With Lockdowns Looming, How Liquid Are Your Finances?
With President Trump facing an uphill battle to try to prove that he was cheated out of the election, it seems all but certain that Joe Biden will be the next President of the United States. Even if the Electoral College were to fail to elect a President, it would be up to the Democrat-controlled House of Representatives to pick the next President, making Biden nearly a shoo-in. Now that Biden thinks he’s in the driver’s seat, he’s sparing no details about his plans to remake the country. And that’s giving some investors some reason for pause.
One of the first things Biden did after the election is create a coronavirus task force. And while after months of COVID hysteria you might think that members of this task force would have some new plan or strategy to combat COVID, it’s probably going to be a rehash of the same failed policies. Dr. Michael Osterholm, one of the members of the task force, recently suggested a 4- to 6-week nationwide lockdown, with the federal government paying the salaries of every worker during that period to make sure no one goes without.
It’s the kind of proposal that you would laugh off if you heard it on the street or overheard it in line at the grocery store. But these people are deadly serious when they make these kinds of proposals, and they have the will to see them to fruition. More importantly, they believe that Biden’s victory in the election gives them some sort of mandate, as though eking out a contested victory gives them carte blanche to run American society as they see fit.
For Americans tired of the COVID hysteria and itching to return to normalcy, the prospect of another lockdown would be a tough pill to swallow. And for the millions of Americans still reeling financially from the initial lockdowns, a new lockdown, even with government financial support, wouldn’t be anything they would want to suffer through again. If Biden ends up pushing through a nationwide lockdown, are your finances in good enough shape to make it through?
How Practical Is a Lockdown?
No matter where lockdowns have been practiced, they haven’t succeeded. The only example the lockdown proponents can point to is New Zealand, which because of its small size, low population density, and geographic remoteness, is obviously not a valid template for countries like the US.
Presumably a lockdown would include exemptions for healthcare personnel, grocery stores, etc., unless the federal government plans to deliver food and medicine to every single person. But that introduces a significant infection vector, one which would likely render the purpose of a lockdown moot.
Then there’s the idea of paying the salaries of every single worker during a lockdown. With total payrolls currently at nearly $8.8 trillion, a six-week lockdown would cost the federal government over $1 trillion. Add to that the necessary payments to support retirees (surely Dr. Osterholm didn’t forget about them), and you could run the sum up by several hundred billion, if not another trillion. And where is that money coming from? The government is already poised to run up trillion-dollar deficits in the future, and adding another several hundred billion would require money that the government just doesn’t have.
That kind of spending would require issuance of more debt, adding to the already enormous $27 trillion national debt. And it would be paid for by taxpayers in the end, as they’re on the hook to repay the national debt. Paying salaries isn’t some sort of freebie being offered by the government, it’s borrowing against the future to pay people in the present.
And what if the lockdown fails, which it likely would? Would the government then seek to extend it, and keep paying salaries? If the strategy to combat COVID is to shut down the economy and pay people with money created out of thin air, it could keep going ad infinitum, until so much money has been created that the dollar becomes worth next to nothing.
Are You Financially Prepared for a Lockdown?
If the country were to enter lockdown once again, how would your finances fare? Are you prepared to sit things out again for weeks? Do you have the savings to last through a lockdown in the event the government can’t make up for your lost income? And what happens if you can’t access your savings?
The latter question poses a real dilemma, and one that many people may face. If your money is in the financial system, it’s subject to the whims and vagaries of Wall Street and major banks. You may think that money in the bank is safe, or that money market mutual funds are a safe haven during times of financial crisis, but is that true?
We can’t rule out the possibility of a bank holiday during a lockdown, which could prevent you accessing any assets you have at the bank. And money market funds are now subject to new regulations post-Dodd Frank that allow them to prevent withdrawals during times of duress. You may find that when you really need that money you’ve been saving for years, you won’t be able to access it. That’s why financial diversification is so vitally important, and why so many investors are turning to alternatives to the banking and financial system.
Protect Yourself With a Gold Investment
By investing in gold through a gold IRA, you’re putting your assets outside the reach of the normal financial and banking system. A gold IRA holds physical gold coins and bars that are held at a bullion depository and managed by your IRA custodian. And when you decide to take a distribution, you can choose either to take cash or to receive a distribution in gold.
Not only do your assets lie outside the control of Wall Street, but they’re also more immune to a Wall Street crash. Banks may fail and stocks may plummet, but your gold assets will continue sitting in a vault protecting your wealth. Looking back at the 2008 financial crisis, gold gained 25% during the same time period that stocks lost over 55% of their value, and gold continued to gain for years to come. In fact, a hypothetical investor who had invested 30% of his assets in gold before the crash would still be ahead today versus someone who had remained invested 100% in stocks. That’s how strong gold’s performance can be during times of economic weakness.
If you’re worried about a future lockdown and about remaining financially secure no matter what transpires in the future, shouldn’t you be thinking about investing in gold? Call the experts at Goldco today to find out how gold can work for you and protect your retirement savings no matter how long lockdowns end up lasting.