Record Budget Deficit And Investing
The Federal budget deficit rose to $192 billion in March, a new record and showing a continued stress for a government looking to spare the economy. The congressional budget office reported that after looking at the Federal budget, Americans should expect a $9 Trillion total deficit over the next decade. This figure would again double the national debt and by 2022 the national debt should stand at nearly $20 Trillion.
The record budget deficit has some extreme consequences for the dollar. For the next decade, the FED will have to either quantitatively ease by $9 Trillion, or the Treasury will have to borrow by a similar amount.
Though the next $9 trillion will come over the next decade, its going to come regardless and finding the opportunity to borrow that much money will have to come with some strings attached. Investors must also consider the inflation effect that the United States will be feeling over the next decade, considering debt is money, $9 Trillion means 10% inflation for 10 years.
Some food for thought. The stock markets should rise with this inflationary pressure but will not do so because of economic progress, only because the dollar will become less valuable.
Start thinking about commodities or any inflation resistant investment. The superpowers of the world are ALL printing money and pumping credit into the market. The decade long commodity boom has only just begun.
The points you make in this post on the federal budget deficit are excellent.There is another guy that writes on this subject,and he does it really well. his name escapes me at the moment though. I like the fact you said we need to start thinking of inflation resistant investments as well. Good advice!