Personal investor Don Hansen has honed his useful resource sector funding strategy for greater than 20 years, and in a dialog with the Investing Information Community he shared his analysis on the US debt-to-GDP ratio.
Trying again to 1945, the ratio was at 111 p.c as a consequence of main spending on World Conflict II. Nevertheless, by 1965 it was down to only 43 p.c — Hansen famous that this occurred on the again of a balanced price range and good financial development. The ratio remained pretty steady from 1965 to 1985, however rose dramatically from 1985 to 2005.
“The debt grew 9.3 p.c between 1985 and 2005, however the GDP solely grew 6.1,” he famous. “So clearly then the debt-to-GDP ratio was climbing, and in 2005 it was as much as 61. So you are going up 50 p.c in 20 years.” By 2025, Hansen expects the ratio to rise to 150 p.c, with debt rising 9.5 p.c yearly and GDP solely rising by 3 p.c.
In his view, this exponential improve is being pushed by the lack of capitalism, which requires three parts to work correctly: sound cash, a free market and restricted authorities. Hansen stated sound cash was misplaced in 1971, whereas the free market was misplaced because the US authorities began changing into extra interventionist.
He believes a forex collapse is inevitable, and thinks actual property like gold and silver are key for traders who need to defend themselves from the approaching storm.
“I had an ‘aha’ expertise about that the place I spotted that the factor that may break, and virtually all the time will break, is the forex,” he defined. “And the explanation for that’s that of all of the variables concerned in these financial conditions, the one variable that the federal government can’t management is the alternate fee of the forex. As a result of it is decided by all people else’s shopping for and promoting. So that is what breaks. That is what offers up.”
Watch the interview above for extra of Hansen’s ideas on the US debt-to-GDP ratio and the approaching forex collapse. You too can click on the the timestamps beneath to view particular elements of the interview:
- 0:00 — Intro
- 0:50 — Historical past of the US debt-to-GDP ratio
- 4:38 — US debt-to-GDP ration sooner or later
- 10:51 — Foreign money collapse is inevitable
- 17:49 — Making ready with gold and silver
- 23:28 — Knowledge vs. intelligence
- 26:20 — Outro
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Securities Disclosure: I, Charlotte McLeod, maintain no direct funding curiosity in any firm talked about on this article.
Editorial Disclosure: The Investing Information Community doesn’t assure the accuracy or thoroughness of the data reported within the interviews it conducts. The opinions expressed in these interviews don’t replicate the opinions of the Investing Information Community and don’t represent funding recommendation. All readers are inspired to carry out their very own due diligence.