Can A Nation $18 Trillion In Debt Afford Higher Interest Rates & Will This Change Our Retirements? 

For some years now, very low interest rates have been reducing the earnings of retirement investors as well as the lifestyles of many of those already retired. To understand why this has been happening – and why it may continue for a very long time – one must recognize that there is a direct relationship between the interest rates that are paid to savers, and the interest payments made by a heavily indebted federal government.

For a retirement investor who is currently earning a 1% interest rate, a 5% increase in rates to a 6% return would increase their total investment earnings by 1,263% over 30 years, allowing for a radical improvement to their eventual retirement standard of living.

And for a current retiree who is drawing down their investment portfolio over 20 years, a 5% increase in annual interest rates from 1% to 6% would allow them to raise their standard of living by a full 57% in each and every one of those years.

For the United States government, on the other hand, a 5% increase in interest rates on the national debt would raise the annual deficit by about $900 billion per year.  Because the government borrows the money to make interest payments, this could set off a chain reaction of paying interest on money borrowed to pay interest, leading to a national debt increase of $67 trillion in 20 years (absent major tax increases). 

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Why Early Collection Of Social Security Benefits Can Be The Best Choice

One of the most important financial questions someone of retirement age in the United States faces is when to start collecting their Social Security payments ─ and this crucial decision deserves the best possible information to work from. 

Recently, there has been quite a bit of publicity about studies showing that for a retiree who lives to an average age, there is a six figure advantage to waiting until age 70 to begin the collection of Social Security payments. That is an amazing advantage ─ but does it hold up under close scrutiny?

As we will explore herein, once we "raise our game" a bit, and use a more sophisticated type of financial analysis than some of the very simple Social Security decision aids in wide circulation ─ the results can turn upside down.  That is, for many millions of people, the financial case for early collection of benefits is much stronger than is commonly recognized.

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Hidden Gold Taxes: The Secret Weapon Of Bankrupt Governments

What if there were a hidden tax that most gold and silver investors were simply unaware of? 

A tax where the government would take a big chunk of your starting net worth if gold went to $2,000 an ounce, leaving you poorer than you started with?

A tax that rises with inflation, so that $5,000 an ounce gold means you end up even poorer?

A tax where if gold were to soar to $100,000 an ounce – it could cripple your net worth?

This tax already exists, as we will demonstrate in step by step detail using three easy to follow examples. All but a few investors are unaware of this tax and its devastating implications. Simply put, when we assume that gold acts as “real money” and perfectly maintains its purchasing power during rapid inflation, then the higher that the rate of inflation rises, the higher the percentage of the average gold investor’s starting net worth that ends up belonging to the government.

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Is There A “Back Door” Method For The Government To Pay Down The Federal Debt Using Private Savings?

The United States government is currently about $18 trillion in debt, which is roughly the size of its annual economy.  With traditional financial planning, the most common way of dealing with this problem – is to completely ignore its existence. As if to say that this wasn't anticipated in the retirement planning models, and it looks quite bad, so we will all just pretend it doesn't exist.

While perhaps understandable on an emotional level, this common approach is likely to prove both dangerous and self-defeating. Because reality is that the world has a long history of large national debts being repaid or otherwise reduced, and every method employed has changed the lives of the citizens, sometimes dramatically.

One real world historical example is what happened with the United States between 1947 and 1970, where the federal debt appeared to grow to 148% of where it started, but the inflation-adjusted value of the debt actually fell to 85% of where it began. The government creating and maintaining the 63% difference between 148% and 85% dominated interest rates and bond markets for decades, and every saver in America helped to pay for this reduction through a steady decline in the value of their money.

While there are unique aspects to the current situation – the basic set of tools for reducing national debts remains the same.  And the short version of how the debt problem is solved is that we the people are the ones who always ultimately pay the price in one form or another.

However, the specifics of how that price is paid can vary widely depending on the method of debt reduction chosen.  And if we don't understand what those methods are, and what their effects on us could be – then we have no way of protecting ourselves.

Listed below are the four primary methods which nations use in practice to pay down huge government debts when they have borrowed in their own currency. Which particular method the government chooses could end up being the number one determinant of the value of your savings, as well as your long-term financial security.

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Is “Mainstream” vs “Doom & Gloom” A False Dichotomy – And Could Our Financial Future Be Neither?

Perhaps the single greatest danger facing investors over the long term is to be investing for the wrong paradigm.  That may sound a little theoretical, but we have a very clear and quite dangerous real-world example going on in front of us right now, which is the false dichotomy between the "Mainstream" and the "Gloom & Doomers".

The way it is too-often presented is that most people in the investment community fall into one of two groups. There is group (A), for those who are for the most part secure in the comfortable Mainstream. They believe that creating wealth through investing is a mostly solved science, and that we can make informed choices today that will quite reliably build substantial wealth over the long-term future because we know what worked in the past – and the future will (implicitly) endlessly repeat the past.

For those who disagree with this, the conventional narrative automatically moves them all the way over to group (B), the "Gloom & Doom" camp. This group is typically presented as being comprised of marginalized, eternal pessimists who are always convinced an economic doomsday is nigh.

So, as the narrative goes, either you (A) buy into the indefinite continuation of the status quo, or (B) you reject it, and prepare for the inevitable collapse of the status quo.

As with all false dichotomies – which are incidentally a quite effective way to control the perceptions and thus the behavior of tens of millions of people – there is an elementary error in logic in assuming it must be either (A) "On" or (B) "Off", as if the present and future were a light switch with only two possibilities.

What if the current economic and investment reality aligns with neither (A) the continuation of the status quo from the long-gone latter half of the 20th century, nor (B) the collapse of the status quo, but instead (C) the ongoing transition to a new status quo for the first half of the 21st century?

What if the future is very different indeed from the past, with challenges including low interest rates, low economic growth rates and rising tax rates?  What if there is an aging population with an increasing number of investment sellers and decreasing number of buyers, which transforms markets in a way that has nothing to do with the past? 

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