America just avoided careening over another fiscal cliff, it seems, as enough senators’ self-preservation instincts kicked in to prompt the passage of a last-minute spending bill Saturday night. The president signed that same bill, which the House of Representatives had already passed earlier that day.
It’s only a short-term measure, however. It will allows the government to stay open for 45 days, thereby giving the Senate and House a little bit more time to cobble together the real, long-term spending bill.
It guarantees nothing, as Congress remains as divided as it’s ever been. With the U.S. already having sent more than $43 billion in security assistance to Kyiv, Ukraine, there’s bound to be bitter contention among Republicans and Democrats regarding how to deploy whatever capital we have left to spend.
Printing and spending more money won’t be an attractive option as the money supply is already flooded and inflation remains a major issue for American families in 2023’s fourth quarter. In other words, people are finally coming to understand that spending our way out of America’s problems isn’t a viable solution.
And let’s not forget, Joe Biden must approve whatever final bill is sent to his desk. Even as American households struggle to get by during this time of persistent food, rent, mortgage rate (the 30-year fixed rate is shown above) and fuel inflation, Biden apparently continues to prioritize financial aid to Ukraine over assistance at home.
His message is unmistakable: “We cannot under any circumstances allow American for Ukraine to be interrupted… Stop playing games, get this done.” As the war grinds on and more billions of taxpayer dollars flow to foreign nations, though, American voters must surely question whether insisting on fiscal discipline is the same as “playing games.”
At least, we can say that conservatives are pushing back to a certain extent. The 71-page short-term spending bill, which was crafted by Republican House Speaker Kevin McCarthy, reportedly includes no new financial assistance for Ukraine’s ongoing war with Russia.
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This shouldn’t provide much comfort for struggling Americans, however. A bombshell is dropping at the outset of Q4 2023 as required federal student loan repayments are set to resume for 40 million U.S. borrowers. Thus, to quote Mark Zandi, chief economist at Moody’s Analytics, “The economy will struggle in the fourth quarter, in meaningful part due to the end of the student loan payment moratorium.”
And by the way, interest started accruing on those loans again on September 1. Here’s a link to the Federal Student Aid website and another link to the Saving on an Affordable Education plan to help you determine if there are available resources – but don’t get your hopes up too much.
Meanwhile, large-cap stock investors have a brief window of opportunity to diversify their holdings. In case you didn’t get the memo, the inversion of the 10-year minus the 3-month Treasury yield curve has lasted for 223 consecutive trading days so far – the longest stretch in history – and inversions like this are typically looming recession indicators.
Diversification could include a moderately sized allocation in Bitcoin, but don’t ignore the precious metals, gold and silver. After a weak August and a scary September (which was 2023’s worst month for the S&P 500, by the way), this is the perfect time to explore hard assets as a crisis hedge for your portfolio.
More and more forward-thinking investors are turning to precious metals now – and in fact, Costco is selling one-ounce gold bars online and they’re selling like hotcakes. “[W]hen we load them on the site, they’re typically gone within a few hours,” reported Costco Chief Financial Officer Richard Galanti.
Of course, you don’t have to rely on Costco to invest in physical gold. There are plenty of reputable precious metal dealers, and you can also consider gold mining stocks as well as silver mining stocks. There are just a few ways to properly position your portfolio for whatever government action – or more likely, inaction – may take place in the next few months.
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