THIS JUST IN: Staggering U.S. national debt hits an unprecedented $35 trillion, raising urgent concerns about inflation and the future of dollar-denominated assets. Taylor Kenney explores the significance of this milestone, its potential impact on your finances, and the broader economic implications.

TRANSCRIPT:

Hi everyone. Thank you for being here. Big news this week for those of us that have been paying attention. If you’re worried about inflation, a currency reset, or you have dollar denominated assets, you’re going to want to hear this. U.S. national debt hits a new record $35 trillion. Now, obviously, that is an astronomical amount. A number, though, is just a number.

We’re going to talk about why this particular one is so important, how it impacts you and what it tells us about what’s coming next.

So if we look at this article in more detail, it says this milestone comes just months after the U.S. eclipsed the 34 trillion threshold in January 2024, while the 33 trillion mark was reached in September 2023.

So if you’re sitting there and you feel like every couple of months you’re hearing that there’s a new record with the debt, it’s because there is. And at a certain point, we almost go deaf to it because it continues to be this noise. But this is when we need to be paying even more attention. The article goes on to say, by comparison, the national debt hovered around 907 billion just four decades ago.

So think about that. Forty years ago, the national debt was under $1 trillion. Now, every couple of months, we’re adding $1 trillion. This is telling us all we need to know that the rate at which the debt is growing is happening so much faster. The pace continues to pick up steam. And what that means is that whatever’s coming next is going to be coming sooner rather than later. And we’ll talk more about that in a second. Next article Dublin sounds alarm on U.S. government debt spiraling higher.

Now, there is a misconception in the United States that there will always be a buyer for U.S. debt. This is because the United States has had a privileged position being the global reserve currency, which means that for the most part, a majority of international transactions are done in U.S. dollar.

For how long? I can’t say. But it is simply not true that there will always be buyers for U.S. debt. And as we continue to rack up 35 Trillion, 36, 37, 40, at a pace that’s unsustainable. We are going to encounter some serious problems. Now, of course, the first one is inflation, which we’ve already felt and seen. What happens when this debt continues to grow.

The Federal Reserve is currently keeping rates higher to try and fight inflation, which is interesting because when you think about it, it’s at odds with what’s happening with the spending continuing to go up. And I have a reason why, and I’ve talked about this before, but this article says it well. There’s finite demand for available capital out there to fund government debt issuance.

So again, there’s finite demand for this government debt. And the only way you’re going to entice demand for government bonds is through higher rates. Higher rates makes the government bonds more favorable. Isn’t that interesting. Your interest expense goes up, which requires higher taxes, then crimps economic growth, which again feeds into further economic contraction a vicious spiral. Now essentially what this is saying again is that there is not always going to be this infinite demand.

There’s a finite demand for government debt. So as we continue to spend, spend, spend, spend, spend, spend, it’s going to get harder and harder to find buyers for this debt. This means that we are going to see a situation where inflation continues to rise, and it feels like the end of this current fiat currency, the US dollar life cycle, is coming to a close because this cannot go on forever.

It is unsustainable. What this means, again, is that the US dollars in your wallet, in your pocket, in your account are going to be worth less and less and less at a quicker and quicker rate. Now, that’s not concerning. I don’t know what is. Now it’s interesting too because thinking about there not being buyers for this debt. I saw this one sentence that stood out for me in the World Gold Council’s Q2 2024 gold demand trends.

This quarter, right off the bat, gold demand, firm record prices prevail. Central banks remained decisive. If you read this, there’s a lot of good stuff in here. But if you continue to read this, when we get to the central bank portion, it says that central banks continue to buy gold in record demand. Two sided drivers of select emerging market central buying, where sanctions and sovereign risk remaining elevated.

Sanctions. We know what they’re referring to there. Of course, if we think about what happened with Russia, again, whether you agree with it or not, the United States putting sanctions on Russia and essentially showing that any kind of U.S. reserves that you have can be frozen, they can be seized.

They’re really not yours if you disagree with the United States has made countries across the world move away from the dollar at an even more rapid pace than they were previously. But the second one here jumped out. Sovereign risk remain elevated. So what they’re talking about here, the sovereign risk is the debt. So essentially, as the United States debt continues to grow, as we know that the credit rating of the US is downgraded as banks have failed, as there’s more geopolitical risk.

What is the likelihood that this dollar is going to remain at the level at will? What is the likelihood that this dollar will have any value at all? I mean, these banks are looking at the big picture and they are looking long term, and they want to make sure that they are protected outside of the dollar because they can’t count on it anymore, especially at the rate that things are going.

And that’s why this 35 trillion is so concerning. Because we’re going to have this immediate impact over in the next however long months year inflation is obviously going to continue to be a problem. And then we have the bigger picture that the US dollars life cycle is going to be coming to an end. And when that happens, anything we have that’s dollar denominated poof.

The value is gone. Which is why again, I look at what the central banks are doing here buying gold to protect themselves as not only a hedge against inflation, but also a store of value in a way to protect themselves against everything else that’s going on versus the dollar, which we know is only going to continue to lose value.

That’s why I personally believe in protecting yourself with physical, tangible gold and silver. Now, if you don’t already have that insurance policy in place, if you don’t already own gold yourself, I would highly, highly suggest that you do so because every couple of months that debt goes up by $1 trillion. So the time really is now because what I would hate to see is that in three months and four months, you’re sitting there with another trillion dollars of national debt.

Inflation continues to rise, and you’re in a situation where your dollar’s worth less doesn’t go as far. You’re not able to buy as much. That impacts, of course, your savings, your retirement, everything. If you have any questions about that or you want to understand how you can protect yourself, you can click on the link below and talk to one of our expert analysts. That’s what I would recommend doing. It’s a great place to start.

They will be able to help you get a custom strategy in place that makes sense for you to protect against all of this that’s going on. As always, thank you so much for being here. I’m Taylor Kenney with ITM Trading, your trusted source for all things gold, silver and lifelong wealth protection. Until next time.

SOURCES:

https://www.foxbusiness.com/politics/us-national-debt-hits-new-record-35-trillion

https://www.reuters.com/business/finance/doubleline-sounds-alarm-us-government-debt-spiralling-higher-2024-07-31

https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-q2-2024