In a Rasmussen Reports commentary, Lawrence Kudlown points the finger directly at the government “debt bomb” as the destroyer of the dollar, which would also make it the premier incentive to buy gold coins.

April 11, 2011 – In a Rasmussen Reports commentary, Lawrence Kudlown points the finger directly at the government “debt bomb” as the destroyer of the dollar, which would also make it the premier incentive to buy gold coins. But as usual the government is all tangled up picking nits while it diverts attention from the enormity of the real problems.

Last week’s squabble over the budget was nothing less than theater of the absurd. The few tens of billions in dispute is only a tiny fraction of the $9.1 trillion official debt, but even that is not the issue.

Pimco, which dumped all of its Treasury debt in February, is now shorting the notes on the expectation of further price declines. That move by the world’s biggest bond fund “pushed holdings of U.S. government-related debt weighted by market value down to negative 3% by the end of March,” said the Wall Street Journal.

As the price of Treasuries falls, the yields – that is, the interest the Fed must pay on its debt – must rise. And that will have a snowball effect.

Bill Gross, Pimco’s founder, sees no future in US debt, and his reasoning is something that begs the attention of every American. The ‘official’ $9.1 trillion version of our debt is bad enough, but obligations to Medicare, Medicaid and Social Security push that up to $75 trillion, nearly 500% of our GDP, Gross says. On Pimco’s website he warns "unless entitlements are substantially reformed, I am confident that this country will default on its debt."

So while our politicians grandstand over relatively piddling cuts, the elephant in the room is getting antsy. And the dollar continues to slide.

The ECB just raised its rates 0.25%, joining Canada, Australia, China and other Asian countries in tightening their fiscal policies to hold off inflation and stabilize their currencies. Meanwhile the Fed continues to go its merry way, ever expanding an already bloated monetary base. And in just 10 months, the dollar index has lost 15 percent.

We are sitting on an unstable debt bomb that could go off at any time. When it does, gold coins will be the only currency the world will accept from Americans.

Kevin Johnson

Senior Staff Writer – GoldCoin.net