We wanted to show you a couple of simple graphs to tell a simple, but it’s a scary story. The first chart shows the federal debt since 1965. We would like to point out a simple inflection point of 1971. It was in 1971 that we moved off of the gold standard (thanks a lot, President Nixon). Removal of a gold standard removed all constraints on government spending. Notice how in a few years passed 1971 that the debt starts increasing.
Chart 1 – Federal Debt Of The US Government
The next chart we want to draw your attention to is the value of the US Dollar. Notice the interesting reverse or negative correlation between chart 1 and chart 2. As you can see as the government continues to tax and spend, our purchasing power has continued to degrade. You should take special note of the significant decline that starts – guess when? 1971!!
Chart 2 – Value of the US Dollar
What does this mean for self-directed IRAs?
The first lesson is that unrestrained government spending is hurting all Americans. We know that the government and the governments of the world are fully committed to printing their way out of any problem. In fact, we saw more clear signaling of that commitment this week from the ECB and our own Fed.
These charts paint a picture of failed central planning. Central planning is the current economic system that we now live under and have so for some time now. Central planning is not going away. Because of this, we know that there will be a point at which there is too much money in circulation, planning cannot restore the basic free market mechanisms that are needed to create a healthy economy. This will ultimately lead to that storm arriving in the form of some significant economic events internationally and here at home.
It’s our continued belief that you should be out of paper based assets as much as possible. You need to continue to look for and hold tangible, productive valued assets. Such assets are things like real estate, precious metals, your own business, patents, etc.
You need to be looking at your self-directed IRA and position it to hold these tangible assets.
Disclaimer: The information provided is for educational purposes only and are not a solicitation or offering of an investment, investment advice, or tax advice. You should consult with your tax, legal or financial advisor to determine the suitability of any investments made with a self-directed IRA account.