In this interview, Michael Howell from Cross Border Capital suggests that the Fed will be forced to step in to fund US federal government deficits.
Deficits will rise for two reasons:
- An ageing population means greater spending on Medicare, Medicaid and social security.
- Defense spending rising to 5.0% of GDP.
Japan and China are no longer buying Treasuries and the private sector doesn’t have the capacity. The Fed will have to step in.
In Howell’s words: “THERE IS NO OTHER WAY OUT”.
Conclusion
Gold is a great hedge against expected monetary inflation.
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