Dollar Devalued By Debt Ceiling Deal

The election of Kevin McCarthy as Speaker of the United States House did not inspire fiscal conservatives with hope. The California Republican’s record on fiscal responsibility was abysmal; with this said, the debt ceiling deal devalued the dollar.

How does The Debt Ceiling Deal devalue the Dollar?

After nearly five months in office, McCarthy has made it clear that he has no plans to stand firm in his opposition to government growth.

He just stated that he and Biden had reached an agreement to postpone future discussions of the debt ceiling until 2025 without making any cuts to spending.

He is pitching the agreement to the public as if it were a devastating blow to Democrats.

McCarthy declared, “The Democrats are furious right now… They do not even get a mention in the bill.” Nothing in the bill would appeal to Democrats.

What he is trying to say here is unclear. The Internal Revenue Service will keep nearly all the additional $80 billion in funding it received due to last year’s Orwellian “Inflation Reduction Act.”

The rest of the federal bureaucracy sees no cuts, and defense spending, including aid to Ukraine, sees a substantial boost.

Only roughly one-third of the current federal budget is “discretionary” spending.

Defense, social programs like Medicare and Medicaid, and interest on the national debt make up the rest.

The growth of these non-discretionary categories is a political nonstarter.

Politicians will need to help strike a financial balance in the future.

There is yet a way to go. The House as a whole still needs to approve McCarthy’s budget compromise. But ultimately, there will be a significant increase in the debt cap. 🧢

What Does This All Mean?

For buyers of gold and silver, the most important thing to know is that the inflationary crisis at the core of our monetary system will not be solved politically. Constant trillion-dollar deficits and annual debt issuance are the new normal for the United States.

Only the Federal Reserve’s printing of money and monetization of debt can keep budget deficits from collapsing at this point. I am sure Vanguard will feel the effects soon.

The federal government plans to “pay” its debts using currency that loses value at an accelerating rate. The country can only continue along the path of currency debasement and perdition. The dollar, as we know it, is further devalued by the debt ceiling deal.