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The Poor United States Economic Sentiment Screams “Buy Gold”

The manufacturing and consumer confidence weaknesses of the United States are deeply concerning, particularly considering that all those allegedly infallible Keynesian policies are being applied intensely.

Considering the insanity of deficit spending driven by entitlement programs, the decline in the headline University of Michigan consumer sentiment index in March to 76.5 from 76.9 is even worse than expected. Let us remember that this index was at 101 in 2019 and has not recovered the brief bounce shown by the re-opening effect in March 2021. Consumer confidence is still incredibly low, and a decline in the expectations index fully explains the most recent decline. Persistent inflation, high gas prices, and declining real wages may explain the poor expectations of the average citizen. Furthermore, this poor consumer confidence reading comes after poor control group retail sales last month.

No, this is not a strong economy. The consumer confidence index, labor participation, and unemployment-to-population ratios, as well as real wage growth, remain massively below the pre-pandemic level, and this after $6.3 trillion in new public debt that will likely reach $8 trillion by the end of 2024.

The manufacturing weakness of the United States is also a problem because this should be a period of high growth, considering the opportunities generated all over the world. Industrial output bounced 0.8% in February, but the January figure was revised to a larger 1.1% slump. If we factor in the decline in the Empire State survey to -20.9 in March, it looks like the manufacturing decline will persist.

The shape of the United States economy also reflects the impossibility of the soft-landing narrative. Inflation remains well above target, and bond yields are reflecting the reality of persistent inflation. Furthermore, money supply growth stopped declining months ago.

If the money supply rises and government spending continues to rise, the Fed will be unable to cut rates, and the impoverishment of citizens will continue.

This is the result of insane fiscal policy that increases spending and taxes. Weak growth, manufacturing decline, and worsening consumer confidence.

Demand-side policies and Keynesian experiments are leaving a once-strong economy on the same path as the euro area: stagflation. A warning sign should be the fact that the increase in public debt completely justifies the gross domestic product recovery.

This is the problem of extraordinary monetary and fiscal experiments. Governments embrace massive spending and debt monetization under the premise that they will implement control policies if the warning signs appear, but when they do, they never stop spending. Economists close to the government said that the administration would reconsider and adjust its budget if inflation rose, and alarm bells rang. Now we have heard all the alarm bells, and the administration continues as if nothing happened. The Inflation Reduction Act became the Inflation Perpetuation Act; the rise in government borrowing is now evident in the ten- and 30-year curve; and the private sector is in an obvious contraction.

Trusting governments to moderate spending after an expenditure binge is simply a very dangerous bet that always ends with worse conditions for citizens. Once they start, they cannot stop, and the inevitable end is higher taxes, weaker growth, lower real wages, and a decline in the purchasing power of the dollar. All the figures in the US economy scream “buy gold” because the government will always prefer to destroy the currency than to moderate the budget deficit and government size in the economy.

U.S. Swing States Misery Index Shows Bidenomics is Failing

One of the most dangerous things that a government can do is present a glossy picture of the economy at a time when families and small businesses are suffering. Governments are always optimistic, but sending euphoric messages tends to backfire, especially when the situation for the middle class is complicated.

In the United States, the Biden administration’s message of “the strongest economy in decades” is not just an exaggeration; it may anger voters who suffer the burden of negative real wage growth, accumulated inflation, and higher taxes.

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Bitcoin Will Not Kill the US Dollar, The Government Will.

In a recent interview with Seth Meyers, President Biden mentioned that the United States has the strongest economy in decades. However, the reality shows that the 2023 GDP growth adjusted for the accumulation of public debt was the worst since 1930. The U.S. national debt hit $32 trillion in June 2023 and surpassed $33 trillion in September. The U.S. national debt now stands above $34 trillion and is rising by $1 trillion every hundred days. The trend is exceedingly worrying because the next trillion comes faster every time, and all this is happening in an alleged recovery with strong employment growth and rising earnings.

Debt matters, and there is a reason U.S. citizens do not see such a positive picture. Negative real wage growth, diminishing purchasing power of salaries and savings, and a much tougher position for families to make ends meet.

Continue reading Bitcoin Will Not Kill the US Dollar, The Government Will.

Record Global Debt: A Ticking Time Bomb for the World Economy

The relentless increase in global debt is an enormous problem for the economy. Public deficits are neither reserves for the private sector nor a tool for growth. Bloated public debt is a burden on the economy, making productivity stall, raising taxes, and crowding out financing for the private sector. With each passing year, the global debt figure climbs higher, the burdens grow heavier, and the risks loom larger. The world’s financial markets ignored the record-breaking increase in global debt levels to a staggering $313 trillion in 2023, which marked yet another worrying milestone.

In the Congressional Budget Office (CBO) projections, the United States deficit will fluctuate over the next four years, averaging an insane 5.8 percent of GDP without even considering a recession. By 2033, they still expect a 6.9 percent GDP budget hole. Unsurprisingly, the economy, even using optimistic scenarios, stalls and will show a level of real GDP growth of 1.8% between 2028 and 2033, 33% less than the 2026–2027 period, which is already 25% lower than the historical average.

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