The Broken Financial System | The Gold Standard 2330

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Hostess Jennifer Horn leads us into a conversation about our broken financial system. Ken Russo, Vice President of the esteemed Midas Gold Group, joins her for a discussion that goes to the heart of our modern economic landscape. From the pivotal moment, President Nixon took the dollar off the gold standard to the present-day chaos, marked by recent bank failures, the Fed’s interest rate hikes, and the downgrading of our nation’s credit rating, this episode shines a spotlight on the cracks in our financial foundation. Join us as we explore the nuanced complexities of our “broken financial system,” unraveling the past to illuminate a path forward in these uncertain times.

While our nation’s financial system stands at a crossroads, it’s nothing new. We’ve been heading in this direction for a long time. Lately, there has been one indication after another that our system is failing. The relentless printing of money and the piling up of excessive debt have strained the system’s resilience. At the same time, the intricate web of fractional reserve banking has added complexities that seem unsustainable. Inflation continues to loom. It erodes our purchasing power and diminishes the value of hard-earned wealth. The economic machinery is stuttering. The cracks are warning signs that we must take steps to protect our wealth.

The national debt, as of August 4, 2023, is $32 trillion. That’s $97,507 for every person in America. Routinely, the federal government spends more than it takes in. The government must borrow the money to cover the annual deficit. Each year’s deficit adds to our growing national debt burden. Aging baby boomers, rising healthcare costs, and a tax system that doesn’t bring in enough money to cover what the government promises its citizens. There is a mismatch between spending and revenues.

“The interest on our debt is more than what we pay for the military, and it’s going to get worse.”
—Ken Russo, SVP of the Midas Gold Group

The burden of interest on the national debt has grown staggeringly, casting a long shadow over our economic stability. Each year, a substantial portion of our resources is diverted toward servicing this debt, hampering our ability to invest in vital sectors such as education, infrastructure, and healthcare. As the weight of interest payments continues to mount, it serves as a stark reminder of the urgent need to address our reliance on borrowed funds and to chart a sustainable path towards fiscal responsibility and long-term prosperity.

Fractional reserve banking exposes banks to the risk of bank runs. This year, we’ve seen plenty of examples of how a bank run happens. Suppose many depositors want to withdraw their money simultaneously. In that case, the bank may not have enough cash reserves to meet the demand, which can lead to a bank failure.

Fitch Ratings surprised us by announcing a US sovereign credit rating downgrade from AAA to AA+. The rationale includes anticipated fiscal decline over three years, growing government debt, deterioration of governance, and widespread polarization. The Fed’s rate hikes escalated debt servicing costs by 25% in nine months, reaching nearly $70 trillion over three decades. Lower credit ratings mean higher interest rates, which only adds to what the Fed’s already doing.

Gold and silver serve as reliable hedges against rising interest rates, potential bank failures, credit downgrades, and the broader monetary system collapse due to their historical status as stores of value, immune to direct government control, and universally recognized as tangible assets offering stability and wealth preservation in times of economic uncertainty.

The one-ounce American Gold Eagle symbolizes timeless beauty and enduring value in precious metals. The one-ounce American Gold Eagle is 22-karat gold. Its masterful design features Lady Liberty in a radiant stride on the obverse, representing ideals of freedom and opportunity that define the American way of life. The design’s intricate details, crafted by the renowned sculptor Augustus Saint-Gaudens, evoke a sense of national pride and heritage.

The reverse design shows a family of majestic eagles. It symbolizes the unity and strength that America represents. Holding an olive branch and arrows in its talons, the eagle symbolizes peace and preparedness, reflecting the nation’s journey through history. The American Gold Eagle is more than a precious metal coin but a testament to the American spirit and the enduring allure of gold as a reliable store of wealth. Holding this coin is to have a piece of artistry and legacy that resonates across generations.
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