Debt Levels Now at a Inflection Point as Gold Demand Skyrockets Among Central Banks
Are we on the brink of a revolution? I’m with Ray on this one! 🔄 But hold on, the US is hitting an inflection point, and the debt issue is like a hockey stick 🏒⬆️ Learn why soaring government debt might lead to even bigger problems! 💰💡 Let’s dive deep into the financial landscape and understand why a financially strong economy is crucial! 🌐💪 Don’t miss out on the insights – we’re breaking it down today! 🔍📊
CHAPTERS::
0:00 The Worse It Gets
1:10 Inflection Point
3:37 Moody’s Negative
6:29 Interest Cost
9:57 Federal Surplus or Deficit
13:56 Current Expenditures
15:54 S&P Defies Fed Push Back
18:20 Global Central Bank Buying
VIDEO TRANSCRIPT:
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The worse that gets, the more we are going to have that long term problem.
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And it’s just you can see it in the numbers.
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It’s just a matter of numbers.
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We are near that inflection point.
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So higher for longer keeps being the mantra for the central banks.
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The markets believe that the Fed is going to pivot.
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the meantime, debt right now is a whole
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lot more expensive via interest rates
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than it used to be for the 15 years that they kept it
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at zero interest rate policy or in other words, zip.
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this is a problem because that debt just keeps growing and growing and growing.
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has that gone better or what are the implications for you and me?
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Let’s talk about this coming up.
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I’m Lynette Zang,
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chief market analyst here at ITM trading of full service
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physical gold and silver dealer specializing in custom strategies.
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And by the way,
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if you haven’t gotten your strategy in place, click that cowardly link below.
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We are running out of time.
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And I’m going to start out with Ray Dalio, who expects a revolution.
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And I you guys know I agree with him.
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And I think we need it badly.
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But he’s also saying that the US is reaching an inflection point
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where the debt problem quickly gets worse because that
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all of that interest is like a hockey stick up now, right?
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So that can crowd other things out.
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And we’re going to talk about that today.
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But soaring U.S.
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government debt is reaching a point where it will begin creating larger problems.
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Economically strong means financially strong.
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And right now, this, I think, is interesting.
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The government spent 659 billion on net interest cost
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in fiscal 2023 to finance the debt.
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Now, here’s the thing about that, though.
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When they don’t take in enough money and we’re going to look at this,
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when they don’t take enough money in to pay all the interest on the debt,
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and then any of the principal,
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all of that interest goes into the principal
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and it compounds and it compounds very rapidly,
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especially in a higher interest rate environment.
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So I thought that was interesting.
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But you want to keep spending at the same level.
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There is the need to get more and more into debt.
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The way that works, it accelerates.
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We are at the point of that acceleration, which creates a supply demand problem.
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In other words, our governments are issuing a whole lot more debt.
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Who’s going to be buying it?
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We’ve been talking about this.
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It’s made worse by the other issues that we’re talking about,
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the internal political issue, the internal societal
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soci social conflict issue.
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Yeah, and China in particular, looking at all the issues that the U.S.
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has and others as well.
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China in particular has cut its holdings strongly,
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pulling back 17% during the period.
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This is the problem when you’re in a debt based system.
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When you get to a point where it’s not just
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that it’s not sustainable, but it is not payable
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and you need to take on more and more debt
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to pay the debt that you already have.
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At some point, creditors say no,
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and we are getting rapidly to that point.
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And actually in some cases we’re already there.
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U.S. Credit Rating outlook Changed to Negative by Moody’s.
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Now, Fitch and S&P previously stripped the U.S.
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of its highest investment grade.
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So the world is starting to shift in its confidence because the U.S.
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budget gap doubled between 22 and 23.
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Wait a minute.
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We didn’t really have a whole lot of problems in 22.
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Well, 22 between 22 and 23.
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Did we?
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I mean, we’re told that our economy is really strong and chugging right along.
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What matters is
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less the aggregate rating and more
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the constant reminder to markets
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that fiscal risk is rising.
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If you were if that were you,
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you know, and it doesn’t matter whether you are a government,
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a corporation or an individual, the laws of economy
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and finance work the same for everyone.
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The difference is that governments and central bankers
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have a money gun and they can just print money out,
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will counterfeit it, because this is real money.
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Jp morgan Chase.
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Jp morgan said only gold is money.
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Everything else is credit.
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That means that it’s debt.
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That is an accurate statement.
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So let’s take a look at what is really happening
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and how it’s likely to impact you.
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Because revenues are decreasing, income tax fed remittances.
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We’ve talked about both of those auction proceeds.
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And California tax receipts are all lower.
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At the same time, increased spending on debt, interest rates,
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Social Security, the FDIC bailouts, which I thought was really interesting
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since they told us back in March and April and June, don’t call this a bailout.
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This is it was a bailout because they weren’t ready for you yet
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to know about the balance, Medicare and defense.
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So all of those spending things have increased
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while their revenues have decreased.
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Can you see the problem?
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Can you see why the fiscal risk is rising?
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Because Moody’s downside risk to the US fiscal strength have increased.
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What are you waiting for?
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They want you to rush in and fill this gap in all the treasuries
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that they want to sell to you because the normal buyers are out.
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We’re at least severely reduce their purchases.
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They need you, the public,
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to buy more debt so they can do more of the same.
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And rob you more U.S.
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kicks off 50 fiscal year with an 87% surge in interest costs.
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The fiscal year ends in October.
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So this was written on November 13th.
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The budget deficit shrank in October because of deferred taxes,
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but the interest cost climbing due to rising
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Treasury bills is really a problem.
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And this is for the fiscal year through September, actually not even October.
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Effectively doubled U.S.
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debt interest bill.
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Rockets passed a cool trillion a year.
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And keep in mind that the issuance
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not just from 2020 as the government was dealing with the pandemic,
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but all of the debt that has been
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issued needs to be refinanced.
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Who’s going to buy?
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That’s the question.
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The question besides deficits of over 2 trillion in the foreseeable future.
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Climbing maturities following the increase of issuance
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from March 2020 will also need to be refinanced.
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Well, the more debt they take on,
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the more interest payment, the more interest they have to pay.
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And those interest payments can crowd out other
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spending programs like we saw.
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Well, if you watch Montre Monday, we’ve seen this
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just recently in
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where is a Chicago or there is somewhere that no New York City
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that has to reduce their police force
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because of the interest on the debt that they’re paying.
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All right. Well, let’s take a look at this.
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The federal government already spends more on interest than on budget areas
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such as veterans benefits, transportation and education.
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In this fiscal year, spending on interest will become greater
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than mandatory spending for income security programs.
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So SNAP, earned, Earned Income, Child and other tax
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credits, supplemental Security Income, Unemployment compensation,
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family support and foster care and child nutrition.
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All of these programs, we’re going to get to a point
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that this interest is going to crowd them out.
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They anticipate in 2024
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that those interest payments will surpass the combined amount
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that the federal government spends on major health care programs
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other than Medicare.
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So Medicaid, children’s health insurance programs
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and premium tax credits by 2028.
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They’ll spend more on interest than on defense, and this could happen
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much sooner, especially with that higher for longer mantra.
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In 3031, the federal government will spend more on interest
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than on non-defense discretionary, which includes funding for transfer
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station, veterans, education, health, international affairs,
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natural resources and environment, general science and technology,
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general government and more.
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Can you see what I’m talking about?
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Because debtors want to get paid.
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They want to get paid.
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And this is why we’re goofing around.
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Our government is goofing around with our credit rating
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because the lower the credit rating is as well.
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Guess what?
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The higher investors demand?
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And for taking that risk, of course, they can hide that risk for a long time.
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Sovereign debt. Government debt.
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But this is through October 24th.
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The federal surplus or deficit.
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And you can see what I was talking about before
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we actually had no it was an accounting gimmick.
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It wasn’t real.
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But okay, we actually ran a surplus
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back in like 99.
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Right. And you can see that
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once we went off the debt standard, it’s deficits ever since.
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Well, this is 2008 right here.
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This is 2020 right here.
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And you can see that it’s going down again with all of this spending
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in 1971, the deficit was 23.3 billion.
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Now it’s 1.7 trillion.
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Compounding interest.
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Compounding interest is not a good thing when you’re the one that’s paying it.
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Think about your credit card bills, right?
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If you don’t pay all the interest plus principal,
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then you start to compound interest.
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You’re never getting out of debt when you do that.
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And this is what it looks like.
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This is the federal debt, the total public debt,
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which is North 33.7 trillion in October of 2023
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and going much higher because of all of the debt issuance.
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And you know, the other part that I want to point out,
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all of these gray bars or are official recessions,
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and you can see that every time we hit a gray bar,
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the speed at which we grow debt
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is faster and faster and faster.
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So welcome to that hockey stick where we are, essentially.
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Well, look at this.
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We were straight up there.
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We’re straight up, we’re straight.
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Frick it up.
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How can you afford that?
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And how about that appetite?
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So again, I go back to institutional investors
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that invest your money in mutual funds and ETFs in 401
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KS and I are raised in in, in pension plans
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because they’re not the ones that are going to eat it in the shorts.
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You are
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you may
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not have choices, but I’ll tell you right now,
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if you don’t have choices, you better balance out your portfolio with gold
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because that’s going to give you
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true diversification.
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And do you think that investors
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are going to demand higher interest rates for the added risk
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so the markets are going nutty on the Fed pivot,
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but those are the markets.
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Those are the interest rates
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of the overnight markets that they can control directly,
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indirectly.
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It’s buying more of the debt to create an illusion of demand.
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And they’re trying to run off their balance sheet
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to give them some headroom to grow that balance sheet again.
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But we are in such a precarious position
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when you just don’t realize it.
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And this is federal government interest payments on the debt.
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And remember, we’re not really seeing the truth
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because there’s compounding interest in those deficits.
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They don’t talk about that.
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God forbid they should talk about that.
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But you can go into the Fred, you have all the links on the blog,
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you can go into the Fred.
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And actually the one that you would go into
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would be this one, the the total debt.
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And you can
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click a button and you can see the total debt
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all the way back and do your own calculations
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and you’ll see that what I’m saying is true.
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But even when you’re looking at this, these are the interest payments
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and look at how that has spiked since 2020,
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even ignoring the fact
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that that those interest the interest on that debt is compounding.
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This does not reflect that.
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That simply reflects the interest on the debt period.
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So I think you can see how we already are at that hockey
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stick level of going straight up and what’s the mantra Higher for longer?
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Higher for longer.
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it’s a big problem when they’ve got to issue a whole bunch of debt.
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But you can see where we are in the interest.
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The Fed funds effective rate because this is the rate
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that the government or the central bank controls
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directly, the overnight rate.
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And you can see, you know, that’s broken out, etc..
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But if the government is spending
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more than it’s making, they’re borrowing to pay the interest on the debt.
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And that’s exactly what’s happening.
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And therefore, the laws of compounding ensure
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that the interest on the debt will crowd out other spending.
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They’re going to have to reduce security.
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They’re going to have to I mean, they’re really going to pay for infrastructure.
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No, just like they’ve been postponing it forever and ever and ever.
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They’re going to be raising taxes.
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They don’t have any choice about that.
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This can help protect you from that.
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So you have to get used to
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like the Bank of England said, get used to being poor.
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Well, is that okay with you?
00:15:35:17 – 00:15:39:22
Because I suggest you click that cowardly link and get a strategy in place
00:15:39:22 – 00:15:42:24
and get it executed and fight.
00:15:43:00 – 00:15:44:00
That’s how we fight.
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We fight with our wallets.
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You’re going to stay in the system.
00:15:48:06 – 00:15:48:28
That’s your vote.
00:15:48:28 – 00:15:51:28
You’re going to buy gold and silver and pull it out of the system.
00:15:52:00 – 00:15:54:25
That’s my vote. What’s your vote?
00:15:54:25 – 00:15:59:25
S&P defies Fed pushback in longest win since 21.
00:15:59:27 – 00:16:02:27
The markets no longer believe the Fed
00:16:03:04 – 00:16:06:03
its bets on that Fed pivot next year.
00:16:06:03 – 00:16:09:27
That sends bond yields sharply lower.
00:16:10:00 – 00:16:13:03
But it’s having problems getting past a certain point
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because of all the problems that we’ve discussed, not just here
00:16:17:02 – 00:16:21:01
but ad nauseum for quite some time.
00:16:21:04 – 00:16:25:20
The really important piece of this is that the markets no longer
00:16:25:20 – 00:16:31:16
believe the Fed and confidence is critical in a Ponzi scheme.
00:16:31:21 – 00:16:32:21
It’s critical.
00:16:32:21 – 00:16:36:14
You gotta have that confidence and they gave it up.
00:16:36:14 – 00:16:39:08
I mean, that was like a key tool that they had.
00:16:39:08 – 00:16:41:09
They don’t have that anymore.
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And by the way, how much more interest will markets demand?
00:16:47:10 – 00:16:52:09
Because when the Fed does pivot and pushes the rate those rates down,
00:16:52:12 – 00:16:56:14
how much damage will have been done to that point,
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not just in our confidence, in our trust in the markets,
00:17:01:08 – 00:17:04:08
but in what’s happening in all of the markets.
00:17:04:14 – 00:17:09:07
How many of those zombie companies will be out of business
00:17:09:15 – 00:17:13:15
because they’re on the verge of it right now?
00:17:13:18 – 00:17:15:02
How awful
00:17:15:02 – 00:17:18:09
is the landscape, the market landscape
00:17:18:09 – 00:17:22:00
going to look because of these high interest rates?
00:17:22:05 – 00:17:27:06
They got us used to this hope, Liam, of, you know, free money, which I already did.
00:17:27:06 – 00:17:29:09
This is no more in there.
00:17:29:09 – 00:17:32:20
But they’ve already gotten this used to zero interest rates
00:17:32:20 – 00:17:34:13
and all of this free money.
00:17:34:13 – 00:17:35:26
It’s like an addict.
00:17:35:26 – 00:17:41:09
You have to keep giving them more and more and more to make them seem normal.
00:17:41:15 – 00:17:45:11
But it comes to a point where it doesn’t matter how much you give them,
00:17:45:14 – 00:17:46:29
nothing is going to work.
00:17:46:29 – 00:17:48:26
And that’s what Ray is talking about.
00:17:48:26 – 00:17:51:04
That’s what I’ve been talking about.
00:17:51:04 – 00:17:53:01
Are you ready for that?
00:17:53:01 – 00:17:54:22
We don’t have years.
00:17:54:22 – 00:17:59:07
Look at where we are. We don’t have years.
00:17:59:09 – 00:17:59:20
And it’s
00:17:59:20 – 00:18:02:20
going to impact the level of interest.
00:18:02:23 – 00:18:07:20
Both of these things, the Fed credibility and the demand from investors,
00:18:07:20 – 00:18:11:12
which we’ve seen will have an impact on the level of interest
00:18:11:12 – 00:18:14:27
on this mountain of compounding debt and compounding
00:18:14:27 – 00:18:17:27
interest,
00:18:17:29 – 00:18:19:09
broad based buying.
00:18:19:09 – 00:18:20:23
So what’s the solution?
00:18:20:23 – 00:18:24:11
Well, let’s see what the central banks are doing for themselves,
00:18:24:11 – 00:18:27:03
because who knows more about what they’re doing than they do
00:18:27:03 – 00:18:30:17
broad base of buying, which suggests that increasing gold
00:18:30:17 – 00:18:35:26
allocations are becoming an accepted prudential strategy across the segment.
00:18:36:03 – 00:18:41:17
You think this is global central bank buying through the third quarter?
00:18:41:17 – 00:18:46:03
So we just got this and let’s take a look at that
00:18:46:03 – 00:18:51:14
being the highest that they have done on record.
00:18:51:16 – 00:18:54:22
The highest, and we haven’t completed the year.
00:18:54:29 – 00:19:01:07
Why do you think global central banks are buying so much gold?
00:19:01:10 – 00:19:03:05
Cause they know
00:19:03:05 – 00:19:07:03
he or she who holds the gold holds choices,
00:19:07:03 – 00:19:12:04
and freedom holds your freedom.
00:19:12:06 – 00:19:16:11
And if you are self-sufficient with food, water, energy, security,
00:19:16:12 – 00:19:21:24
barter, ability, wealth preservation, community and shelter,
00:19:21:26 – 00:19:25:27
you’ve got your freedom, you’ve got your choices,
00:19:26:00 – 00:19:29:00
and they can’t force you into compliance.
00:19:29:04 – 00:19:31:01
You keep everything in the system.
00:19:31:01 – 00:19:32:27
You’re forced into compliance.
00:19:32:27 – 00:19:34:22
You’re not going to have any choices.
00:19:34:22 – 00:19:36:11
I want everybody that’s watching.
00:19:36:11 – 00:19:42:17
I want everybody that’s not watching to retain those choices.
00:19:42:19 – 00:19:44:29
Central bank demand for gold saw no
00:19:44:29 – 00:19:49:09
let up in Q3, building on the record breaking first half of the year.
00:19:49:12 – 00:19:54:18
Global official gold reserves rose by 3337 tons,
00:19:54:21 – 00:20:00:04
120% higher quarter over quarter
00:20:00:11 – 00:20:04:20
and the second highest third quarter totaling Q3
00:20:04:20 – 00:20:07:20
in 22 2022.
00:20:07:21 – 00:20:10:15
On a year to date basis, central banks have bought
00:20:10:15 – 00:20:14:10
an astonishing net 800 tons,
00:20:14:12 – 00:20:19:02
14% higher than the same period last year.
00:20:19:04 – 00:20:23:17
What does that tell you?
00:20:23:19 – 00:20:26:29
I believe so strongly that you should always do
00:20:26:29 – 00:20:31:20
what the smartest guys on any given topic are doing for themselves.
00:20:31:20 – 00:20:35:24
As I have shown you ad nauseum how easy it is
00:20:35:24 – 00:20:40:21
to manipulate that paper contract spot gold market that takes nothing.
00:20:40:21 – 00:20:43:29
It doesn’t even take very much money, easy peasy,
00:20:43:29 – 00:20:47:17
easy peasy to manipulate.
00:20:47:19 – 00:20:50:18
It’s the physical market where we see the truth
00:20:50:18 – 00:20:55:05
and whether you’re looking at the top tier or the average tier,
00:20:55:12 – 00:20:59:12
those have both broken out because demand is exceeding supply.
00:20:59:17 – 00:21:03:10
It’s a true cement demand supply market.
00:21:03:13 – 00:21:06:13
What are you doing about it?
00:21:06:16 – 00:21:08:26
The other thing that I want to keep in mind
00:21:08:26 – 00:21:13:11
is that it’s not all doom and gloom and being in the right place
00:21:13:11 – 00:21:18:26
at the right time with the right asset puts you in a position
00:21:18:28 – 00:21:19:29
where you can
00:21:19:29 – 00:21:24:26
retain your this is your freedom for yourself, for your family,
00:21:24:27 – 00:21:28:19
for people that you love and care about,
00:21:28:21 – 00:21:30:21
because everything else is a lie.
00:21:30:21 – 00:21:32:10
Everything else is a contract.
00:21:32:10 – 00:21:37:28
Everything else runs counterparty risk.
00:21:38:00 – 00:21:40:03
Speaking of that,
00:21:40:03 – 00:21:43:15
you make sure that you watch the latest video on the
00:21:43:18 – 00:21:48:08
municipal debt danger because we think that these things are so safe
00:21:48:14 – 00:21:52:05
the way they’ve been sold to us and they’re not.
00:21:52:07 – 00:21:56:08
Additionally, I’m sure you are really loving the lineup
00:21:56:08 – 00:21:59:29
that we have put together with Daniella Cambone and Taylor.
00:21:59:29 – 00:22:05:14
Kenny I mean, it really we have such a good team on this desk.
00:22:05:14 – 00:22:07:12
I’m really proud of us.
00:22:07:12 – 00:22:11:17
And again, if you haven’t done this yet, click that Colon Lee link below
00:22:11:19 – 00:22:16:16
and start your gold and silver strategy and get it executed.
00:22:16:19 – 00:22:18:24
Because having the right gold and silver
00:22:18:24 – 00:22:23:00
for your objectives and your goals is absolutely crucial.
00:22:23:04 – 00:22:24:04
And you want to do it
00:22:24:04 – 00:22:28:08
when you have the most number of choices, which is today, tomorrow.
00:22:28:08 – 00:22:32:16
I mean, I’ve seen choices be reduced since I’ve been accumulating.
00:22:32:18 – 00:22:34:16
Who knows about tomorrow?
00:22:34:16 – 00:22:38:05
This is a physical demand and supply market.
00:22:38:08 – 00:22:39:11
It’s off the market.
00:22:39:11 – 00:22:41:06
You’re not going to be able to get it.
00:22:41:06 – 00:22:44:21
So you want to get this done and executed a.S.A.P
00:22:44:21 – 00:22:47:14
because we are absolutely running out of time.
00:22:47:14 – 00:22:50:11
And if you haven’t done it yet, make sure you subscribe.
00:22:50:11 – 00:22:51:24
Leave us a comment.
00:22:51:24 – 00:22:53:11
Give us a thumbs up.
00:22:53:11 – 00:22:58:14
Share, share, share, share.
00:22:58:16 – 00:23:02:01
And remember that this
00:23:02:03 – 00:23:04:06
is your wealth shield.
00:23:04:06 – 00:23:06:19
And until next, we meet.
00:23:06:19 – 00:23:08:24
Please be safe out there. Bye bye.
SOURCES:
Ray Dalio says U.S. reaching a point where our debt problem gets even worse (cnbc.com)
US Credit-Rating Outlook Changed to Negative by Moody’s – Bloomberg
US Kicks Off Fiscal Year With an 87% Surge in Interest Costs – Bloomberg
US Government’s Debt Interest Bill Soars Past $1 Trillion a Year – Bloomberg
https://fred.stlouisfed.org/series/FYFSD
https://fred.stlouisfed.org/series/A091RC1Q027SBEA
