One of the most important data points to understand the coming years is debt-to-GDP.
Yes, you can argue about how to measure GDP. And there are some forms of debt, like those debts tied to entitlement programs, that aren’t even included.
But using the government’s own baseline numbers, things are getting ugly. And they’re getting worse, not better.
History tells us that when a nation’s debt-to-GDP ratio reaches 130%, it is a point of no return.
Servicing that level of debt means lower systemic growth – making it even more challenging for those who want to ignore the debt and try to grow the economy out of the problem.
The latest spending boondoggle does nothing to change the trajectory, and the extension of the 2017 tax cuts and higher SALT deductions, among other goodies, will accelerate the timeline.
If the party of so-called “small government” is just looking to juice the private sector now rather than avert a crisis – then such a crisis has always been inevitable. Be prepared.
~ Addison
P.S. With out-of-control spending still the norm in Washington, two assets look attractive as safe havens: gold and bitcoin. With the dollar weakening on top of everything else, we see the potential for gold prices to soar far higher over the next 18 months. It’s also no surprise to see silver breaking higher, finally jumping past $35 and topping $36.
Meanwhile, with all the institutional interest in bitcoin, which is getting over 98% of the capital to the broader crypto market right now, it’s possible that bitcoin could also be on a similar trajectory in the months ahead as a crisis looks increasingly likely.
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