Kicking the can down the road

Dollars and Sense

According to some politicians it is a “step in the right direction.”

In agreeing to terms that would allow the U.S. government to increase its debt ceiling, we can at least breath a sigh of relief that a crisis was averted. But, really, who doubted that something would give at the 11th hour, as the consequences of not reaching an agreement were too grave, and simply had to be avoided.

The real question is (and was): what steps will be taken to tackle the real problem — dealing with a national debt that is spiralling out of control? When you are $14 trillion dollars in debt, is a “step in the right direction” really enough?

It appears that other than a few politicians, most don’t think so. Certainly the markets seem underwhelmed, though there are other factors that may have contributed to the selloff that took place after the agreement was reached. 

For further evidence of what the markets think, look at the price of gold, which continues to set new records. The message is clear: investors and central banks around the world are losing faith in paper money, and instead are investing in hard assets that are perceived to be more likely to hold their value as governments in many countries continue to print money to solve problems.

Do I sound pessimistic?

As an investor, I am not. Government policies around the world may not be in the best long-term interests of the economy, but at least they are predictable, and as such are presenting opportunities.

Over the last week I have received calls and e-mails from concerned clients, wondering if there is anything we should be doing in light of what is going on. 

Consistently, my answer has been: we already have, and we’re doing fine.

It truly is an exciting time to invest!

 

 

 

Jim Grant, CFP (Certified Financial Planner) is a Financial Advisor with Raymond James Ltd (RJL). This article is for information only.  Securities are offered through Raymond James Ltd., member Canadian Investor Protection Fund. Insurance and estate planning offered through Raymond James Financial Planning Ltd., not member Canadian Investor Protection Fund. 

For more information feel free to call Jim at 250-594-1100, or e-mail at jim.grant@raymondjames.ca. and/or visit www.jimgrant.ca.

 

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