Historically, the United States national debt has been an issue. Now more than ever before in the history of our nation, it is a significant concern. The national debt is at the point of hitting its borrowing limit, a situation that the US government must avoid if the country is to continue spending as it is. The argument has become a partisan one, as Republicans claim reckless spending is irresponsible, while Democrats claim continued spending on government services is essential.
Why Is the US Hitting a “Debt Ceiling”
Every year since the 2010s, America has been teetering on the brink of a debt crisis, with national debt perilously close to hitting a “debt ceiling.” The President and members of Congress are continually arguing over whether to raise it.
The United States debt ceiling, also known as the debt limit, is a legal limit on how much national debt the United States Treasury can incur, which limits how much money the federal government can pay on the debt they have borrowed.
United States national debt is a measure of debt owed by the federal government to its creditors. The national debt is a measure of the portion of federal debt held by the public, rather than the amount of debt held by the government. US government spending almost always surpasses its revenues, causing the national debt to rise continuously.
The National Debt Affects Everyone
With the national debt growing immensely year over year, it is not a surprise that the American population is starting to question how this may affect them.
US citizens are right to be concerned as the economic environment is bound to weaken. Government spending on interest costs increases as the federal debt grows, crowding out public investments. As more federal resources are diverted to interest payments, there is less available to invest in important areas for economic growth.
As the rate offered on Treasury securities rises, corporations in the United States are viewed as riskier, which increases the yield on newly issued bonds. In turn, this forces corporations to raise their prices to cover the increased cost of their debt service obligation. Then, this causes people to pay more for goods and services, ultimately causing inflation, which the public is seeing today.
It is also important to note that when a country is at risk of defaulting on its debt obligations, it loses social, economic, and political power. A national security issue is then imminent.
Gold As an Inflation Hedge
With inflation on the rise, people begin to look for ways they can preserve their money.
Historically, gold has been seen as a helpful asset that combats purchasing power against inflation during challenging economic times, since it tends to hold its value over the long term despite fluctuations. The COVID-19 pandemic increased the popularity of precious metal as a hedging instrument, which increased its price.
At Reagan Gold Group (RGG), we offer gold and silver investment solutions that are found to be essential in a weakened economy amidst national US debt. It is now time to begin re-evaluating your investments and find a proper hedge against inflation. With the help of RGG, both individuals and significant investors can make critical decisions that successfully impact personal and business futures.
Contact RGG today to learn more about how physical gold and silver can balance your portfolio, well before the deep catastrophes of a serious economic depression set in.