It is not hard to see how the U.S. economy has existed on life support since the middle of the 2007-2009 Global Financial Crisis and Great Recession crash. It was the enormously exploded balance sheet of the Federal Reserve that kept it going since then and helped it to crawl somewhat out of the financial mire.
To do this, the Fed flushed a never before seen amount of “financial stimulus” through the economy to prop it up and stave off imminent financial collapse. This happened in a variety of stages that began with the optimistically named Quantitative Easing programs one, two, and eventually three. It continued with rates at, near, or even below zero percent not only in the U.S. but around the economically developed world.
To put this into historical perspective, these are the lowest interest rates ever known to man. Back in ancient Greece more than 2,000 years ago, the rates never declined below six percent. In the Roman Republic and Empire, interest rates varied from four percent to more than 12 percent. This is to say that the interest rates in a whole raft of nations today are now lower than they have ever before been in around 5,000 years of written human history.
The reason this matters to you now is because the Fed has recently embarked on tightening policies about which no one can say exactly how they will finally play out. This past week they increased the interest rates to the greatest level since the end of the 2008 collapse nearly a decade ago. Analysts including Goldman Sachs have warned that it might be enough to burst the outrageous asset bubbles in both stock and bond markets.
The dangers to the investor markets are only part of the threat though, real as this may be for your retirement portfolio. The true peril lies in the life-threatening danger higher rates poses for the United States Federal budget. It seems like everyone has forgotten in the midst of their “irrational exuberance” that the American government requires $400 billion per year to pay only its interest on the Federal Debt of over $20 trillion. Yet this amount of interest comes at less than one percent interest rates. Look at this chart on what the Congressional Budget Office projects for future rates:
When interest rates rise, the government needs an additional $200 billion more to pay its interest only with one percent higher rates. At two percent higher rates, it requires $400 billion more. With three percent loftier rates, they would require $800 billion more. Again, as this chart below shows, these are the government’s own Congressional Budget Office projections:
And at four percent higher rates, they require a stunning additional one trillion dollars. This is not a one time sum either, but an every year amount. Keep in mind that at present the U.S. government only collects slightly more than $2 trillion in total tax base receipts every year and is already more than a trillion dollars over over budget each year. The problem is getting better not worse.
Is Your Retirement Portfolio Protected by Gold Against the Strategies of the Federal Reserve?
Obviously the government can not service its borrowing costs much longer that its own Federal Reserve central bank is raising on it. This doesn’t even take into account what is about to happen as the Fed stops reinvesting its proceeds that roll off from the Treasuries, agency debt, and Mortgage-backed securities it has been artificially propping up through its aggressive purchases the last near decade.
The Federal Reserve is operating in uncharted territory. Gold is the only historically proven asset with the experience to save your retirement portfolio from the bitter end to this massive and dangerous fiscal experiment the U.S. and other Western governments embarked on ten years ago. Click here right now to receive your no-cost, no-obligation gold IRA rollover kit from the industry-leading Regal Assets so that you will have all of the information you desperately need to prudently protect your retirement assets through a partial diversification of your IRA and 401k into physically held, real gold.