The US added
$11.8 Trillion of debt since 2020.
The government
owes $108,000 for every American, man, woman, and
child.
Deficit spending
as % of GDP is at World War 2 levels.
25% of
government receipts pay interest on the debt
annually.
The massive debt will push interest rates upwards until the
government starts paying down the debt significantly. This will
increase the cost of purchasing autos and homes for most
Americans.
Americans have record household debt.
Credit card and auto loans debt is at all time highs.
The Buffett
Indicator shows US stocks are overvalued at 200% of GDP,
one of the highest levels in history.
Corporate insiders are
selling shares at a record pace in the 4th quarter of
2024.
Goldman Sachs
states it is time for investors to diversify.
Blackrock,
Goldmann Sachs, and Vanguard all predict low stock returns (3-5%
annually) for the next decade.
Many financial
experts are calling this the "golden age" of fixed
investments.
Even if the Trump administration does everything right,
some problems will take a while to fix. Debt is a major
challenge.
Record levels of debt requires record selling of bonds. This
pushes bond interest rates higher.
Until the government starts paying down debt, bond interest
rates will remain elevated.
At the same time, the Federal Reserve is lowering borrowing
costs by reducing interest rates.
This creates an opportunity.
Your Personal Bank allows you to earn dividends (likely
increasing) while accessing funds to pay off debt, purchase items,
or invest in assets.
If dividends are higher than the borrowing costs, you keep the
difference. This creates positive cash flow (positive arbitrage) on
your money.
We are likely headed to a historical positive arbitrage
scenario.
Historically, positive arbitrage has been available 24 of the
past 28 years. The other 4 years the dividends and borrowing
costs were similar. The average annual positive arbitrage was 2-3%.
This is interest you earn on money you spent or allocated
elsewhere!
