“The 2024 deficit will represent 7% of US gross domestic product while the 2034 deficit will be 6.9% of GDP,” the nonpartisan Congressional Budget Office (CBO) wrote in its latest report. This makes it easy: 7% over a decade roughly doubles the US debt. The CBO now projects this year’s deficit at $2 trillion, a …
Tag: economy
Gold is the only lifeline from inflation – Inflation is implicit government bankruptcy
The money supply (the M2 index) in the US is rising again and persistent inflation is no longer a surprise. Price inflation occurs when the quantity of currency increases significantly above private sector demand. For investors, the worst decision in this currency disaster environment is to invest in government bonds and hold cash. The destruction …
The consumer, the average citizen, continues to suffer…
In April, former US Treasury Secretary Larry Summers drew laughs from investors when he said the Fed’s next move might be tightening, not easing. In other words, Mr. Summers is predicting another rate hike, which could cause the markets to… explode. And the truth is that few traders are still laughing. Of course, the likelihood …
Slowly and steadily cracks are appearing in the Financial System
The FED raised interest rates above 5%, yet the US economy is not broken. The bond yield curve has been inverted since 2022 and has remained inverted ever since. The lags looked short, with the US economy only briefly causing concern in 2023 when there was a consensus among market participants that a recession would …
How far or close are we from a painful crash?
The economic cycle we are experiencing is very different from most economic cycles we have experienced to date in our lifetimes. This means that we are in an income-led expansion, but also in an income-led consumption expansion, meaning that citizens in the US are enjoying wage growth of 6% per year, with personal consumption spending …
The European economy will die a slow death day by day – Unless something changes immediately
Europe’s economic underperformance has long worried politicians. But the problem has climbed to the top of the debate agenda now that the development gap with the US has widened, following the twin shocks of the coronavirus pandemic and Russia’s war in Ukraine. Last month, French President Emmanuel Macron warned that Europe faces a “mortal” threat …
The BRICS prepare a Central Bank and buy gold to support the common currency
China, backed by Russia and South Africa, is planning the final assault on the still-strong dollar by introducing a new currency, to be issued by a BRICS central bank that will combine the strengths of the respective currencies of the five largest economies join the group. At the same time, the replacement of the dollar …
Inflation – Recession nightmare returns for stockholders
Journalists in the financial press often speak of a Goldilocks economy (“not too hot, not too cold”) in tribute to the Fed’s finesse in manipulating interest rates. They also use the term “soft landing” because the Fed is supposed to manage to tame inflation without causing a recession. However, these narratives, in fact, have no …
Excessive Public Debt is killing the Middle Income class – the “lifeblood” of Consumption
Every promise by politicians to increase public spending – and especially those concerning social transfers – resonates positively with voters. These promises may win elections, but what voters themselves should be asking is: Who pays the bill? The common narrative in the US that the debt is unsustainable which has a life of 40 years …
Weak development and the Global financial system with multiple problems
After the great financial crisis of 2007 – 2008, regulatory authorities, worldwide, are engaged in continuous efforts to remove, in every way, financial risks. However, mistakes on their part are not lacking. A typical example is the crisis of regional banks in the USA, which was triggered by Silicon Valley Bank, which until that time …