That is the whole point. There is no need to 'print money' or issue new debt. There was never one [reason] to begin with. The seigniorial privilege allows the USA to balance its budget year after year if it strapped its belt, acted responsibly (the irony) and in name of the country. The US federal government (different from state government) did not issue debt pre 1913, yet the nation prospered to unimaginable lengths. Why is that? You simply cannot print money to pay for debt. Doing so threatens the credibility of the government and currency (that is what is going on today, though). The seigniorial privilege, in a sense, would be jeopardized. Not to mention costs to finance the debt would more likely than not skyrocket, having the opposite effect of what the seigniorial privilege gives you as the de facto currency leader. To become the world superpower you need a dominant currency. China is doing everything in their power to make the Yuan the defecto global currency. It will take decades and more of the same by western governments before it happens, but once the Yuan gains its foothold as the world reserve currency, the story changes. surfsup -- the $1T need not be allocated to military spending. A small portion of bonds can still be sold to finance military spending, but I think most would agree it is absolutely insane the level of military spending the USA carries these days. You should limit military spending to no more than 1% of annual GDP. And in times of war, you can boost it up. Of course, military spending is what is keeping US GDP afloat these days. These are all great ideas but lets be honest. None of this will happen. This means governments loses power and the paradigm between money and government gets thrown upside down. Its a novel idea, but sadly personal agendas trump anything else.We can only wish, right?
Sooo now gold is on a downtrend or is it another head fake? Technically, it seems like, if it can't bounce on Monday it is going much lower. However, my gut feeling makes me think this is another good buying opportunity for gold. I guess it is best to continue being on sidelines for now.
1959 all over again? Why this could be another historic moment for the market http://www.cnbc.com/2016/07/15/1959...e-another-historic-moment-for-the-market.html In the history of yield-seeking investments, 1959 was a seminal year — the one in which bond yields and dividend yields flipped. The question investors must now contend with is whether they have finally flipped back. It may not be one of those years that has widespread recognition among armchair market historians, such as 1929 or 1999, but 1959 was a critical one nonetheless. Before 1959, dividend yields on stocks were reliably above those of bonds. This made all the sense in the world insofar as stocks were seen as a riskier way to generate income; since they don't come with the legal obligations that adhered to bond payments, dividend yields had to be higher as compensation for risk.
