September 2024 - Week 4 Edition

Federal FY 2024 Ends Monday – With $2 Trillion in Red Ink! Does Congress Care? Does Either Candidate Care? Do the Voters Care?

The federal government’s fiscal year (FY) starts on October 1st and ends September 30th, next Monday. Through August 31st of this year, after a horrendous $383 billion deficit in August, the FY 2024 federal deficit totals nearly $1.9 trillion and will likely reach $2 trillion for the first time since the COVID-bloated budget of 2021. That is also the year we saw the roots of super-high inflation with the huge new spending plans in the first year of the Joe Biden-Kamala Harris administration.

As you can see from the table below, over half of the past 16 fiscal years (9 of 16) have delivered federal budget deficits of over $1 trillion, according to the U.S. Treasury (listed here in millions):

As you can see, the United States has gained over $20 trillion of our total $35.4 trillion national debt in the past 16 fiscal years and nearly $11 trillion in red ink over the past five years. Imagine that! Debt was under $15 trillion 16 years ago but we managed to more than double that debt under three Presidents.

Going back over 40 years, I remember the time we crossed $1 trillion in total debt in 1982 and I thought that was a huge and unsustainable debt load then. In fact, that was so traumatic that it caused President Ronald Reagan to appoint businessman J. Peter Grace to start a commission to cut “waste, fraud and abuse.” Soon after that, I moved to New Orleans and worked for the founder of the National Committee for Monetary Reform (NCMR), which ran large conferences and invited J. Peter Grace to speak. I wrote often for that organization’s magazine “Wealth,” on coins and the editor of the magazine, Gary Alexander, invited Grace to summarize his commission’s findings:

“The Grace Commission has issued 47 reports, totaling over 21,000 pages and detailing 2,748 specific recommendations which could save taxpayers $424 billion over the next three years. Regrettably, about three-fourths of these proposed savings measures will require congressional action rather than the improvement of bureaucratic (line authority) efficiency.”

–From Wealth Magazine, Winter 1984-85, “How Bad Will Government Spending Get?”

Unfortunately, that last warning came true: The report's recommendations that conflicted with entrenched policies were ignored by Congress. Some minor savings were finally implemented but now candidate/former President Donald Trump is promising to bring in Elon Musk to do the same thing in 2025!

Here Are A Couple of Starting Points – Stop the Hypocrisy Surrounding Government Inefficiency

Kamala Harris has promised a whole array of new benefits, which I won’t even begin to dissect all of them here. Let’s just look at one small (but expensive) promise that President Biden has made, but so far failed to deliver. In 2021, President Biden vowed to build 500,000 electric vehicle charging stations in the United States by 2030 – a date far enough away that he had some “wiggle room” to make excuses for only delivering SEVEN charging stations so far in his first three-plus years!

That’s right! Congress allocated $7.5 billion to build those 500,000 stations in 2021 but only seven charging stations are operational across four states. On May 26, Margaret Brennan interviewed Transportation Secretary Pete Buttigieg on CBS’ “Face the Nation,” asking him simply “WHY” he hasn’t done more with $7.5 billion in over three years than build just seven charging stations.

SECRETARY PETE BUTTIGIEG: So, the president's goal is to have half a million chargers up by the end of this decade. Now, in order to do a charger, it’s more than just plunking a small device into the ground. There’s utility work and this is also really a new category of federal investment. But we’ve been working with each of the 50 states. Every one of them is getting formula dollars to do this work, engaging them in the first handful of stations…

MARGARET BRENNAN: Seven or eight, though?

SECRETARY PETE BUTTIGIEG: Again, by 2030, 500,000 chargers. And the very first handful of chargers are now already being physically built. But again, that’s the absolute very, very beginning stages of the construction to come. The reason that we’re investing federal dollars is to fill in some of the gaps in areas where it is not yet profitable for the private sector to do it.

Gee, that’s funny. When gasoline-powered cars became popular, I don’t recall any $250 million (adjusting for inflation since then) program to install 500,000 gas stations around the nation.  They just popped up, regardless of the “utility work” and “new kind of investment” involved.

The government just isn’t designed to do the work of free enterprise and they can’t make decisions for 330 million Americans who know how to buy the vehicle that fits their needs the best. When so many Americans live in the wide-open states of Texas, Montana, Kansas and the rest of middle America, subject to hurricanes, tornadoes, bitter winters and long commutes, an electric vehicle with a short driving radius and a long wait behind others charging with a family in bitter weather doesn’t work.

It’s time for a new “Grace Commission” with teeth and Elon Musk sounds right for the job – or maybe Vivek Ramaswamy, too – but where are the cost cutters on the Kamala Harris team. More debt and more government inefficiency lead to more inflation and U.S. dollar weakness but higher gold prices.

In 2021, the Biden-Harris Administration got $42.5 billion from Congress to deploy high-speed internet to millions of rural Americans but that program has been a massive failure. According to the Washinton Times, the Broadband Equity Access Deployment Program has not connected a single rural American household to the internet.

This prompted Elon Musk, who owns the Starlink broadband service, to post on his X platform, “Your tax dollars for nothing.”

Gold Continues Breaking Previous Record Highs

Gold Rose to Another All-Time High on Monday, September 23, reaching $2,635.60 on the spot market and $2,659.80 on the futures market. Through last Friday’s close, the four best-performing sectors in the overall market to date in 2024 are: (1) Semiconductors, up 35.2%, (2) Silver, up 30.4%, (3) Utilities, up 28.6%, due to their high dividends; and (4) Gold, up 28.7%.

Gold is also up over the increased tensions in the world, summed up in the opening of this Wall Street Journal editorial on September 16 by noted foreign affairs expert Walter Russell Mead:

“Washington Post columnist David Ignatius reports from Kyiv that Ukraine is ‘bleeding out’ as its weary soldiers struggle against a numerically superior Russia. The New York Times reports that China is expanding the geographical reach and escalating violence in its campaign to drive Philippine forces from islands and shoals that Beijing illegitimately claims. And Bloomberg reports that Washington officials are fearful that Russia will help Iran cross the finish line in its race for nuclear weapons.

“These stories, all from liberal news outlets generally favorable to the Biden administration, tell a tragic and terrifying tale of global failure on the part of the U.S. and its allies. China, Russia and Iran are stepping up their attacks on what remains of the Pax Americana …”  – The Wall Street Journal (9-16-24)

If you haven’t already contacted one of our sales representatives to invest in gold and secure your financial future in the wake of this massive government ineptness and world chaos, I urge you to please do so today. It’s not too late to routinely add gold to your portfolio or IRA.

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