Will the U.S. be able to maintain a healthy balance sheet amid MASSIVE debt? [Wednesday: The Independent Investor]
Miles Everson’s The Business Builder Daily speaks to the heart of what great marketers, business leaders, and other professionals need to succeed in advertising, communications, managing their investments, career strategy, and more.
A Note from Miles Everson:
It’s natural to feel a tinge of concern for the financial and economic status of the market amid the constant buzz surrounding the United States’ debt ceiling.
This matter has been a subject of considerable debate for months and so, it is crucial to gain a clear understanding of the current state of affairs in the country.
In today’s issue of “The Independent Investor,” we’re going to take a closer look at how well the nation is handling its financial responsibilities. This will also give you a better idea on how you can protect your investments.
Are you ready?
Keep reading below.
—
UPCOMING EVENT ALERT:
For the past several months, warnings about an impending recession have flooded the mainstream financial media, leading regular folks and everyday investors to become wary of this adverse event.
Now, the panic has reached Wall Street, as seen in Warren Buffett’s unloading of USD 5 billion in stocks and Jamie Dimon’s public warnings about interest rates rising to as high as 7%.
Given these events, I asked my friend and colleague, Professor Joel Litman, about his thoughts and what worries him most.
His answer?
It’s time to brace ourselves for the Great Recession of 2024.
Joel says every signal he’s seen for the past several months points to a looming recession that will hit the U.S. financial markets next year. He adds that the adverse economic event will blindside millions of Americans.
In light of his warning, I invite you to join Professor Litman today at 8:00 p.m. ET. He will discuss the ONE step you can take with your money before the year ends and how you can reap MASSIVE potential profits as the 2024 recession unfolds.
If you want to move your money NOW before January 1, visit this link to register for the event.
I hope you can join!
—
Miles Everson
CEO, MBO Partners
Chairman of the Advisory Board, The I Institute
The Independent Investor
The U.S. has run at a deficit for over a decade. Since the end of 2012, the country’s total public debt has exceeded its gross domestic product (GDP). As of Q2 2023, the U.S.’ debt is 20% greater than its GDP.
If you’re a keen reader and observer of the news, you’ll likely notice a trend. It seems like almost every story is focused around the U.S.’ HUGE amount of debt.
Because of this, everyone feels the need to insert their 2 cents into the argument… and with so much commentary, what’s happening might be confusing.
Here’s the thing:
The story is really just simple. The U.S. has to raise its debt ceiling to pay for bills it already agreed on. The main issue?
Congress is using this as an opportunity to discuss the government’s accounting responsibility AND to score political points.
Think about this: Congressional Republicans are focusing on how the country can cut costs. Meanwhile, the Democrats, including President Joe Biden, want to talk about how the U.S. can increase revenue (raise taxes).
This entire debate has turned into a classic game of chicken.
However, there’s an important detail that’s being overlooked in this subject. As we’ll explain in today’s article, one should pay attention to what actually drives the U.S.’ ability to borrow.
Photo from Pexels
Debt-ceiling Headlines… Fuss or Facts?
“The government’s balance sheet is in no real danger.”
According to Professor Joel Litman, Chairman and CEO of Valens Research and Chief Investment Strategist of Altimetry Financial Research, the debt-ceiling headline story basically revolves around whether or not the limit will be increased so the U.S. can borrow more.
… but before that, one must first analyze the government’s ability to pay its current debt obligations. After all, if the U.S. can’t handle what it owes now, it probably shouldn’t raise its borrowing limit.
Fortunately, Professor Litman says there’s a simple reason not to worry: The U.S. still remains a global superpower.
The country is still spending more on research and development (R&D) as a percent of GDP compared to Europe and China… and that’s leading to a consistent stream of innovations in areas like tech and energy!
Here are a few more reasons why Professor Litman believes the U.S. is still a global superpower:
- American businesses are set up to benefit from infrastructure spending as the supply-chain supercycle ramps up. There’s plenty of strong demand for goods and services as people emerge from the pandemic.
- The U.S. is home to the largest public market by far, with almost 60% of the world’s total equity market value.
- The U.S. dollar is still the world’s reserve currency, despite all the noise about how it won’t be for long. Countries still have to deal in USD to participate in world markets, and this increases the country’s ability to borrow.
According to Professor Litman, he’s not just saying this because he’s bullish on the U.S.’ long-term prospects. Data backs him up. The U.S. tax revenue, which hit USD 4.9 trillion in 2022, continues to rise. This makes it much easier for the country to spend less than it collects.
On the expense side, Professor Litman says the U.S. can easily afford the annual cost of its debt. He states even if the U.S. did struggle to make its debt payments, it still has hundreds of trillions of dollars in assets that it could sell.
The bottom line?
There’s no reason to think the U.S. will fail to meet a financial obligation in the short term! Much of the public’s worries are out of place.
Even if such worries happen, Professor Litman says the U.S.’ balance sheet is still healthy. The country’s place at the top of the global economy won’t go anywhere.
Keep these important and useful insights in mind!
As a smart investor, it’s important to know where you should invest your money. After all, you need to put it in a safe asset class in a well-performing country so you can achieve financial stability in the long run!
Always stay informed with financial news, economic trends, and any developments that could impact your investments, but don’t always believe what the mainstream media tells you.
More often than not, when the media tells you something, you should do the opposite. Sometimes, there are also hidden agendas in such news because of regulatory capture. That’s why you have to be wary in terms of your investments.
[Regulatory Capture: An economic theory that regulatory agencies may come to be dominated by the interests they regulate and not the public interest.]
Through applying these insights, you’ll be able to make informed decisions that will benefit you, your family, and your investments in the long term.
Stay tuned for next week’s “The Independent Investor!”
(This article is from The Business Builder Daily, a newsletter by The I Institute in collaboration with MBO Partners.)
About The Dynamic Marketing Communiqué’s
“Wednesdays: The Independent Investor”
To best understand a firm, it makes sense to know its underlying earning power.
In two of the greatest books ever written on investing, the “Intelligent Investor” by Benjamin Graham and “Security Analysis” by David Dodd and Benjamin Graham (yes, Graham authored both of these books), the term “earning power” is mentioned hundreds of times.
LITERALLY.
Despite that, it’s surprising how earning power is mentioned seldomly in literature on business strategy. If the goal of a business is wealth creation, then the performance metrics must include the earning power concept.
Every Wednesday, we’ll publish investing tips and insights in accordance with the practices of some of the world’s greatest investors.
We make certain that these articles help you identify and separate the best companies from the worst, and develop your investing prowess in the long run.
Our goal?
To help you get on that path towards the greatest value creation in investing.
Hope you’ve found this week’s insights interesting and helpful.
Stay tuned for next Wednesday’s “The Independent Investor!”
Cheers,
Kyle Yu
Head of Marketing
Valens Dynamic Marketing Capabilities
Powered by Valens Research
www.valens-research.com
