest in the dollar
I’m no Ben Bernanke but I do remember the definition of “inflation” from my freshman Introduction to Economics course: too many dollars chasing too few goods. That’s what happened in Germany after World War I and is happening in Zimbabwe now, you know, bringing basketfuls of bills to buy a candy bar.
As the interest compounds on our debt and it continues to grow, our leaders have three options:
- renege on social security, medicare, military pensions and other commitments;
- increase everyone’s taxes by 75%; or
- print money
Which of these choices do you think they’ll choose? If you picked number 3, the question becomes how do we protect ourselves from the basketfuls of money scenario? According to Peter Schiff, CEO of Euro Pacific Capital and a Connecticut GOP candidate for the US Senate, buy commodities that don’t rely on the US dollar, such as gold, which he believes will go significantly higher in the short and long term.
Schiff predicted the US’s economic meltdown long before the housing bubble burst. “The United States’ (economy) is like the Titanic and I am here with the lifeboat trying to get people to leave the ship,” said Schiff in August 2006.
“I see a real financial crisis coming for the United States.” Schiff urges those of us with retirement accounts and other savings to put them in stocks of companies in countries with sound fiscal policies.
Talking on CNBC’s Fast Money last week, Schiff predicted a further weakening of the US Dollar as the Chinese government begins to raise their interest rates.
“As the (Chinese yuan) goes up, that’s going to cause more money to flow out of dollars into (the yuan) and, of course, the Chinese aren’t going to be expanding their money supply as much and they don’t have to buy as many treasuries, and that means the Fed is going to be printing even more dollars to buy what the Chinese don’t want.”
Schiff’s hard truth is: Don’t invest in America.
