Today James Turk warned King World News that investors around the world missed a historic news release that will not only impact gold but also the world.
July 29 (King World News) – James Turk: “There was some important news this past Thursday that is being overlooked, Eric. It was missed I think because everybody’s attention was and still is focused on the Fed as we await their announcement of a 0.25% rate cut. Attention may have also been diverted because this news was misrepresented by much of the mainstream media…
To learn which junior explorer is looking to drill some of the best holes in the world CLICK HERE OR ON THE IMAGE BELOW
Debt Ceiling Removed
A typical headline in the MSM was ‘White House and Congressional Leaders Raise Debt Ceiling’. But that’s not what happened. They didn’t raise the debt ceiling limit. They removed it. That means until July 2021 there is no limit on what the federal government can spend and then borrow to fund its spending.
The argument has been that federal spending is good because it increases GDP. That argument fails on the basis of financial logic because it ignores the fact that debt has a cost, and therefore it comes with consequences. Look at it this way: Borrowing to make a sound return – for example, a company borrowing to build a new plant to expand its business – is one thing. But borrowing to fund consumption of a spendthrift lifestyle is something entirely different.
Unfortunately, federal government borrowing – particularly since the financial crisis – has fallen into the latter category. Here’s a chart to prove it. This eye-opening chart will stun many people.
HITTING THE WALL: Government Borrowing To Boost GDP Is No Longer Working
Borrowing by the federal government to fund its increased spending no longer helps GDP. In other words, federal debt has been rising faster than GDP since the financial crisis.
The implications of last week’s debt ceiling decision are ominous. We are moving ever closer to what Ludwig von Mises called the “crack-up-boom.” He observed in Germany in the early 1920s that additional spending by the government resulted in a growing debt burden that eventually caused a collapse in the German government currency.
It resulted from a twofold impact. As the supply of Reichsmarks increased, the demand for them fell. Rising supply and falling demand means the purchasing power of money falls, which is what happened to the Reichsmark and is happening today with dollar inflation. Yet the German government leaders as well as the head of the German central bank all believed they were doing the right thing because they were following conventional wisdom. Namely, all the top economists of their day were telling them that more government spending will boost the German economy, regardless of the debt.
We all know it didn’t work out that way. The hyperinflation of the Reichsmark is one of the best known examples of government mismanagement of its currency. Money printing outran economic activity.
US Crack-Up Boom
So is the US doomed for a crack-up-boom? Obviously the future is unpredictable, but at least for now the dollar is headed toward a similar fate. And I don’t see anyone rushing to turn things around. If past history is any guide, we should be prepared for a dollar collapse described in my last book, “The Money Bubble.” And the best way to prepare for that inevitable dollar collapse is to own physical gold and silver. Both are just getting started in what, over time, I expect will prove to be a historic bull market for the precious metals.”
The powerful KWN audio interview with one of the true veterans of the gold world has now been released and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
KWN Special Audio Release Sunday
READ THIS NEXT! KWN Special Audio Interview Has Now Been Released! CLICK HERE TO READ
More articles to follow…
In the meantime, other important releases…
Greyerz Just Warned Central Banks Are Now In Panic Mode, Worried The Financial System May Disappear Into A Black Hole CLICK HERE TO READ
Bullion Banks & Commercials Ramp Up Short Positions In Silver, Add To Gold Shorts CLICK HERE TO READ
Central Planners Face A Serious Problem As Looming Crisis Will Be Catastrophic CLICK HERE TO READ
One Of The Greats Just Warned The Fed Needs A Half Point Cut Now, And More Soon CLICK HERE TO READ
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