The Secret War Against America
Yes, you read that right…
The Federal Reserve has set out on a dangerous course that could bankrupt the U.S. in a few years if they’re not very careful.
Last week I briefed you on how the Fed signaled more interest rate hikes are coming. This means more pain for bond investors and perhaps more volatility for stocks.
Minutes from the Fed’s September meeting, released last week, made it crystal clear they intend to keep raising rates well into 2019.
For the very first time this cycle, the Fed admitted monetary policy “would need to become moderately restrictive for a time.”
That’s shorthand for more aggressive rate hikes, which will continue to push Treasury bond prices lower as yields continue to surge higher.
Also, the Fed confirmed its intent to unwind the central bank’s balance sheet by unloading $600 billion per year worth of Treasury bonds and mortgage backed securities. This adds more upward pressure on long-term interest rates in the U.S., which are already the highest of any developed nation.
The chart below shows exactly why the U.S. could be on a dangerous course toward bankruptcy.
Total U.S. national debt is a staggering $21.6 trillion today and growing fast. That’s a debt burden of $177,499 per U.S. taxpayer. The Federal budget deficit is now $824 billion and also growing. This thanks to the fact government spending is up 132% since 2000, or more than $4 trillion today.
The problem is as interest rates rise so do the debt service payments on all that debt.
In fact, during the last fiscal year, American taxpayers shelled out more than half a trillion dollars to service the national debt alone. If government debt continues to rise as it has, the U.S. debt burden will reach $25 trillion in a few years.
If interests rates also continue to rise, as the Fed has indicated, the 10-Year Treasury yield could easily reach 4%. That means $1 trillion in yearly debt service payments alone.
That’s unsustainable debt burden!
Financial stress like that would make the 2008 crisis look like a picnic in comparison.
At that point, the only safe havens will be high-quality stocks and gold, as global investors lose confidence in U.S. government bonds.
If rates do continue to rise, be ready to shift your money into those two asset classes.
Forewarned is forearmed!
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch
Editor’s note: There’s only a few years before the U.S. could go flat broke…
Before that happens you need to grab every dollar you can to survive this debt apocalypse.
And in 3-steps I’ll show you how to secure the wealth needed to survive any crisis. Click here now to learn how.