Saturday, March 13, 2010

U.S. debt magnitude continues to draw concern

The size of the U.S. national debt are raising concern about the long-stability of the dollar while also giving people more of a reason to talk to silver and gold dealers about precious metal investment opportunities.

In fact, one South Carolina state lawmaker has even made news with his proposal to end the use of federal dollars in the state and replace the money with silver and gold coins.

The lawmaker, State Representative Mike Pitts, a Republican, recently spoke to Neil Cavuto on Fox News about the idea. A transcript of the interview notes that Pitts has received a "mixed" reaction to his proposal, which he explained would amount to "taking the state to the gold-silver standard and backing up what would be our dollar."

Pitts also told Cavuto that gold "is more valuable than that paper dollar you're trying to spend" and suggested that his bill had largely been intended to ignite a debate and a dialogue over the issue of government spending and the handling of debt and currency issues.

The issue of the national debt has gained more prominence after two consecutive years of deficits exceeding $1 trillion, with more on the horizon as the national debt rises to levels once thought unthinkable. Further fueling the attention to fiscal responsibility is the state of the economy and news headlines from countries like Greece about the economic uncertainty their own sovereign debt problems are contributing to.

In fact, things may be even worse in the United States than some had previously thought. An Associated Press report cited government data noting that for February, the deficit had been $220.9 billion, which was 14 percent higher than the record for that month set last year.

For the first five months of the current budget year, the AP added that the deficit stood at $651.6 billion, which was said to be 10.5 percent higher than at this time last year. In a somewhat positive sign, the wire service also noted that government revenues had posted a year-over-year improvement in the monthly report for the first time since April 2008.

Since the debt is reaching a point where it costs hundreds of billions of dollars a year just to pay the interest on it, economists and others are becoming increasingly alarmed about the long-term prospects for the world economy. However, it remains to be seen if the political will exists in Washington before solid action is taken on the matter.