The Dollar Is More Worthless Than Ever

Written by Jason Simpkins
Posted August 16, 2019

Most people understand that the dollar isn’t actually worth anything.

It’s just paper that’s backed by the word of the U.S. government and nothing else.

But the cold, hard reality is that the United States really doesn’t deserve that kind of credit.

For one thing, our government has accrued a massive amount of debt that it clearly does not intend to pay.

The U.S. budget deficit grew to $866.8 billion in the first 10 months of the fiscal year, up 27% from the same period a year earlier. That’s wider than last fiscal year’s $779 billion shortfall, and puts us on track to sail past the $1 trillion mark by year’s end (October).

AND WE AREN’T EVEN IN A RECESSION YET.

The market right now is panicking over recession indicators, but the economy itself has yet to really deteriorate.

When it does, there will be new calls for increased government spending, like the $787 billion stimulus package President Obama enacted to combat the Great Recession.

And that makes all of the spending the government’s indulged in during good times look all the dumber.

Don’t say I didn’t warn you.

Here’s what I wrote back in November 2016, when Donald Trump won the election:

“The national debt is going to vastly expand under Donald Trump… This is Donald Trump’s plan. Drastically reduce taxes on corporations and the wealthiest people in the country. Spend big on infrastructure and border walls. Add more than $5 trillion to the national debt. And then either print enough money to pay it off, or convince creditors to take less than what they’re owed.”

And sure enough, it’s happened.

The “Tax Cuts and Jobs Act” has been the biggest contributor to our growing debt burden since Trump signed it into law in 2017.

It alone increased the national debt by $1.8 trillion.

But that’s not all. Donald Trump and the Republicans aren’t the only ones responsible for this mess.

The budget deal they brokered with Democrats earlier this year showed that American debt accumulation is a bipartisan endeavor.

That deal was essentially a compromise in which everybody got what they wanted.

It suspended the debt ceiling through July 2021, raised domestic and military spending by more than $320 billion over the next two fiscal years, and will ultimately add some $2 trillion in debt over the next decade.

Make no mistake, the U.S. government has vastly overextended itself.

The government (i.e. the taxpayer) spent $4.4 trillion just on financing costs over the past decade.

That’s just interest. It didn’t even begin to pay the burden down.

We’re going to be carrying trillion-dollar deficits for years, going forward. At $22.3 trillion, the country’s collective debt is already 101% of GDP. And again, that’s before any kind of recession contracts our economy.

And I’ll tell you something else: Other countries are catching on.

They see this. They also see the world’s preeminent economic power slapping political rivals with punitive sanctions, denying them access to money markets, imposing tariffs, instigating trade wars, and ultimately, exploiting the dollar’s role as the key global currency reserve at every conceivable turn.

So they’re backing away from it.

The dollar is attractive only in comparison to other failing currencies. But Russia, China, and other emerging economies in Latin America and the Middle East have made it clear they’re not content to settle for that.

They’re doing everything they can to cut the dollar out of their trade dealings. They’re engaging in currency swaps and stockpiling gold.

Worldwide central bank gold purchases surged 70% in the first quarter of 2019, hitting their highest level since 2013.

They know what’s coming: More spending and more rate cuts.

The dollar is about to get smashed.

So I’m going to give you the same advice I gave you in 2016: Buy gold.

That’s what everyone else is doing. It’s why gold is suddenly back up over $1,500 per ounce, and shooting ever higher.

In fact, if you really want to take advantage, you can also buy into some of the small gold mining companies that got walloped when everyone thought the Fed was serious about raising interest rates.

You can find out more about how to do that here.

Fight on,

Jason Simpkins Signature

Jason Simpkins

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Jason Simpkins is Assistant Managing Editor of the Outsider Club and Investment Director of The Wealth Warrior, a financial advisory focused on security companies and defense contractors. For more on Jason, check out his editor's page. 

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