The House Votes To Suspend The Debt Ceiling

Historic Move By The House To Suspend The Debt Ceiling

Gold And Debt CeilingIn light of the recent discussion on the debt ceiling, and whether or not congress would approve extending the debt ceiling or not, it was astonishing when last week the House made the monumental decision to completely suspend the debt ceiling.  This means, if it is approved by the Senate, that there will be absolutely no limitations on spending until May 19th, when the debt ceiling issue must once again be re-evaluated.

Suspending The Debt Ceiling May Destroy The Dollar

Even though this temporary suspension has a time limitation (May 19th), in all likelihood we have set the stage for a more permanent suspension of the debt ceiling.  In many ways it is similar to Nixon, who on August 15, 1971 made the decision that it was no longer necessary to keep the gold standard and have gold backing the dollars.  42 years later, here we stand with very little gold backing the dollar and shaky economic policy.  Most often, politicians will take the road of least resistance.  Once the precedence has been set, it will be easier for them to continue to kick the can down the road and just extend the suspension.

The Dollar Is On The Slippery Slope To Hyperinflation Thanks To The Debt Ceiling

Since 1971, we have been sliding down a slippery slope towards inflation.  First Nixon removed the dollars link to gold, which allowed the government to have the power to inflate the dollar, leading to our current mess.  The last finger in the dike of our financial policy was the debt ceiling.  It was the one thing that was left to call us on the table for our outlandish spending, and horrendous fiscal policies.  Now that, the debt ceiling has been suspended it is inviting the flood of inflation to come and destroy the dollar.   It’s just like the head of China’s sovereign wealth fund was saying in Davos:  “Your money printing machine will have to slow down, or the world will lose confidence in the dollar.”

In Times Of Hyperinflation Which Investments Can You Turn To?

As an investor, this issue should have you concerned.  If the U.S. continues to ignore our unhealthy spending habits, its only a matter of time before the dollar is as worthless as any other piece of paper.  In order to protect yourself against inflation, you need to make certain that you are adequately diversified in gold and silver before that time arises.  For more information on how gold and silver can protect you in times of inflation speak to a redhawk advisor near you.

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