So Moody’s has downgraded U.S. debt. Of course, as Peter Schiff points out, this is probably only because they boxed themselves in via previous statements. Other ratings agencies are still mum, although that’s certain to change in the very near future.
At any rate, this particular signpost on the road to economic hell is, in my opinion, pretty clear. Inflation Ahead. The recent debt ceiling increase (charade that it was) brought no meaningful cuts. Instead, Tea Party resistance, blown up to crisis status by rank-and-file Republicrats, resulted in entitlement armageddon fear mongering — with virtually no discussion of reigning in out-of-control empire-ism — and was ultimately leveraged to introduce a dangerous precedent in the form of “Super Congress”.
Although austerity is threatened when expedient, Congress has no real political stomach for budgetary restraint and therefore will continue spending until the dollar ponzi collapses. Some argue that this was the intent all along. True or not, Super Congress makes it even easier to quickly bypass resistance and continue the charade.
When it becomes clear to all that ongoing Federal Reserve clownsmanship is ravaging the value of the dollar, we will be faced with some kind of collapse. This will most likely come in the form of global hyperinflationary panic as investors and, well.. everyone, try to buy anything and everything that stand a chance of preserving value. If this happens, the U.S. could experience social unrest similar to that endured by Argentina in the late ’90s. (Again, Super Congress could play a role here quickly rubber stamping draconian laws in attempt at population control.) The value of physical metals against national currencies will skyrocket.
I am now thoroughly convinced that precious metals are one of the few assets classes that will be remain buoyant when the gathering debt tsunami finally swamps global economies. And while I hope I am wrong, to friends of this blog: I urge you to prepare. Get physical. Investment in a small cache of precious metals, gold and silver, could be a real lifesaver in the event of a widespread paper asset meltburndown.