Congressional Budget Office Estimates Federal Debt Will Double by 2020

Ian Wyatt — Wed, 16 Jun 2010 16:54:00 GMT

Based on recent numbers, the United States Congress believes the Federal Government's debt will rise to 90% of Gross Domestic Product by 2020. That means that the Government would need to raise Federal taxes to astronomic levels in order to pay for their reckless spending.

But according to a study put together by W. Kurt Hauser of the Hoover Institution, Federal tax receipts can never capture more than 20% of GDP. That's because increases in tax rates produce no additional revenue above the 20% mark.

A recent article in The Wall Street Journal explains how this limitation works:

"The tax base is not something that the government can kick around at will. It represents a living economic system that makes its own collective choices. In a tax code of 70,000 pages there are innumerable ways for high--income earners to seek out and use ambiguities and loopholes. The more they are incentivized to make an effort to game the system, the less the federal government will get to collect."

So how will the government make up this huge gap in expenditure and revenues? It's pretty clear that massive inflation -- in essence, printing money -- will be the only viable alternative to outright default.

That spells a dollar with less and less purchasing power over the next ten years. The only way to profit in a world of currency devaluation is to seek out the safety of physical gold and silver as well as the upside of the relevant gold and silver stocks.

Ian Wyatt, the Chief Investment Strategist at Wyatt Investment Research recently recommended a small North American gold company to his readers. This company has over $20 billion in proven gold reserves, with a market cap of around $200 million. Even if this company only mines 1% of its reserves, it could double its current share price in the not so distant future.

Click here for the full write up on this $4 gold stock.

Some Heavyweights Report Earnings This Week

Ian Wyatt — Mon, 01 Feb 2010 16:50:00 GMT

Your Daily Profit

February 1, 2010

*****Dow 10K

*****Earnings this Week

*****Jason Nails It

Fellow investor,

There’s no doubt that there are investors who believe that current valuations for stocks and an improving economy offer money-making opportunity. It’s also true that there are plenty of investors who feel the exact opposite and are selling stock. And for the last three weeks, the sellers have been winning.

The fact that stocks couldn’t hold a 1% gain after a stellar 4Q GDP number on Friday is a little worrisome. That was a lay-up for the bulls, and still, stocks finished the day with losses.

Volume has been stronger on the down days lately, and the S&P 500 is now well below its 50-day moving average, a common measure of support. I expect we’ll see stocks bounce before Dow 10,000 is breached to the downside.

But at the same time, there’s nothing magical about Dow 10K. Just because it holds on the first test or two doesn’t make it an important line in the sand. The Dow is just 30 stocks. Far more important is the S&P 500. And interestingly, there is an important support point at 1064 on the S&P 500. And 1064 actually lines up with Dow 10,000 nicely.

*****There aren’t any market-moving earnings reports today, but tomorrow we get UPS (NYSE:UPS), Whirlpool (NYSE:WHR), News Corp (NYSE:NWS), DR Horton (NYSE:DHI), and British Petroleum (NYSE:BP).

Wednesday is a heavy day, with Black & Decker (NYSE:BDK), Cisco (Nasdaq:CSCO), Honda Motors (NYSE:HMC); Pfizer (NYSE:PFE) and Visa (NYSE:V).

Thursday, it’s Chicago Mercantile Exchange (NYSE:CME), Deutsche Bank (NYSE:DB), MasterCard (NYSE:MC), Starwood Hotels (NYSE:HOT) and Toyota (NYSE:TM).

Finally on a light day Friday, we’ll hear from Beazer Homes (NYSE:BZH) and Aetna (NYSE:AET).

Of all the companies to report this week, Cisco may be the most important because it’s the ultimate barometer of corporate spending. Cisco is one of the best run companies around. CEO John Chambers runs a tight ship and it’s unlikely Cisco will miss its numbers. An upside surprise, and more importantly, some improved guidance and a little optimism going forward would be good news.

*****Another item to watch for is kind of tax credit for business that hire new employees or expand their payroll. Politically, some kind of stimulus spending to help unemployment will be easy to accomplish. And now that TARP investigator Neil Barofsky is feeling better about how much TARP money the government will recoup, we’ll probably see new stimulus measures sooner rather than later.

*****SmallCapInvestor PRO members just discovered a $3 U.S. based company that makes amorphous alloy core transformers for the Chinese market. The Chinese government has mandated that old silicon steel core transformers be replaced by more efficient transformers, like the amorphous alloy core ones.

This isn’t earth-shaking news, but this little company is expanding capacity by 200% to meet the demand. I’ve got a $5.82 target for the stock, which is a 94% gain from yesterday’s close. You can get the details when you CLICK HERE.

Until tomorrow,
Ian Wyatt
Editor
Daily Profit

Daily Profit : tax

Congressional Budget Office Estimates Federal Debt Will Double by 2020

Some Heavyweights Report Earnings This Week