By Sean Kelly

Is America fraying at the edges?  Or coming apart at the seams?

By whatever metaphor you choose it is clear that the social fabric of American life has been badly damaged.

In past upheavals, American prosperity has been tapped to calm things down.  A wealthy nation can paper over a lot of problems.  The race riots of the 1960s were answered by the massive social spending of the Great Society.

The Vietnam and draft protests resulted in the All Volunteer Army that got started in 1971.  It cost the taxpayers billions of dollars for military pay raises, re-enlistment incentives, and recruiting costs.

These guns and butter programs were not really affordable then.  In fact, even then the government was writing checks that it could not honor.  That’s why Nixon repudiated America’s gold promises.

But if increased social spending was not affordable then, when America was the global manufacturing hegemon and a creditor nation, not a debtor nation, it is much less affordable now.

That’s one of the reasons that we suspect the political divide in the country is becoming more polarized and the political disputes in Washington are becoming more bitter: the fight is over a shrinking pie.

Consider:  The US has a visible debt of $27 trillion.  Its budget shortfall this year alone will be about $4 trillion.

Stated differently, over the past 50 years the budget deficit has averaged around 3 percent of the nation’s total productive output (GDP).  This year it could be 18 percent of GDP.

In other words, there is no money to satisfy weak claimants.  The government’s problem is solvency.  No wonder the Federal Reserve is printing money as fast as it can to keep the Washington lights on and to hold back higher interest rates.  (If the federal budget is unmanageable now, just wait until interest rates normalize!)

At the risk of taking more metaphorical license, it is proving increasingly difficult for the political classes to bring the bacon home to their constituencies.  But they will try, no matter what it does to the dollar.  They will try.

What does this have to do with us?  Not one of us can do anything about the developing financial crisis.  It is already baked into the cake:  the money that the Fed has printed has already been printed.  Washington’s red ink has already been spilled.

The American currency will have to be devalued.  The American standard of living will have to take a hit.

Foreign central banks are beginning to recognize this.  That’s why they have been trading dollars for gold.

There is really only one thing you can do.  You can avoid being a fleeced.  You can protect yourself to avoid being victimized.  You can protect yourself, your family, and your wealth with gold and silver.

By the way, we note today with interest that the Ohio Police and Fire Pension Fund, with a $15.65 billion portfolio, has decided to allot five percent of its investments to gold.  Such funds are usually rather slow to catch on in the face of a looming crisis.  We take this development, along with famous gold skeptic Warren Buffett’s move away from bank shares and toward gold, as a sign of a growing realization of things to come.

We hope you are prepared as well.  We’re here to help.

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