Alarm bells are ringing at the nation's runaway debt. Debt levels are already at a high not seen since World War II. And now, a blockbuster report released last month by the Congressional Budget Office has a dire prediction: if we don’t change course, we are on an unsustainable path to a surging national debt and a fiscal crisis that threatens the very fabric of our nation’s financial stability.
Yet, the government seems incapable or unwilling to address this crisis. With the national debt escalating to unprecedented levels, it begs the question: What does this mean for the individual investor and retiree?
Debt Today: A Skyrocketing Concern
The national debt ballooned to an astonishing $34 trillion in 2024. It now equals the entire size of the US economy. That works out to $102,984 for each U.S. resident. And puts each taxpayer's share at $266,951. What got us into this alarming spot? Years of budget deficits, massive federal spending during Covid, and record-breaking debt accumulation. And there is no obvious relief on the horizon. 1, 2
'Severe, Irreversible Scars' if Debt Goes Unchecked
The stunner of a report released last month by the Congressional Budget Office outlined a bleak future. If we remain on the path we are on, the debt will reach $141 trillion by 2054. The result? Such debt “would slow economic growth, push up interest payments to foreign holders of U.S. debt, and pose significant risks to the fiscal and economic outlook; it could also cause lawmakers to feel more constrained in their policy choices.” 3
An equally startling report by the U.S. Government Accountability Office (GAO) was released last month. It said the U.S. is on an economic trajectory that is "unsustainable" and poses a "serious" threat to the country if not addressed. 3
To curb this trajectory, Congress faces the daunting task of curbing spending, raising taxes, or both.
Understanding Debt and Its Historical Context
Running annual deficits has been almost a perennial feature since our country's founding. When the government spends more that it collects in taxes, it is called the deficit. The cumulative effect of these deficits year after year is the national debt. It is a measure that, when compared to GDP, provides insight into the nation's economic health.
The debt was at its peak levels of over 100% of GDP in 1946 due to World War II spending. The lowest debt of just 24% of the GDP was in 1974. Various economic policies, entitlements, and wars from the Reagan administration through to now have caused the debt to fluctuate. The constant: debt remained a central economic issue.4
Biden’s Ballooning Deficit
In recent years, Biden's tenure has seen substantial financial outlays. This includes forgiving $127 billion in student loans and enacting infrastructure and climate legislation. Collectively, that is expected to add another $1 trillion to the debt. U.S. foreign assistance reached a 70-year high in 2022 with substantial aid to Ukraine. This all contributes to a deficit larger than any fiscal year not marked by war, recession, or emergency. And, if Biden is elected again, it’s safe to assume that government spending may soar even higher, leaving investors and retirees to ponder their next move in an increasingly uncertain economic future. 4,3.
Ushering in a New Era of Increased Debt
The drivers of debt growth are multifaceted. Social Security, Medicare, and Medicaid costs have all risen due to an aging population. Unforeseen events like the Covid pandemic and wars inflated the deficit dramatically. Covid alone swelled the debt by $3.1 trillion in 2020, or 15% of GDP. On top of that, interest payments on the debt are now reaching their highest levels in over 20 years. With interest rates - and debt - projected to surge in the coming decades, the fiscal outlook appears grim.5
The Threat to America’s Future
Rising debt threatens to reduce public investment and increase interest costs. But it also risks triggering an economic recession or slowdown. This could severely impact businesses, job creation, and overall economic growth. Which would further exacerbate the challenges facing retirees and investors alike.
Implications for Your Retirement Savings
For retirees and those nearing retirement, the escalating debt situation is particularly concerning. The potential for increased taxes, significant spending cuts to Social Security, and the resultant decrease in the value of stocks and bonds could jeopardize retirement savings. Moreover, borrowing becomes more expensive, personal debts, including mortgages and loans, could see a sharp increase in costs.
Protect Your Golden Years With a Golden Asset
In the face of these challenges, gold emerges as a beacon of stability. Gold and precious metals have historically been regarded as a safe haven asset. The shining metals offer a reliable hedge against the volatility and uncertainty brought on by runaway debt. By moving savings into a Gold IRA or investing in precious metals, individuals can take proactive steps to safeguard their financial future.
Conclusion: Taking Action to Protect Your Future
With the looming crisis of runaway debt, it appears that the genie is already out of the bottle. The U.S. government seems incapable or unmotivated to stop the exponential growth that is predicted by experts and the Congressional Budget Office. It is time to take decisive action to protect your savings. Gold and precious metals in a Gold IRA stand out as a prudent choice for those looking to shield their investments from economic instability. American Hartford Gold offers a pathway to securing your financial well-being with physical gold, providing a solid foundation for your retirement savings in an uncertain world.
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Max Baecker is the President of American Hartford Gold (AHG), the nation’s largest retailer of precious metals. He leads American Hartford Gold’s mission to help clients achieve long-term financial security with physical gold and silver.
Under his guidance, American Hartford Gold has delivered billions of dollars’ worth of precious metals to thousands of satisfied clients. He has significantly expanded the AHG workforce and opened a third office in Florida.
Max's dedication to upholding American Hartford Gold's industry-leading standards is reflected in its accolades. American Hartford Gold has made four high ranking appearances on the prestigious Inc. 5000 List of America’s Fastest-Growing Private Companies. AHG holds an A+ Rating from the BBB and a 5-Star Rating on Trustpilot with thousands of 5-star American Hartford Gold reviews. American Hartford Gold is the only precious metals company trusted and recommended by Bill O’Reilly.
1.
https://www.usdebtclock.org/
2.
https://www.justfacts.com/nationaldebt.asp#_ftn10
3.
https://finance.yahoo.com/news/america-left-severe-irreversible-scars-113555033.html
4.
https://fiscaldata.treasury.gov/datasets/historical-debt-outstanding/historical-debt-outstanding
5.
https://www.cfr.org/backgrounder/us-national-debt-dilemma