The Debt of America (and how Gold could be the answer)

Washington DC is spending money at a rate never before seen in our lifetimes.  The printing presses are running overtime trying to create enough paper money to keep us out of the Great Depression 2.  While this effort might hold off “end times” for now, many wonder it it won’t end up doing more harm than good over time.

The national debt now stands at over $13 trillion dollars, but don’t blink, because by the time your read this, it will be even higher.  As the debt goes higher and our tax base shrinks because of the sour economy, it doesn’t take a mathmetician to realize that something has to give.

As bad as a debt of $13 trillion sounds, you have to also take into consideration that according to the Michael Hodges financial newsletter (April 2009 edition) there is also a staggering $44.2 trillion private household, business, financial sector debt.  Add it all up and we are $57 trillion in the red and growing by the second.

What’s even scarier is that almost 80% of that debt has been accumulated since 1990, a period of time that was supposedly the greatest growth period in American history.  Take away the credit cards and home equity loans and we would have been in a world of hurt years ago.  We’ve been living on borrowed time for 20 years and that time is now up.

While we’d like to be optomistic, for all intent and purposes America is broke,  We were given an unlimited credit line and we exceeded it by a factor of 10.  Now it’s payback time and the checkbook is bare.

The shocking truth is that America could see an increase in home prices, an increase in the Dow and even a slight increase in their paycheck (for the record we doubt any of the 3 will happyen) and still be worse off tomorrow.  Inflation is the enemy and printed money without a gold backing will almost cretainly lead to less buying power for you and me.

Will the U.S. paper dollar be devalued to the point where it is virtually worthless?  Will a new currecny rise up up to take its place?  Will that currency need to be backed in some form by gold so that the sins of the past won’t be repeated?  Could a gold backing create a huge surge in the price of the precious metals?  Nobody knows for sure, but record amounts of money have been pouring into the metals markets over the past 2 years.  Could the big boys be selling you their stock while they inventory the gold?  Could $5000 an ounce gold be right around the corner?  Couldn the next big American pot of gold, be gold itself?

These and many other questions will be answered soon … Stay Tuned …

Opinion/Editorial …. not to be considered investment advice