RSS FeedRSS

Lowered credit ratings mean decreased faith in a government’s ability to repay, devaluing its fiat currency and increasing the value of gold coin investments.

January 31, 2011 – Lowered credit ratings mean decreased faith in a government’s ability to repay, devaluing its fiat currency and increasing the value of gold coin investments. But could that really happen to the almighty dollar? Comparing where we are heading to where Japan has been, Bloomberg contributor Kevin Hassett concludes that “there’s a strong case that the U.S. rating should be cut immediately.”

That, of course is unlikely to happen but the credit downgrade is inevitable unless we make drastic changes. If we continue “to run annual deficits at the 2011 level . . . it will take just six years to reach a debt level of 135.3 percent of GDP,” the point where Japan was first downgraded. And our ill advised fiscal policy could make it happen much sooner. To avoid downgrade we need to get serious about reducing the deficit and do it fast. “But President Barack Obama’s State of the Union address offered pitifully small spending cuts while floating Obama’s fiscal commission out to sea on an iceberg.”

If you believe it impossible for the U.S. to default, think again. We have defaulted twice before. The first, understandably, was in 1790 when we postponed repayment of revolutionary war debt. In the second default, however, we passed a law forbidding repayment in gold, unilaterally changing the terms of our contracts with lenders. Not surprisingly the year was 1933 and the President was Franklin Delano Roosevelt.

I find it unconscionable that the ratings agencies were complicit in bringing about the financial crisis by failing to downgrade the real estate junk. In all likelihood they will be even more reluctant to downgrade the U.S. rating, “setting investors up for yet another fall.”

Regardless, I see no return to fiscal responsibility here any time soon. Our credit rating will fall, but the value of gold coin investments cannot be downgraded.

Kevin Johnson

Senior Staff Writer – GoldCoin.net

Get Your Complementary Award Winning Guides Below

 Publish Real Money Magazine

 Publish Gold Investment Magazine

 Publish IRA 401K Kit Magazine

 Real Money Magazine

captcha