11 Aug 2020
United States Debt Level
- Posted by Dejan Pekic BCom DipFP CFP GAICD, Senior Financial Planner
Government debt levels over the next two decades are likely to be the biggest impediment to asset growth and return.
This is not to say that debt is bad thing, it is an extremely important tool and necessary for an economy to function but not when debt grows to excessive levels.
In January 2020 the Congressional Budget Office (CBO) projected United States Federal Government debt will exceed the post-World War II record in less than 15 years.
The situation is even worse when you consider that United States Federal Government debt does not include State debt or Local Government debt or unfunded public pension liabilities.
Click for charts.
The current United States Government debt escalation and other governments will keep cash rates ultra-low as has been the case in Japan because a 0% bond yield helps keep the debt servicing cost low.
This debt escalation however is unsustainable and eventually must come to an end but that is the big unknown. How?
Importantly, the investment insight from Benjamin Graham for times such as these is not to speculate and never to panic but instead, remain invested according to your appetite for risk and then react after the buying opportunity presents.
At Newealth we are always looking to support and promote our clients wherever possible and if you have any ideas or comments, please feel free to email me or to call me on +61 2 9267 2322.
