Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Will ‘Infrastructure’ Spending Collapse the U.S. Dollar?

Currencies / US Dollar Jun 30, 2021 - 06:00 PM GMT

By: MoneyMetals

Currencies

Recent collapses of bridges and a Florida condo building highlight what can go wrong when basic structural and foundational elements are neglected and allowed to deteriorate.

As corrosion and cracking spread, they may go little noticed at first, with repairs and upgrades put off. Meanwhile, the risks steadily build of a single point of failure leading to catastrophic consequences.

America’s deteriorating infrastructure is badly in need of fixing. On that issue, there is wide bipartisan agreement.


On Monday, President Joe Biden touted a $1 trillion infrastructure deal moving forward in Congress with support among some key Republicans and Democrats.

It’s a rare glimmer of bipartisanship in a starkly divided Washington.

But bipartisanship doesn’t imply fiscal responsibility. Whenever Republicans and Democrats get together and agree on something, you can bet it will entail more spending – and therefore more debt.

Whatever the merits of infrastructure spending (and many politicians have an expansive view of what constitutes “infrastructure”), it won’t be offset by cuts in less essential government expenditures. Instead, lawmakers are proposing tax hikes and more aggressive IRS enforcement actions aimed at bringing home more revenues.

At the end of the day, however, the bulk of any new infrastructure spending will likely be paid for through borrowing. New currency units will be conjured up and pumped into things like concrete and steel.

With building materials and construction costs already surging this year, the government’s stoking of additional demand will only make the problem worse.

A larger inflation problem is brewing. It’s not about supply bottlenecks or surging demand in particular areas, though these phenomena are typically the focus of “inflation” stories in the mainstream media.

What underlies all the recent (and likely future) price spikes is currency depreciation that is being carried out systematically by the Federal Reserve at the best of Congress.

The Fed aims to engineer an inflation rate that averages 2% over time. According to central banker logic, deliberately pushing inflation above 2% is now warranted because of past undershoots.

Inflation is running hotter than the Fed expected. Not to worry because it’s “transitory,” Fed Chairman Jerome Powell insists.

But what if confidence in the U.S. dollar is more permanently broken? Could cracks in the foundation of the world’s reserve currency lead to a sudden and precipitous collapse in its value?

A dollar collapse scenario is certainly possible. But it may play out over many years or even decades rather than all at once.

The result would still be catastrophic for holders of U.S. dollars and bonds. Instead of a dramatic default or devaluation announcement, purchasing power losses would accumulate steadily and relentlessly – perhaps finally accelerating into a crescendo of hyperinflation.

It’s how many governments throughout history have dealt with unsustainable debts.

“I think unsustainable just means that the debt is growing faster than the economy. That's been the case for a long time,” Powell said in testimony before Congress last week.

“I have no question that the U.S. government will be able to pay its bills for the foreseeable future,” he added. “It's also true though, that we're on an unsustainable path.”

If federal finances are unsustainable, then how can Powell be so confident the government will have no problem paying its bills?

An individual or business on an unsustainable path would eventually get cut off by creditors and go broke.

Uncle Sam enjoys the privilege of an unlimited credit line with the Federal Reserve. As he continues to abuse that privilege, currencies with tightly limited supplies and zero counterparty risk – gold and silver – stand to gain in comparison to fiat Federal Reserve note profusions.

Precious metals are infrastructure – monetary infrastructure that instills confidence and stands the test of time.

Stefan Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2021 Stefan Gleason - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in