Investing in certified gold can be the panacea the government has admitted it cannot provide. Posted by James Randolph on December 16, 2010
It isn’t going to get better fast.
December 16, 2010 – The Congressional Budget Office’s (CBO) August update gave plenty of reason to diversify with certified gold investments, and things have not gone according to two major assumptions of the report.
The biggest impact comes from extending the Bush tax cuts, which the report assumed would be allowed to expire. However, the report did provide this estimate should that assumption prove false: “the deficit in 2020 would equal about 8 percent of GDP, and debt held by the public would total nearly 100 percent of GDP.” Not very encouraging news as we face “the second largest shortfall in 65 years.”
As anybody with a credit card knows, the real problem is servicing the debt – money spent on interest contributes nothing to wealth or economic growth. Larger deficits caused by the tax cuts and stimulus will “result in even greater interest costs” than the CBO’s current-law projections of “a fourfold increase in net interest payments over the next 10 years, from $196 billion in 2010 to $778 billion in 2020.”
Although the CBO expects there will be some short term improvement over its baseline predictions for real GDP and unemployment as a result of the tax cuts and extended stimulus spending, “later in the coming decade, real GDP would fall below the level in CBO’s baseline because the larger budget deficits would reduce investment in productive capital.”
The CBO reports that we are going nowhere fast. “Slow income growth as well as lost wealth” are the perfect recipe for runaway inflation. The Fed believes that it has everything under control, but that is of little reassurance to investors whose wealth is eroding and to countless unemployed who are no longer counted because their benefits expired long ago.
Investing in certified gold can be the panacea the government has admitted it cannot provide.
Senior Staff Writer – Certified Gold Exchange