Thursday, March 01, 2007

Bernanke, Boomers and Silver

"As the population ages, the nation will have to choose among higher taxes, less non-entitlement spending by the government, a reduction in spending on entitlement programs, a sharply higher budget deficit or some combination thereof, Bernanke said.

Government spending on Social Security and Medicare alone will increase from about 7 percent of the total size of the U.S. economy to almost 13 percent by 2030 and to more than 15 percent by 2050, he said."

Thus spoke Benjamin Bernanke recently. We at The Silver Analyst believe we are now the inflationary upside of the Kondratyev Wave. That is a technical opinion but the fundamentals are screaming it out as well. Do not expect government to solve this problem due to conflicts of vested interests and vocal voters such as pensioners. In fact, expect it to be worse as we add constrained energy supplies to the inflationary recipe.

Fiat money will undergo its greatest test in the next two or three decades as government expands the money supply even more to avoid unpopular tax hikes. The flight to hard assets as this crisis unfolds in the years ahead will outdo anything seen in 1980 and you can take that to the bank (well, maybe not in a systemic crisis).

Got silver?


Blogger stuckinthecity said...

Most pensions will be wiped out long before they can be enjoyed.

The City of Chicago's police and fire dept pensions are only funded about 55%.

With many baby boomer cops and firemen expecting nice "Golden Years" they will be surprised when the housing downturn wipes out their housing lottery ticket AND their pensions.

11:28 PM  

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