It’s Math Not Politics

Posted: 8/8/2016 by Sean Cohen

Flag-600x394 It’s Math Not Politics These days there is a strong feeling that politicians, regardless of party, have a somewhat loose relationship with facts.
As seen from the great recession, and more recently in Europe and China, regardless of what politicians say or promise, math doesn’t lie, and is extremely unforgiving.

Following are some math facts to consider for the future
Regardless of who or how it was generated, currently total debt in the USA exceeds 19 trillion. According to the congressional budget office the projected deficit over the next 30 years (the baby boom retirement bubble) is $103 trillion. The current net value of all assets held by American households and businesses today is $121 trillion.

Of the $103 trillion projected deficit, 55 trillion will be interest payments. If annual growth is boosted to 3% from wherever it is now, that will add 14 trillion to our economy over 10 years. 4% would add 29 trillion.

Math does not lie
We can debate what future interest rates may be, the actual figure could be worse or better. 3% annual growth seems like a dream, and 4% a fairytale. However one looks at it, whatever assumptions one may make, there is going to be significant shortfall. The only question is how large, and when the bill will finally come due. What will things look like 10 years from now, 20, 30, or 50? Certainly there will be some better times along the way, but overall math does not lie.

While some may call me an alarmist, or a pessimist, I’m simply being realistic
Who wants to take the chance? What happens when every asset is paper or electronic, when all assets are tracked and the government needs money. Well in Cyprus during the recession, each bank account with money in it got dinged for 10% right off the top, just because people had savings and the government needed money, right away. And that figure does not take into account the lowering of their currencies value.

Of course we are not Cyprus, but then neither is Holland — and a desperate government there did, more or less, the same thing.

Desperate times call for desperate measures
Remember how we interred the Japanese during WWII?

If 9/11, the recession, or Brexit has taught us anything, it’s that in the 21st century anything can happen. Even what we used to think was impossible. The realities of today and the future require some safe haven assets, even if only for peace of mind.

What could be better or safer than the world most compact store of wealth?
Define Value Diamonds. Something only you know you posses, something so compact that 1 oz is worth $700,000 or more.

Food for thought.

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