{"id":5636,"date":"2012-02-03T23:45:07","date_gmt":"2012-02-04T03:45:07","guid":{"rendered":"http:\/\/www.pgm-blog.com\/?p=5636"},"modified":"2012-02-03T23:45:07","modified_gmt":"2012-02-04T03:45:07","slug":"is-the-u-s-a-debt-crisis-a-paradox","status":"publish","type":"post","link":"https:\/\/www.pgmcapital.com\/nl\/is-the-u-s-a-debt-crisis-a-paradox\/","title":{"rendered":"Is the U.S.A. Debt Crisis a Paradox?"},"content":{"rendered":"

\"\"\"\"<\/p>\n

Dear PGM Capita<\/strong>l Blog readers
\nIn accordance with the USA Debt Clock\u00a0http:\/\/www.usdebtclock.org\/<\/a>\u00a0the USA has today, February 3rd<\/sup>\u00a02012, a National Debt of approx. 15.3 Trillion USD. Based\u00a0on\u00a0its estimated nominal GDP\u00a0of approx. 14.5 Trillion USD for 2011, the USA currently has\u00a0a\u00a0<\/strong>Debt to GDP ratio of over 100%.<\/p>\n

On top of this the USA has\u00a0a\u00a0<\/strong>budgetary deficit\u00a0<\/strong>of\u00a0approximately 10% and an\u00a0increasing\u00a0trade deficit, which has reached 47.8 Billion USD in November 2011, as can be seen from below chart.<\/p>\n

\"\"<\/p>\n

Everybody with a sound Economic sense would expect the yield of the 10-year note to be (far) above 4%, instead of 1.95% where it stands today.<\/p>\n

The questions most investors would be asking\u00a0themselves\u00a0are \u201cHave we missed something\u201d and \u201cWhy is the bond market not reacting to the weakening USA fiscal situation?\u201d<\/p>\n

The answer for this\u00a0may\u00a0be found in the fact that the US-Dollar, as the world reserve currency –\u00a0driven\u00a0by\u00a0fear of these uncertain times,\u00a0by\u00a0the European Debt crisis and\u00a0by\u00a0<\/strong>a slowing world Economic growth – has irrationally\u00a0increased\u00a0the appetite of Investors for US Government loans, despite the weakening USA fiscal situation.<\/p>\n

Secondly,<\/strong>\u00a0the USA FED is expanding its balance sheet via hidden and announced Quantitative Easing<\/a><\/strong> programs and is using this newly created money to buy USA Treasuries,<\/strong>\u00a0which artificially is keeping the interest rates low in the USA.<\/p>\n

So,<\/strong>\u00a0what if the European debt crisis is nothing more\u00a0than\u00a0a storm in a glass of water and the world Economic growth isn\u2019t slowing like the media want us to believe, or the world Economy\u00a0starts\u00a0getting momentum again.<\/p>\n

It sounds like a paradox,<\/strong>\u00a0but if the above mentioned is true, the U.S.A could run into trouble, because inflation will rise,<\/strong>\u00a0forcing the FED to increase rates much earlier than expected and investors appetite could rise for corporate bonds over Treasuries, putting an upwards pressure on the US government borrowing costs.<\/p>\n

If the USA budget deficit isn\u2019t handled accordingly we could see the total USA National debt reach 20 Trillion USD by the end of 2015, if in this case investors\u00a0will turn their backs\u00a0<\/strong>to the US Treasuries and subsequently\u00a0the yield of the 10-year note\u00a0will\u00a0<\/strong>rise to 5%,\u00a0which\u00a0means that the USA interest payment will be approx. USD 1 Trillion a year.<\/p>\n

This is why a Global or USA Economic recovery isn\u2019t in favor of the USA National Debt and Interest payment on its debt.<\/p>\n

If we are right on the above, the media must keep on doing everything to maintain the fear high by blowing up the European\u00a0Debt Crisis, while the USA debt is absolutely and relatively higher than\u00a0Europe’s.<\/p>\n

They will continue\u00a0misinforming people that the rest of the world Economy is slowing and that China might have a hard landing, while China\u2019s Economy has grown with 8.9% in
\nQ3-2011, and the USA only grew with 2.8%.<\/p>\n

This also means that the USA FED must keep on printing money until there are no more trees, and to use this newly created worthless money to buy USA Treasuries nobody else wants to buy in order to keep interest rates Low.<\/p>\n

The consequence of this will be that the smart money will flee into Gold & Silver and that more and more countries will avoid the USA Dollar as the reserve currency by pricing commodities like Oil in Gold instead of the US-Dollar or Euro or any other FIAT CURRENCY.<\/p>\n

This event will lead to a very disastrous currency war, which will wipe out all savings in paper currency. Those most hurt will be retirees whose pension premium are\u00a0mostly\u00a0invested in Treasuries<\/p>\n

For the sake of humanity I hope and wish that the points as discussed in this blog article\u00a0will\u00a0never happen.<\/p>\n

But if after reading this \u00a0you agree with the content, please feel free to contact us, for us to talk with you about your future and the best investment plan than meets your profile to protect you and your love-ones for the disaster that lies ahead<\/p>\n

Yours sincerely<\/p>\n

Eric Panneflek
\nChairman<\/p>\n","protected":false},"excerpt":{"rendered":"

Dear PGM Capital Blog readers In accordance with the USA Debt Clock\u00a0http:\/\/www.usdebtclock.org\/\u00a0the USA has today, February 3rd\u00a02012, a National Debt of approx. 15.3 Trillion USD. Based\u00a0on\u00a0its estimated nominal GDP\u00a0of approx. 14.5 Trillion USD for 2011, the USA currently has\u00a0a\u00a0Debt to GDP ratio of over 100%. On top of this the USA has\u00a0a\u00a0budgetary deficit\u00a0of\u00a0approximately 10% and[…]<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,9,10,11,19,12,14,42,15,16,1,17,32,18],"tags":[],"class_list":["post-5636","post","type-post","status-publish","format-standard","hentry","category-debt-crisis","category-emerging-markets","category-eric-panneflek","category-euro","category-financial-news","category-inflation","category-pension-crisis","category-pension-fund","category-pgm-capital","category-precious-metal","category-uncategorized","category-us-dollar","category-video","category-world-economic-outlook"],"_links":{"self":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/posts\/5636","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/comments?post=5636"}],"version-history":[{"count":0,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/posts\/5636\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/media?parent=5636"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/categories?post=5636"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/tags?post=5636"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}