The Silver Bear Cafe

Discover how the Department of Government Efficiency’s bold plans could reshape your financial future. With huge cuts to government spending, will inflation subside? Will prices finally fall? Or will Bidenomics prices stick around even longer?

One of Donald Trump's big campaign promises when he won both in 2016 and this year was to reduce the size of the Federal government and radically reduce government spending.

And it has been a wildly popular promise with a huge number of people who are sick of government bureaucracy.

If Trump can actually do it, pushing through resistance in Congress and the inevitable lawsuits from government workers who want to keep their government jobs, that will almost certainly help the economy in the long run.

Because it could allow the Federal government to actually stop borrowing money to pay for everything which means that there could, potentially, be much less inflation. And everyone wants that, right?

Some people, though, are scared that Trump could include Social Security cuts in his efforts to reduce the size of the government and Federal budget. After all, it’s the single biggest expense the Federal government has.

Some believe that the basic idea that Trump is going with to reduce government waste is to go with the “wrecking ball theory.”

While it sounds like a crazy name, it is a good metaphor for what Trump could do to the Federal government and the Federal bureaucracy in particular.

Or, at least, some Trump opponents see it that way. They think that he’ll wreck the government which they see as the backbone of our country (why the government isn’t the backbone of the country is a discussion for a different time).

To explain what they mean by the wrecking ball theory, Jim VandeHei and Mike Allen at Axios write:

Like the Gordian Knot, Sometimes, a thing is such a mess and would be such a headache to slowly fix that the best thing is to simply wreck it and smash it to pieces.

To be clear, neither Trump nor Elon Musk or Vivek Ramaswamy (that I’m aware of) have suggested completely destroying the Federal government.

But we can probably all agree that some of it needs to go. We just might disagree on which parts those are.

To give perspective, what could you do if you suddenly weren’t borrowing ⅓ of all that you spend? Think that you could begin to get your budget back on track and pay down some debts? Maybe invest more for your future?

For those who haven’t done enough retirement planning, yet, and expect to depend on Social Security to make it through retirement, there is good news there. Again from VandeHei and Allen:

In other words, the Trump administration can’t unilaterally decide to just cut Social Security benefits or other similar programs

And let’s be frank here: most baby boomers and many Gen Xers getting close to retirement age aren’t likely to be friendly to the idea of cutting Social Security payouts, so getting something like that passed through Congress is almost certainly not going to happen.

Look: I personally find it insulting to refer to Social Security as "entitlement." It's our money, we paid it into the fund! Regardless, Social Security isn’t going anywhere. Meanwhile the Federal government has to figure out how to keep paying out for the program before 2035. That's when the cash runs out.

Keep in mind, though, that we still have to deal with the fallout from nearly four years of Bidenomics.

That means that Trump will have to work hard to get the economy turned around, and as I’ve talked about before, there will be struggles getting this ship going in the right direction.

One of those challenges will be the inflation that we’re still dealing with and that we’ll continue to deal with.

Then, there are the higher costs for… well… everything thanks to Bidenomics’s failed policies that getting rid of inflation won’t bring back down.

(Remember, inflation is the rate of price increase, so, stopping inflation means that the price would stop going up. It doesn’t mean that the price would actually go down.)

And in case you have any doubt about how much the cost of things has changed over the last few years, CBS News has that data in abundance.

For example, since 2019 (so, just the last five years), the average price of coffee (which is a major commodity expenditure in my house) went from $4.17 to $6.64, an increase of over 59%.

And that’s not a price change that can be attributed to Starbucks prices! That was brewing at home five years ago and still brewing my coffee at home (though, I am using my own grinder now – and yes, I’m a coffee snob).

For another example, eggs increased from $1.28 per dozen to $3.37 per dozen, an increase of 163%!

There’s something to make anyone upset looking at that chart. They’re little things, though – it’s hard for me to get too worked up over the 109% rise in sweet potato prices.

But there’s one thing, America’s biggest asset class, that’s even more worrisome…

Another ugly example of Bidenomics has to do with the cost for housing, both for rent and home prices. Official CPI numbers don’t accurately reflect the cost of homeownership, so we’ll look beyond headline inflation reports.

Nationwide averages don’t quite tell the full story – scroll down here to see a city-by-city breakdown of home prices. Or check out Wolf Richter’s coverage of “Housing Bubble 2” for a more granular discussion.

If you’re fortunate enough to already own a home, congratulations! Hope you locked in a 3% mortgage during the pandemic panic…

If you don’t already own a home – or you’re looking to sell your home for any reason? This isn’t good news. The combination of 60% price increases and 7%+ mortgage rates (and, of course, a significantly higher cost of living) has put the housing market in a deep freeze.

These price increases will not go away without a major correction in the real estate market. Imagine property values declining 60% over the next five years. That’s what it would take to correct the situation! For context, peak to trough, the early 2000s housing bubble saw prices ball just 34% before stabilizing – and that event wiped out $7.5 trillion in home equity nationwide.

So we’re stuck between a rock and a hard place – permanently unaffordable prices, or an apocalyptic collapse in home prices significantly worse than the one that touched off the Great Financial Crisis.

In some ways, building your retirement plan is like building your dream home. The first step is to envision what it should look like.

Next, you survey the land to make sure it doesn’t hold any unpleasant surprises. You want to avoid sinkholes, floodplains and fault lines. (Articles like this one seek to educate you on the current state of the economy – they’re part of the “survey the land” step.)

Then, you lay the foundation. Your foundation should be stable, and it should be able to endure everything that might happen in the future. You can avoid building on a floodplain, but you still never know when a tornado could sweep down on you…

I believe that diversifying your retirement savings with physical precious metals offers time-tested stability, resistance to inflation and lower volatility that make an ideal foundation for your retirement.

By establishing a precious metals IRA, you’re laying a strong, stable and reliable foundation for your financial future. Diversifying with physical gold and silver can help reduce volatility and provide a smoother journey despite economic ups and downs. Best of all, just about everyone can benefit from saving for the long term with a precious metals IRA. You might not be able to afford breaking ground on your dream home (yet!) but you can still enjoy the benefits of diversifying your savings – and start building the foundation of the retirement you deserve – today.

Peter Reagan is a financial market strategist at Birch Gold Group. As the Precious Metal IRA Specialists, Birch Gold helps Americans protect their retirement savings with physical gold and silver.