On today’s show we are taking a look at what the US might look like post election. The race is probably too close to call. The left leaning media are predicting a Harris victory and the right leaning media are predicting a Trump victory. Anyone who says they know definitively can’t possibly know. Voter turnout will have a major impact in the swing states. In those ridings where the vote is close, a larger turnout for one group versus another could be enough to make the difference, regardless of what the polls say.
We are currently living in two economies. Those who have assets, and those who have a job. Those who have assets are not feeling the pain of inflation, whereas the hidden tax of inflation is really hurting those whose incomes are not keeping pace with rising prices.
In both cases, we will see government debt balloon. At the current rate, we can expect the national debt to reach 50T by 2030, and that’s if we don’t have any wars or any recession between now and then. At some point, someone in the world is going to purchase all those bonds. If the supply of that debt exceeds the demand, you can expect the cost of that debt to go up. That means higher long term interest rates. The only way that the US will maintain low interest rates is if it retains its global reserve currency status. Otherwise they will be relegated to the same demand as bonds from Italy, or maybe worse like Argentina or Ecuador.
I keep hearing from investors that they’re waiting to see who is going to win the election before making any new investments. I ask them to imagine that the election is over and you now know who is going to be sitting in the oval office, what would they do differently in terms of investments based on that knowledge? All too often, they have no answer.
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