Can America print its way out?
Whether America can technically go bankrupt is a complicated question because the federal government cannot file for Chapter 11 bankruptcy reorganization. Instead, Congress would have to decide to let the federal government default on its debt, otherwise it can keep borrowing as long as there is demand from investors for government bonds.
“Technically speaking, the government can’t go bankrupt because it only promised to hand over a certain number of dollars; it didn’t promise what the value of those dollars would be. Because the value of the dollars was never specified, the government can print enough to render the dollars nearly worthless. To the rest of us, the effect is the same as the government going bankrupt,” wrote the co-hosts of podcast “Words & Numbers.”
In other words, printing money to stay afloat has significant consequences, as inflation erodes the purchasing power of the U.S. dollar. And while that’s a concern, say J.P. Morgan market analysts, they may not go so far as predicting the country is “toast.”
They say the likelihood of the country defaulting on its debt remains “extremely low.” This is because the U.S. benefits from a “unique position” of issuing debt in its own currency — which also happens to be the global reserve currency — along with a robust tax base that can help raise revenue through tax reforms if required.
The analysts point to Japan as an example. With a debt-to-GDP ratio of 228% — nearly twice the indebtedness of the U.S. — they argue it is indeed possible for a country to avoid a fiscal crisis despite a hefty burden of debt.
So whether the situation is as critical as Musk believes remains to be seen — but there’s still a way to make your own silver lining regardless. Throughout history, savvy investors have found ways to shield themselves from inflation’s bite. Musk himself highlighted this strategy in 2022, just before inflation hit a 40-year high in the U.S.
“It is generally better to own physical things like a home or stock in companies you think make good products, than dollars when inflation is high,” he advised.
Let’s take a closer look at some of these assets.
‘Physical things like a home’
When inflation rises, property values often increase as well, reflecting the higher costs of materials, labor and land. At the same time, rental income tends to go up, providing landlords with a revenue stream that adjusts for inflation.
This combination makes real estate an attractive option for preserving and growing wealth when the U.S. dollar is losing its value.
Over the last five years, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index has surged by more than 50%.
You can invest in real estate by purchasing rental properties and becoming a landlord. Alternatively, crowdfunding platforms like Arrived have made it easier for average Americans to invest in rental properties without the need for a hefty down payment or the burden of property management.
With Arrived, you can invest in shares of rental homes with as little as $100 without worrying about mowing lawns, fixing leaky faucets, or handling difficult tenants. The process is simple: browse a curated selection of homes that have been vetted for their appreciation and income potential.
Once you find a property you like, select the number of shares you’d like to purchase, and then sit back as you start receiving rental income deposits from your investment.
‘Stock in companies you think make good products’
Investing in stocks of companies that “make good products” has proven to be a successful strategy during the recent inflationary period, with Musk’s own Tesla (TSLA) serving as a standout example.
Tesla’s popular electric vehicles have enabled the company to dominate the growing EV market in the U.S. This success has translated into significant rewards for its shareholders: Tesla’s stock has skyrocketed by over 1,400% in the last five years.
Another example is Apple, a company whose flagship product, the iPhone, commands the largest share of the U.S. smartphone market. Apple’s ability to consistently deliver desirable products has paid off for investors as well. Over the past five years, Apple’s stock has surged by 250%.
That said, it’s important to remember that stocks are inherently volatile, and past performance is no guarantee of future results. However, today’s investors have access to a wealth of resources to help make informed decisions.
For example, platforms like Moby, founded by former hedge fund analysts, provide stock research and insights tailored for everyday investors.
Over the past four years, Moby’s stock picks have outperformed the S&P 500 by an average of 11.95%, helping more than 5 million users identify promising investments before they take off.
A timeless alternative
When it comes to preserving wealth and fighting inflation, few assets have stood the test of time like gold.
The appeal of investing in gold is straightforward: the yellow metal can’t be printed in unlimited quantities by central banks like fiat money. And because its value isn’t tied to any one currency or economy, gold could provide protection during periods of economic uncertainty — or in the kind of dollar collapse scenario Musk has warned about.
As inflation erodes the purchasing power of paper currencies, gold’s appeal as a stable store of value often grows, driving up demand. In 2024, gold prices surged by 27%, surpassing $2,600 per ounce.
Schiff believes this is just the beginning. “If gold can go from $20 an ounce to $2,600 an ounce, it can go from $2,600 to $26,000, or even to $100,000. There’s no limit because, again, gold isn’t changing — it’s the value of the dollar that’s decreasing,” he recently stated.
At today’s prices, a climb to $100,000 would represent an astounding upside of over 3,700%.
One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of Priority Gold.
Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, thereby combining the tax advantages of an IRA with the protective benefits of investing in gold, making it an option for those seeking to ensure their retirement funds are well-shielded against economic uncertainties. Since you will be holding physical gold, you will be charged storage fees on top of other types of fees, so make sure to do your research and find the best deal for yourself.
With over 20 years of industry experience, Priority Gold has earned an A+ rating from the Better Business Bureau and a 5-star rating on TrustLink. The company promises transparent pricing, free shipping, and secure storage options for a hassle-free and trustworthy investment experience.
