Intro: Warren Buffett explained this week the simple reason why the US will never default on its debt.
According to Yahoo! Finance, The U.S. Treasury is borrowing $3 trillion in three months to pay for the pandemic response, a record sum that dwarfs the $1.8 trillion borrowed in 2009 during the financial crisis, with the debt sold in bonds to a variety of foreign and domestic investors.
Weighing in on this ‘new normal’ coronavirus economy is Jack Hanney of Patriot Gold Group.
Q&A:
- How is it possible that the U.S. government will never default on its debt, regardless of how much money they borrow?
Answer: The answer is as simple as it is unnerving. As Warren Buffet so aptly points out, if ever a potential default is staring US in the face, The Federal Reserve simply prints more money.
- The current bailout in this Republican administration is about double the amount of money borrowed in the 20090 financial crisis. Isn’t that a challenge to paying back the money?
Answer: Not if you have the ability to print as much money as you want since those bonds are paying in U.S. dollars. So, this issue isn’t if we’ll default, the issue is what will be the value of the diluted-down money use to pay debt to avoid a default.
- What about other government’s bonds, are they also payable in their own currency so they also can make good on any amount of debt at any time?
Answer: Sometimes but not always. Argentina has a huge problem because their debt instruments are payable in in other currencies. They can’t simply print their way out of that mess. The same holds true for other countries, but not the United States. They were clever enough to cover their debts denominated in U.S. dollars.
- Not long ago, big government bailouts were something largely associated with Democrats. But in the ‘new normal’ of the coronavirus pandemic, things have changed quickly. But are they all for the better?
Answer: Plagues are equal opportunity punishers. This one hit during a Republican administration.
- What about Debt that preceded the Trump administration’s new debt. A trillion here and a trillion there, after a while doesn’t it add up to real money?
Answer: Fiat money is not real money. It’s something with no gold standard, no silver standard, not even a copper standard. From a technical standpoint, American dollars aren’t worth the paper they are printed on since they can’t even be used for scratch paper. You can’t ever turn them over and print on the back because they’re already printed on! And if we ever experience hyper-inflation, paper money becomes worthless, and gold and silver will rule the day, due to their scarceness since metals are real money, not fiat currency.
- Where may we get more info on you and your financial advice?
Answer: PatriotGoldGroup.com
ABOUT JACK HANNEY…
Jack Hanney has been in the financial markets for 20+ years and is widely heralded as an expert in his field.
Born and growing up in Westchester County, NY where his father was a successful politician and owner of an Insurance Brokerage Firm. Jack began subscribing to The Wall Street Journal at the age of 14 and moved to California in his early 20’s to study under William O’Neill, arguably the single most successful investor in the history of the markets and founder of Investor’s Business Daily and author of How to Make Money in stocks.
Jack Hanney went on to be the General Manager and Director of Sales at several algorithmic automated trading companies trading the futures and commodities markets working with Introducing Brokers out of Chicago, Geneva and NYC. Jack was recruited by several tech startups and made a name for himself at Infosearch Media, Virtumundo and The Design People before returning to Finance. Jack passed on Morgan Stanley and other reputable, prestigious Brokerage firms to be a CFP in their Wealth Management Divisions and opted for a position as Senior Executive Trader with MG Private Client Services where he spent 4 years 2010-2014.
Jack Hanney had spent two years as Director of Trading, Executive Vice President of WDM overseeing the Retail Division before collaborating with two other prominent experts in his field and opening Patriot Gold Group a collective of Industry-Leading Experts bringing their clients Investor Direct Pricing and superior customer service.
Jack has written over 200M in business and trades maintaining outstanding relationships with his clients at Patriot Gold Group (PGG), where he is a senior partner, who he refers to as dear friends and family and now … welcoming them to the PGG family of investors. Jack resides in Los Angeles, California and is the proud father of his two daughters, Kate age 10 and Luna age 18.
