QUICKTAKE

December 12, 2024

How America Can Escape the Debt Trap

The Biden administration is leaving Donald Trump a Christmas present that makes a lump of coal look like a shiny new bicycle: $36 trillion of debt that requires about $1 trillion a year in interest payments.

At least, it did come with a little bit of an apology note yesterday from Treasury Secretary Janet Yellen.

Well, I am concerned about fiscal sustainability, and I am sorry that we haven’t made more progress. I believe that the deficit needs to be brought down, especially now that we’re in an environment of higher interest rates. - Janet Yellen (12/11/2024)

Markets are unsurprisingly focused on how Trump will manage around the enormous federal government debt burden he is inheriting.

Investors have some serious concerns.

Is the U.S. dollar at risk of losing its status as the global reserve currency?

Will interest rates skyrocket?

Is more inflation inevitable?

Trump has made clear his strategy to handle the situation—cutting spending and driving economic growth.

He spoke this morning at the New York Stock Exchange and communicated his priorities for the U.S. economy, which involve making sure America dominates the industries of the future.

We’re going to do something great with crypto because we don’t want China or anybody else, not just China, but others are embracing it and we want to be the head. We’re going to be ahead of AI. We’re going to be way ahead of AI. And we’ve got to produce tremendous amounts of electricity. - Donald Trump (12/12/2024)

Investors in stocks have many good reasons to be optimistic about the implementation of Trump’s growth agenda—but America’s enormous public debt still presents meaningful risks.

These risks do not mean you should not be invested. These risks mean you need to be invested in the right places.

In our latest 76report, we dive into some of the more difficult but crucial questions facing all investors today…

How can the Trump administration navigate a path forward and avoid the dreaded inflation-debt spiral that has brought down one regime after another since the dawn of civilization?

And how can investors position their portfolios to take advantage of extremely promising technological shifts underway, yet also protect their savings from the risks associated with the federal government’s severe debt problem?

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