Next Financial Crisis Has Already Started…And We Have Just Begun to See the Results of our Irresponsibility

As debt service payments rise (the U.S. sovereign debt is well on its way to $30 trillion), other priorities that could add value to the economy will be starved out of the budget. It’s a vicious cycle.

So why has the dollar been rising?

The answer is that the USD is the only game in town; it’s the cleanest shirt in the dirty clothes pile. Investors have nowhere else to go.

In a recent newsletter to its clients, precious metals dealer Birch Gold Group stated as much: “The greenback’s rise also reflects confidence in the United States economy and concerns about the prospects elsewhere.” They go on to say, “On Tuesday, the International Monetary Fund lowered its estimates for global growth this year to 3.3 percent from 3.7 percent, and also reduced its forecast for 2015 to 3.8 percent. Europe got some of the biggest reductions with only 0.3 percent expected growth for the Eurozone economy. In contrast, the forecast for the United States is 0.5 percent.”  

But what happens when the world sees that America won’t pay back her debt?

The economic numbers coming out of the United States have been misleading.  Yes, the job numbers have improved; but the economy is generating part-time, low-wage employment. Almost 100 million Americans have left the workforce.

This is not the consequence of growing, robust economy.  It is the consequence of a sick economy supported by the Fed’s sugar-high, which is slowly being removed.  As the Fed stops its bond buying to create demand for U.S. treasuries to keep interest rates low, the American economy will come under further pressure.

Obamacare will soak up additional funds from the federal budget as outlays are scheduled to increase exponentially over the coming years. The next big bailout will be for the insurance companies participating in Obamacare.  The risks and threats to the U.S. economy are great, and we are not dealing with reality.

The next financial panic has already started. The federal budget will grow, and the deficit will grow, while the world economy is slowing.