I recently read an analysis of the United States federal debt. The analysis showed the debt rising 6-12% every five year period since 1980 (with the exception of 1995-2000 when it fell 9%). This analysis expressed the debt in nominal dollars as a percentage of the gross domestic product.
Warren Buffet, William J. O’Neill, Robert Kiyosaki, Robert Ringer and Donald Trump have all recently expressed bearish sentiment regarding the U.S. Dollar.
Overseas investors own over half of the marketable U.S. government debt, and with the falling value of the dollar, dollar investors are looking for a higher risk adjusted rate of return.
As Brazil, Russia, China and India Grow at their current economic pace, the supply of commodities tightens up, and the cost continues to rise for wheat, corn, oil, gold, silver…the list goes on.
Our Medicare hospital insurance trust fund is predicted to be depleted in 2020. Our Social Security trust fund is predicted to be depleted in 2041.
The recurrent argument suggests that without a gold standard (or a commodity backed currency), our government will simply print fiat money in lieu of balancing its budget, which mirrors what happened in other countries (such as Germany), who abandoned the gold standard, just before periods of hyperinflation.
I realize that forecasting the future is a fool’s errand, but I would like to know people’s opinion about our current monetary policy. Is this attempt to avert recession setting us up for another glut of liquidity and uncontrolled inflation? Is this just an example of media hyperbole? Where should I put my capital reserves?