News arose today regarding congress raising America’s debt limit to keep the U.S government on. Treasury Secretary Janet Yellen expresses her deepest concerns regarding our economy.
Yellen is currently blowing up on Twitter feeds as she’s stated, “there are issues relating to hedge funds and the possibility of leverage, they can trigger financial runs”..
A financial run is a consecutive run in the markets, whether bullish or bearish. In the case of a hedge fund, it’s usually bearish due to short selling or short-laddering.
Welcome to Franknez.com – today’s finance news will uncover some rather jarring information in regards to our economy. Yellen has warned House Speaker Nancy Pelosi on the matters.
Let’s get started!
Failing To Act Could Spark An Economic Catastrophe
Yet again our government is forced raise America’s debt ceiling or face devastating consequences.
Raising the debt ceiling essentially provides America with a larger line of credit. Yellen’s solution is for America to continue mounting debt, as the treasuries extraordinary measures to print more money could have very well been exhausted.
Although, if congress does not raise the debt ceiling, the treasury would have to step in to keep the federal government running.
Inflation continues to skyrocket with the printing of money. And the only two solutions America has is to either keep digging a debt hole, or exhaust the worth of our dollar.
The lack of financial literacy in our own government is what will ruin our financial system.
How Did We Get Here?
If you ask Robert Kiyosaki, he will say the lack of financial education got America here. And I agree. Robert Kiyosaki, author of Rich Dad, Poor Dad is a strong advocate for financial literacy.
In this incredible interview with Patrick Bet-David, Robert talks to us about his thoughts on the U.S national debt.
If you follow Robert on Twitter, you know his tweets are very strong when it comes to the Feds, our government, and the destruction of our financial systems.
The U.S Will Run Out of Cash By October 18th
Congress has up until Monday, October 18th to raise the national debt before they run out of cash.
“It is imperative that Congress swiftly addresses the debt limit,” Yellen said yesterday in testimony before the U.S. Senate Banking Committee. “If it does not, America would default for the first time in history. The full faith and credit of the United States would be impaired, and our country would likely face a financial crisis and economic recession.”
What Would Happen If America Goes On Default?
If America goes on default, it would trigger a broad market sell-off and put a hold on everything from government payments to the ability to borrow.
Unemployment, child tax, and social security would all stop flowing to the American people. Not to mention, our troops would stop getting paid.
And although social security is a self-funded program, the money is drawn from various trust funds to pay benefits.
Stocks and crypto would tank which would present a buying opportunity for investors. Investors usually profit from these market crashes as they begin to correct themselves. As for hedge funds, closing short positions could result in the MOASS retail investors have been waiting for.
A default would only be temporary, but could hurt Americans who depend on assistance from the government.
The interest rates on credit cards, car loans, and mortgages would also skyrocket, making it almost nearly impossible for struggling families to keep up with occurring debt.
Let’s Talk Solutions For An Economic Downturn
How can we prepare ourselves for an economic downturn? This is not financial advice, but advice from a friend.
If you have money in stocks and crypto, know that with a stock market crash the value of your assets will go down. However, if you take this opportunity to increase your position then you will come out profiting during its correction.
Negative beta stocks such as AMC and GME are more resilient and less volatile when it comes to crashes.
Be sure to have an emergency fund set aside in case you see yourself needing cash short-term. While most of our holdings are in assets, it would be wise to keep cash at hand to prevent from liquidating certain stocks or crypto.
If you have a safe stream(s) of income, make sure you’re stacking. That way when turmoil hits, you’ll be ready to take advantage of the investing opportunities presented to you.
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