Everyone knows that our ‘official’ US debt is around $20T on our ‘cash basis’ of accounting. When taking all our promised future payments into account and running them back to their present worth then the real US debt is around $80 to $120 T. Considering the total US GDP for an entire year is only $18.5T these numbers are pretty unpayable – EVER. Of course this means only one thing which is default. Sir Alan Greenspan said that we could never default in that we could just print up more dollars, however, printing more dollars and making them worth less is indeed another indirect form of default. The big question is exactly how much longer can this go on?
The bonds of the US government are backed by the ‘full faith and credit of the government’. It is the ‘faith in government’ that I want to talk about in this article
There are many reasons that drive the price of gold up in terms of dollars, however, the number one reason that will drive it much higher is loss of confidence or ‘faith’ in the government.
Well how is ‘faith’ in government playing out in 2017? Let’s look at just a few highlights:
CONGRESSIONAL APPROVAL RATINGS
The US congress has 100 senators and 435 representatives. Each senator has a staff budget of between $2.5M to $4M depending on state population. Each representative has a staff budget of around $1M and has about 18 employees (plus interns and part timers). Of course committee staffers are on a separate budget. So in addition to our 535 elected representatives in congress there are 12,000+ staff members to assist them in their duties. Before the 1860’s, members of congress didn’t even have offices or staff and worked at their desks in the capitol. Small wonder their approval rating is around 3% now.
This post was published at GoldSeek on Monday, 26 June 2017.