twist in time, page-6

The article was cut short. This is full.
It mentioned about the Fed rate decision.

Ben Carson, a Republican representative also said " Carson: I think our debt is horrendous. You know, one of the things that happens with this level of debt is that it's very difficult for the Fed to raise interest rates. And why is that such a problem?"

http://www.marketplace.org/2015/11/17/elections/full-interview-dr-ben-carson-economy


November 20, 2015
The Daily Market Report: Will Mounting Debt Ultimately Underpin Gold

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20-Nov (USAGOLD) — In the three short weeks since the debt ceiling was suspended once again, the U.S. national debt has risen dramatically to more than $18.6 trillion. That’s an additional half-a-trillion dollars in debt since early-November. Much of it — $339.1 billion — came on a single day; a new record one-day rise.

The budget deal that allowed the debt ceiling to rise was yet another Washington compromise, where a higher level of spending is allowed with some promise of slowed or reduced spending down the road. If past budget deals — including the most recent one in 2013 — are any indication, those promises of future fiscal restraint aren’t worth a hill of beans.

When the debt ceiling is reinstated in March of 2017, conveniently well after the 2016 elections, the national debt is likely to be around $21 trillion. That will leave us with a debt/GDP ratio around 120%.

But that doesn’t tell the whole story. In fact it only tells about a third of the story, according to David Walker, the former U.S. comptroller general and former head of the Government Accountability Office (GAO):


“If you end up adding to that $18.5 trillion the unfunded civilian and military pensions and retiree healthcare, the additional under-funding for Social Security, the additional under-funding for Medicare, various commitments and contingencies that the federal government has, the real number is about $65 trillion rather than $18 trillion, and it’s growing automatically absent reforms.” — David Walker
Walker, who served under both President Bill Clinton and President George W. Bush, went on to say that Americans have “lost touch with reality” when it comes to government spending. Certainly American politicians have.

When the debt ceiling is ultimately raised again after March 2017 — and it most assuredly will be — the United States will be on its way to a $25 trillion national debt. American politicians have never met a debt ceiling they couldn’t exceed!

The ever-worsening debt load presses down on the shoulders of our economy, preventing it from reaching escape velocity. When one looks for a reason as to why the recovery from the great recession has been so tepid, one really need look no further than our debt. We have borrowed what limited prosperity we’ve been able to from an ever-dimming future. The Japanese can tell you how that ultimately plays out . . .

The strangle-hold is further tightened by the recent rise in the dollar to near 12-year highs, which is simultaneously crushing U.S. exporters and making it more expensive to service the debt. Why in the world would the Fed be looking to raise rates at this juncture?

The correction in gold over the last 4-years has been driven largely by gains in the dollar. And while that inverse correlation is important, the correlation between the yellow metal and the debt may be even more so.


Now that the national debt is off to the races again, we really can’t afford to allow the dollar to gain further. This is why I continue to believe the Fed wan’t raise rates in December. If they do, it may prove to be a one-and-done situation, in which case the greenback may come under renewed pressure. That in turn would buoy the gold market.

Additionally, part of the allure of the budget deal was that it avoided a government shutdown. However, House and Senate appropriators now have to pass an omnibus spending bill to divvy up the moneys approved in the budget compromise. Paul Ryan, the new Republican Speaker of the House, said this week that he will not rule out attaching riders to the omnibus bill. Such riders are deemed a non-starter by the Obama administration.

The government will reportedly run out of money on December 11, so Congress and the President have 3-weeks to sort out their differences, or we may see a government shutdown after all. That potential black swan hanging over the market may provide support for gold as well.

Any critical thinker must know that sustaining a massive debt burden can not go on indefinitely. We’ve seen debt crises in the past and they are not pretty. The prudent investor lays in some gold as a hedge before the storm hits. That investor hopes for the best, but is prepared for the worst