Watching the news in the last week has been painful. I’m still not sure if it’s funny or just pathetic. Congress and the President are both smiling for cameras right now while applauding what they think is a huge compromise in spending. The problem is, they will not be cutting the debt by a dime. I’m not kidding.
The US government has agreed to massive spending cuts nearly $100 billion per year! Of course, this doesn’t count inflation. It is also probably going to be less because they always overestimate cuts. And it doesn’t count new projects being added on. And it’s realistically about a 1% cut and will change absolutely nothing about our fiscal direction.
None of the spending cuts the government agreed upon will occur until 2013, at the earliest. That’s a long time to wait for a 1% cut in spending. By 2013, our credit rating will drop, and we’ll be spending more every year. It’s really a joke.
And remember, this is a cut to spending programs that are already on the books — theoretically. It won’t happen for years, will probably get deleted when it’s no longer in the news, and doesn’t stop future spending increases. It also doesn’t stop the Fed from printing money to make up for the cuts.
Boehner says that it cuts more spending than it raises the debt limit which is “98%” of what he wanted. It cuts more spending, theoretically, over a decade compared to a 1-2 year debt ceiling increase. Talk about apples to oranges. I would not want to play charades against this guy — he’d clean up.
Long story short, literally nothing has changed. Nothing. Nothing has changed. If stocks rally this week, it’s not because the market thinks the debt got cut — the rally will be strictly because we won’t be defaulting on the debt and institutional investors know they can game the system for a little while longer.
So what should you do? Build a mini-hedge fund by investing in gold, investing in silver, buying Swiss currencies, international stocks, and foreign bonds. Join us and I’ll show you how for free later this week.
Join Over 8,000 Investors:
In less than 15 minutes a week, you'll learn everything you need to know about gold prices, the collapsing dollar, and the real inflation rate.
Thousands of investors have already signed up for the newsletter and are getting the info for free: