How To Inflation-proof Your Retirement - The United States Debt Crisis - Protect Yourself

By Author: Sophie Reade
Total Articles: 1
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The total official U.S. national debt stands at approximately $11 trillion.

The "unofficial debt", which includes the funding shortfalls of both the Social Security and Medicare programs, raises the total debt closer to $60 trillion. Of this, the last trillion dollars were added in less than six months. The United States' government estimates that the national debt will reach $16.2 trillion by September 2012. The annual value of the American gross domestic product (GDP) is $14 trillion.

To put this in perspective, if the $60 trillion in total federal debt was converted into single dollar bills, they would stretch out and loop around the sun and back around the earth over five times.

In order to fund this much debt, the United States has to sell a lot of debt. One faithful buyer of this debt is the Federal Reserve System. In the parlance of government bureaucrats, this is called quantitative easing.

When a government buys its own debt, it is said to be monetizing the debt. This is a polite academic term that means that the government prints the money it then uses to buy its own debt. It ...
... seems to be a counter-intuitive act; yet, the United States is not alone in monetizing its debt. The United Kingdom recently announced that it too would be pulling money out of thin air to purchase GBP 150 billion of its newly created debt.

The International Monetary Fund estimates that, for the time period of 2010 through 2012, the U.S. will need to finance debt equal to 26 percent of its GDP. The only advanced economy with a higher financing need (52.9 percent) is Japan. This puts the U.S. squarely ahead of the three Euro zone countries that have recently needed bailouts: Greece (23.2 percent), Portugal (18.9 percent) and Ireland (19 percent). In fact, in the developed world, only Japan and America are increasing their underlying budget deficits.

Japan does have one advantage over America, in that approximately seven percent of its debt is foreign-owned. For the United States, however, 50 percent of its debt is now foreign-owned.

The question many economists ask today is this: Once the Federal Reserve stops purchasing U.S. debt, will there be enough for others to buy it? The U.S. has no alternative but to continue issuing debt. Interest payments on the national debt consume $4,000 billion per year.

One way for the U.S. government to deal with its extensive debt is, of course, inflation. Many politicians create fiscal policy in a way that it, at least temporarily, alleviates the debt crisis. For us average citizens, this poses an immediate threat and creates a need to protect our hard-earned retirement assets from inflation. There are many safe ways to do it, the most intelligent being by investing in overseas bank accounts and trusts, denominated in foreign currencies. Another way to do it, which many people are unaware of, is by investing in Swiss annuities with companies like Gonthier Group. Swiss annuities are very flexible financial structures that allow one to take advantage of the safety, stability, and security behind the Swiss Franc.



Gonthier Group is your partner for Swiss annuities and retirement solutions. Protect yourself from inflation! We are there for your Swiss annuities, IRA rollovers and retirement solutions needs.