From Birch Gold Group
Donald Trump and the GOP face a major hurdle as their first budget test looms next week, along with several problematic issues that could prevent an agreement and trigger a government shutdown.
The potential shutdown would put a hiccup in federal bureaucracy for a few weeks, but that’s not the real reason Americans should be worried. Turns out, there may be an unseen economic danger that could affect you and your savings.
Shutdown Dejavu?
We’ve been down this road before, haven’t we?
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Back in 2013, federal legislators failed to reach an agreement on funding appropriation, and there were some serious consequences. This time the fallout could be just as bad, or even worse.
The political mechanics of why are a little confusing, so let’s break it down piece-by-piece.
There’s a sensitive relationship between the debt ceiling and the federal budget. Both require congressional approval, and big problems arise if either gets blocked.
Here’s where things get complicated…
In negotiations of the federal budget, the majority party (in this case, Republicans), can hold the debt ceiling “hostage,” so to speak as a way to influence the president — plus legislators from the opposing party.
Republicans have to be careful not to overplay their hand, though. If they do, it could result in a shutdown, which nobody wants — each group for their own reasons.
That said, why should Americans care? What are the risks? And why could this shutdown be worse than the last?
Why the Stakes Are So High
On March 15, the debt ceiling expired, and the Treasury (acting on behalf of the president) was forced to start using “extraordinary measures” to keep the U.S. from defaulting on its debt.
If Congress doesn’t act briskly, we could see another credit downgrade or worse. And a government shutdown caused by budgetary squabbles would dramatically increase the chances of that happening.
However, there’s one thing that makes this shutdown particularly special, not to mention uniquely risky.
According to data from LPL Financial, analyzed and reported on by Ryan Vlastelica at MarketWatch, there have only been a handful of government shutdowns under one party’s control. But those few shutdowns have historically been the most economically damaging.
Vlastelica writes (emphasis added):
“A shutdown during a united government could underline the difficulty of major legislation getting passed, something investors are particularly attuned to right now. The rally that was sparked by Trump’s election started to unravel when a health-care reform bill was pulled because it didn’t have the votes to pass. The post-election rally largely occurred because investors viewed Trump’s economic agenda on taxes, infrastructure and regulation to be positive for growth. The prospect of those initiatives not coming to fruition has raised questions that the market’s robust move was unwarranted.”
So not only could this potential shutdown put the U.S.’s creditworthiness at risk of taking another hit (and causing a repeat of all the negative economic consequences Americans were forced to suffer last time), but it could be a big downward trading signal for equities markets as well.
But in the meantime, your savings could easily get caught in the crossfire while federal politicians duke it out.
How to Keep Another Shutdown from Touching Your Wealth
The last time there was a government shutdown, then-President Obama acted like a petulant child by shutting down national parks and even fencing off national monuments and posting armed guards to keep people out. This was intentionally designed to cause conflict so that Congress would raise the debt ceiling faster — illustrating how desperately the president needs Congress to act on it.
This time the president is facing off against his own party, and throwing up roadblocks to the negotiation like border wall funding.
Trump is calling Republicans’ bluff, most likely because the all-important 100-day mark of his presidency is quickly approaching. Fearing scorn from media and the public for compromising his plans, Trump is increasing the chances of another shutdown (and consequently another debt ceiling crisis) to avoid losing face.
Obviously, it’s not the end of the world if certain non-essential functions of government don’t have money to operate for a week or two… so what’s there to worry about?
Well, the biggest risk is another downgrade to the U.S. credit rating, which could crash both bonds and stocks…
On top of that, a shutdown under single-party rule sends a message to market makers that Trump’s many proposed policies for the economy — the ones responsible for the rally in stocks we’ve seen over previous months — aren’t as likely to come true as previously hoped, which could send markets down even further.
However, such a scenario would cause an equal and opposite reaction in another type of investment that Americans could take advantage of. Essentially, it would send investors flocking to safe haven investments like gold and silver, which would drive metal prices through the roof.
This shutdown could send a huge ripple effect throughout the global economy, affecting financial markets across world. Securing your wealth yet with gold could be a crucial step toward ensuring your safety.
Birch Gold Group helps Americans protect their savings with physical gold and silver. Clients can purchase precious metals for physical possession, or move their IRA or 401(k) into a Precious Metals IRA. To learn more, request a free Info Kit on Gold – there is zero cost and zero obligation to you. All you need to do is enter your details at www.birchgold.com
To me there are no “essential functions” of the federal government or of any level of government for that matter. Every single do-nothing federal jobholder could lose his job tomorrow and I would cheer. Every spook or FLEA could be fired and nothing but good would come of it.
Every parasite drawing a federal pension could suddenly have to fend for himself, and it would be a good lesson for their character. Every politician could be turned out to try to find a living in this mess they’ve created and it would the the best thing that has ever happened here.
Government can kiss my ass, all government, everywhere.
It is true that a very large percentage of government employees cost us as taxpayers far too much for what we recieve and the bankrupt pension plans in all levels of government need to recieve the old HAIRCUT ! I here all the reps blathering about how hard these people work and how they deserve this or that but when a company bankrupts itself and a judge wipes the pension plan out while other investor groups and CEO’s walk away with millions and you want me to pay a tax so that judge gets paid and a pension how about FUCK YOU !
As for this nonsense of precious metals to protect your wealth ? Really if the banks freeze up the dollar craps out you can’t eat that gold or silver . I suggest a more lucrative investment would be non perishable food and as for metals “LEAD & BRASS” . You want a cup of coffee from my store that will be 500 ounces of your gold or 50,000 ounces of your silver . This crash is going to be real fun when the powers that be try to evict us from our homes for non payment of taxes . I see real life or death decisions coming for us all . A warning to all badge wearing government enforcers : the claim your just doing your job or duty on people you know have been cheated lied to and bankrupted will not protect you from their resolve . I suggest you tell your superiors you will not follow an inhuman unfair order and walk away ! I am sure many of us Americans will be taken down myself included but again be warned you are outnumbered and we will be in a position with nothing to lose !
One more point everywhere I have ever worked in my 42 years of employment any person that was considered non-essential did not exist “POOF” not just gone but never there in the first place . I have a family member that ?works? For a federal agency and any family get together you hear her talk about how much more she would have in the private sector and on and on as she tells on herself . Every business my wife and I worked for and managed she would be on the street by lunch time maybe in the dumpster !
Watch the right hand very carefully. I want to do something you don’t like with my left hand.
“Back in 2013, federal legislators failed to reach an agreement on funding appropriation, and there were some serious consequences. This time the fallout could be just as bad, or even worse.” – Like what? They closed the national parks – so I guess I can go camping without the big bull dyke pulling up and fining me for building my campsite in a ‘protected zone’ as not to piss off an owl or a Coyote? Oh, I don’t have to stop and pay for the renewal of my ‘pass’ to drive in to the National Park. O what a darn shame.
No Whitehouse tours for the kids. Well, I guess we will just have to pass on that.
I don’t remember ANY ‘serious consequences’ from the last shutdown, at all. I just remember a lot of theater, and talking heads nashing their teeth about this supposed shutdown.
I am in complete agreement with the other commentators on here: Shut this whole shit show down, and if Trump really wants to start leading, tell all of these asshats that the longer these ‘non – essential’ drones are off the job, the more that will not be coming back. Hell, if it can stay closed long enough, we may wipe out half of the government, and at the same time grow real GDP (you know, people that really produce something) by 50%.
Oh, and BTW, this whole ‘we will default on our debt’ nonsense is just another BS threat from the useless drone class. We have more than enough in tax revenue to cover the present bond issuance debt. What we don’t have money for is the ENTITLEMENT shit. We should default on that. Then maybe we have a shot at not blowing up financially our entire country for the lazy, free shit army class. I know, the Medicare and SS was ‘promised’, well unfortunately, you were LIED to. Period. Don’t get mad at our generation (mid 40’s) for not giving you more, get mad at the politicians YOU elected for continuously stealing from the funds to support these ‘programs’. Take your anger out on the real reason for the issue, the crooked politicos in their palaces in Washington.
The debt ceiling is a big charade, IE Kabuki theater. The debt has to increase to keep the Ponzi going.
As for gold and silver, yes, it helps dramatically, to get your wealth through a collapse. But you have to survive the collapse AND usually be able to get out to another country. I know people from Iran, Syria, and Cuba, who lost basically all their wealth.
http://taxprof.typepad.com/taxprof_blog/2017/04/the-irs-enlists-debt-collectors-to-recover-overdue-taxes-a-bulls-eye-on-the-backs-of-low-income-taxp.html
The IRS Enlists Debt Collectors To Recover Overdue Taxes, ‘Placing A Bull’s-Eye On The Backs Of Low-Income Taxpayers’ And ‘Putting Out Barrels Of Honey For Scammers’