It took the USA 218 years to grow its national debt to 9 Trillion dollars. Take a look at the graph above. From 1792 to 1980, the national debt, while rising as the 20th Century progressed, was still under 1 Trillion dollars.
Between 1980 and 2010, the debt ballooned to that 9 Trillion dollar figure…
…but what’s scary is that in the space of just 7 years, between 2010 and 2017, successive US government administrations have succeeded in more than doubling that debt figure to somewhere north of 18 Trillion dollars.
And in the next 3 years, it’s estimated that another 5 Trillion will be added to the debt.
Way to go guys!
That is one massive acceleration in the creation of debt.
And that’s just the debt that’s on the books.
The USA has “off balance sheet” unfunded liabilities of over $100 Trillion in an accounting exercise that has echoes of bankrupt corporation Enron.
If you look at the amount of new gold that has been added globally over the same time frame, it’s tiny in comparison at only 63 million ounces.
Let’s look at those two numbers with all the zeros added:
$9,000,000,000,000 versus 62,720,000 ounces.
That amount of gold is worth just short of $700 billion, or less than 13 times the increase in the U.S. debt in just 7 years.
And this is where the key issue lies.
On the one hand the government seemingly has the ability to print money infinitely and at an alarmingly rapid rate (that’s Quantitative Easing in action) and on the other hand is a finite resource that can only be increased at the rate that we can find it, mine it and refine it into gold jewellery, coins and bars.
The USA is not alone in going this. Mario Draghi’s ECB have created €1.2 Trillion (Euros) in just 5 years, badly impacting the balance sheet of the European Central Bank (ECB).
And the United Kingdom’s Bank of England has a balance sheet of GBP£435 billion after years of printing or electronically creating currency to try and engineer a recovery from the financial crisis.
Global debt levels are now a whopping 327% of world gross domestic product (GDP) and have surged to $217 trillion in the first quarter of 2017. That’s a debt that can never be paid.
A massive $120 trillion of new debt has been added just since the financial crisis.
With that in mind, now which do you think will be a better store of value in the coming years?
Dollars, euros, pounds and other fiat currencies or gold coins and bars?