Today, the United States (US) will celebrate its Independence Day with all the fanfare and firework. But is it really time to celebrate when several financial 'bombs' are ticking in the US economy, about to explode anytime soon? We don't think so. In fact, the capitalist economy is now enslaved by such a gigantic pile of debt the world has never witnessed before.
The US has become a slave of excess debt. The monster that heads this debt-based system is the Federal Reserve. To give you a number, the US national debt is 4,700 times larger than it was when the central bank was created in 1913.
According to Peter Schiff of Euro Pacific Capital, the US economy has slipped into a depression. He even goes further to assert that the US dollar could lose almost 50-70% of its value. The problem is that the US Fed tried to cure a debt problem by adding more debt. In doing so, the Fed has done no good to the economy. In fact, it has only aggravated the problems.
So today is the 4th of July, America's Independence Day and the question is again about freedom; freedom from the intervention of the US government. The US economy needs to be allowed to correct and recover through its own course. Of course, it would be painful. Any recovery is! Avoiding it only makes it worse. What the US economy needs is a total restructuring. It needs to reduce all its excesses- less spending, less debt, less consumption, less government. On the other hand, it needs to save more and produce more.
What's in for investors at a time when the dollar is set to lose much of its value? Well, gold remains the old, evergreen haven and insurance against currency devaluation. Investors will be better off if they hold some amount of gold in their investment portfolio. Also, Indian investors must be prepared to witness a lot of volatility in the stock markets given the fragile global economic environment.