President Joe Biden’s massive, $1.9 trillion dollar stimulus bill is about to send every American taxpayer a $1,400 direct payment check.
The bill will include additional monthly payments to every American parent — called “tax credits” but paid whether or not the parent actually pays taxes or even has a job — based on how many children they have.
That’s not all. It will send hundreds of federal dollars to every unemployed person throughout the country. Again. It will send billions and billions of dollars to various programs, state and local governments, tribal authorities, and more.
But hidden in the massive project is a reward for early gold and commodity investors.
The Federal Reserve has vowed to keep rates near their historic lows because inflationary pressures remain manageable. And gold prices have remained steady in recent weeks, despite the downturn in the U.S. dollar.
Still, savvy investors would be wise to head towards the commodity markets before it’s too late.
While manageable at their current rates, inflationary pressures are creeping into the market. The U.S. government’s deficit in 2021 is projected to be larger than the total U.S. gross domestic product this year — the first time that has happened since World War 2. The overall debt in the United States has become an eye-watering $28 trillion and counting.
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But it’s not just the current stimulus bill’s impact on inflation that investors should be worried about.
It’s the second massive stimulus bill that comes later this year to keep an eye on.
The coronavirus pandemic isn’t going anywhere soon. It will likely linger for at least the rest of the year in some capacity or another, experts have warned. And even if the pandemic were to suddenly disappear tomorrow, the lingering economic downturn wouldn’t turn around overnight.
Combine that with the popularity of government spending, and we’re almost certain to face another “stimulus bill” by the end of this year.
Only 1/3 of Americans say the upcoming $1.9 trillion stimulus bill is too large. And 94 percent of Democrats — the party in control of the White House and both chambers of Congress — think it’s appropriate, according to Pew Research.
Stimulus checks are increasingly popular among Democrats’ liberal base. This is the third round of checks sent out within the past year, after all. And the upcoming direct payments to parents are anything but a “tax credit” — it’s a watered-down version of Universal Basic Income.
With 94 percent of Democrats in favor of the $1.9 trillion stimulus package, the coronavirus pandemic still months (perhaps years) away from ending, and with the economic downturn sure to linger after, it’s almost certain that pressure begins to mount for another huge spending bill by the end of the year. Democratic lawmakers, despite all their flaws, were exceptionally good at uniting their party behind the Biden administration’s first massive stimulus package. They could likely pass another Biden-backed stimulus in 2021 without any Republican support.
It would be foolish for investors to ignore the reality of today’s populist political environment.
Printing money is popular with voters who don’t remember the dangerous inflation rates of the late 1970s and early 1980s. Direct federal payments to unemployed workers are popular among Democrats. Direct cash payments sent to every single lower-and-middle class American parent will be popular… and Democratic voters will soon demand they become permanent. With Democrats in control of both the House and Senate, leftist politicians are in a position to buy these voters’ loyalty.
It will be no surprise when voters demand Congress pass another stimulus bill later this year. It will be no shock when Democratic lawmakers, some facing primary challenges next spring, push another stimulus past Republicans. Debt will continue to climb while more and more “free money” is doled out.
At some point, the government spending realities will catch up to the Biden administration. The inflation dam will break.
Short-sighted voters and greedy politicians will quickly find out that economics doesn’t care about popularity polls and primary votes.
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Reckless government spending by Democrats and their embrace of populist monetary policy will result in a sudden spike in inflation.
And those invested in gold and commodities will be the only winners.
The Horn editorial team