Chuck Butler of Everbank writes The Daily Pfennig. He has been accurately calling for sanity in regards to the addition of debt in our country. This is what he had to say yesterday.
So... Here I am on a Wonderful Wednesday, and I just finished my day job which means it's now time for me to begin reading, researching, and thinking about what to write about in Thursday's Pfennig!
On this day, we had some monstrous black clouds move in from the west... And I couldn't help thinking that one day, those same monstrous black clouds are going to move in and take over the U.S. economy. There's nothing new here folks... It's just another rant on deficit spending... If you don't care to participate, skip ahead to the Big Finish...
This time I'm going to quote some facts from the IMF... Not that I've made stuff up before, it's just that my economics professor for continuing education, is in love with the IMF, so, this is really to appease her!
You know, that the U.S. deficit spending has been going on for about a decade now, and that it has taken huge strides to increase the total deficit in the past two years. I've gone through all that with you before, right? OK... Here's the first blurb from the IMF...
IMF's analysis of the U.S. economy, that under the Obama administration's current fiscal plans, the national debt in the U.S. (on a gross basis) will climb to above 100% of GDP by 2015 -- a far steeper increase than almost any other country.
But level of debt isn't the only problem. Then there's the fact that the US has a far shorter maturity of government debt than most other countries, meaning that even if it weren't borrowing any extra cash it would have to issue a large chunk of new stuff each year as things are.
You know... The U.K. Telegraph does a much better job of reporting on the U.S. deficit than do U.S. news organization (except the Pfennig!) Most of this stuff was from an article they printed. In addition though... Here's the killer... a country's gross financing needs represents how much debt it has to issue in the coming years to keep itself functioning... And here's where the cheese begins to bind folks...
The U.S.'s gross financing needs today is 32.2% of GDP, which is far greater than most countries, including Greece! The only major country to beat the U.S. on the road to ruins is Japan!
And to end this little discussion on the U.S. deficit and forecast, the yield in a 2-year U.S. Treasury is .80%... That's not even 1% folks... By the time the broker takes his pound of flesh from the yield as his commission, the holder of this magnificent piece of junk gets about .25%, or 1/4% WOW! Where do I sign up for that? NOT! Think about this for a minute... Most of the U.S. debt is financed through these shorter maturities, and they are paying less than 1%... How long will foreign investors continue to line up at the door for 1% yields?
I'm with Chuck! I'm also with Chuck on his advocacy of owning physical gold in a portfolio. He and his boss at Everbank (Frank Trotter) advocate adding a gold coin per person per year (those are one oz gold coins). Buy them today at Lear Capital!