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U.s.a To Default


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“Negative real interest rates cause consumers, businesses and governments to borrow more money. When more money is borrowed into existence, the supply of money grows. Increasing money supply growth reduces the value of dollars already in existence. The YOY change in M2 money supply growth is near 10%. Since U.S. economic output is around 2%, the supply of goods and services is growing far below the rate of money supply growth. This causes aggregate prices to rise and reduces the value of the dollar, while boosting gold prices.

Finally, our government just requested permission for yet another $1.2 trillion increase in the debt ceiling. U.S. debt stands at over $15.2 trillion and is now estimated to be larger than America's entire economic output in 2012. The proposed increase would boost the debt ceiling to $16.4 trillion and would only be sufficient to last until the end of this year.

U.S. debt and deficits are running over $1 trillion per annum and amount to over 700% of Federal revenue. And just last week, we learned that the monthly budget deficit climbed to $85.97 billion in December, from $78.13 billion in the same month a year earlier. The only relief from such debt will be a default on the part of the United States. A sovereign U.S. default would be pernicious for the dollar and massively bullish for gold.

The simple truth is the U.S. dollar is under increased assault from negative real interest rates, increased counterfeiting from the Fed and a national debt the government is attempting to inflate away. That truth isn’t made less painful just because a European vacation is getting cheaper.

Since the intrinsic value of the dollar continues to deteriorate, investors would do well to ignore the dollar’s temporary and beneficial measurement against the Euro and focus on its true fundamentals, which are forcing investors towards gold.”

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Edited by Asheron
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