More Evidence Of Peak Spending In America At Government & Individual Levels
Daniel Gross of Yahoo makes a suggestion that the government of America should pursue the option that millions of broke people across our great country have pursued – and that is to cash in their gold to continue to fund an unsustainable lifestyle. Ah yes, that’s just a fantastic idea.
I’ve talked before about how the popping up of cash 4 gold like outlets is not a sign of a peak in gold prices, but instead, a further sign of a peak in consumption and spending. Selling your gold is essentially your last ditch effort to get cash to fund your unsustainable lifestyle.
I have XM radio and listen to CNBC frequently when I’m driving around. There are a ton of commercials trying to get listeners to BUY gold. It’s very interesting to see the targeted demographics of the companies that try to sell gold and those of the companies that try to buy gold.
Drive through a crappy neighborhood in your town and you will find stores that advertise “We buy gold.” Turn on CNBC on satellite radio and you get the opposite – I imagine there aren’t too many broke people listening to CNBC on satellite radio, no?
One group – the broke group – is marketed to as a group that will sell their gold to companies. It’s a pretty simple picture really.
This same principle can be extended to governments and countries as a whole. For example, countries like China and India are using reserves to buy gold. Countries like America that face massive debts need to now sell gold – if they do in fact own gold – to get cash and fund unsustainable spending levels. Ridiculous.
Look, this stuff is simpler than one would think. Who gets wealthy? The person who sells assets to fund consumption, or the one who foregoes consumption to invest in assets? Yeah, easy answer. The same concept can be applied to groups of people, corporations, state governments, countries, etc.
Now, if you’re expecting the peak spending in America to be a fast process and to “top out” quickly, you’re probably going to be disappointed. The economy of America is enormous, and any changes are going to be multi-year processes. With that said, make no mistake, you are seeing the peak spending in real terms here in America. Sure, the nominal numbers might increase, but this will only occur with a debased currency.
Stay focused on long-term trends, don’t stress over short term movements in assets, trends, and data. This trend is firmly in place. Consumption and spending is peaking.
The peak will either be driven by political will (yeah, right) or forced by the market. Since our politicians are spineless, it’ll likely be market driven, but nonetheless, it is happening.
Make sure your financial strategy takes this into account.