Yes, if you spend a trillion dollars, it’ll stimulate something. But where will the money come from? How does the U.S. government plan to raise the money? Do you have a spare trillion dollars lying around, brothers and sisters?

I don’t know about you, but to me, a trillion bucks is a lot of money. It’s almost twice the national defense budget, which is a really big number in its own right. For a trillion bucks, the Navy could buy something like 133 Nimitz-class aircraft carriers. Except at current construction rates, it would take 500 years to build all of them. So just on the numbers alone, the U.S. is about to do something very, very strange in its historical arc.

Speaking of which, let’s look at some history. We’re a far cry from the olden days of a U.S. customs house in every port town. Back then, the U.S. Customs Service collected tariffs and imposts on foreign goods that landed ashore. The old customs houses were the national cash register, sending wagons full of gold down to the national treasury. If trade and commerce were good, the federal government collected more in taxes. When times were tough, the government experienced the lean economy along with everyone else. So in the olden days, the federal government was institutionally inclined to support the growth of business.

(And as an aside, those customs houses made important cultural statements about how the nation viewed itself, as well as just collecting taxes. There are some fine examples of federal customs houses, like the Greek Revival edifice built in the 1830s near the waterfront of New Bedford, Mass.)

That was then. This is now. Things have changed, like night and day. Today, the federal government balances its accounts via funds raised through taxation, borrowing and just plain creating currency out of the ether.

Congress collects a lot of funds through taxes. But not nearly enough to pay for all the spending. It’s not even close. So will Congress raise taxes? And do it during a recession? I don’t think so. Herbert Hoover tried that in 1930. Didn’t work too well.

What about the federal government borrowing? OK, it borrows a lot. But can it borrow even more? Trillions of dollars? From whom? Who has an extra trillion dollars lying around that they want to loan the U.S.? Will China and the oil-exporting nations continue to buy up U.S. Treasury paper? If so, with what? Chinese exports are down. Oil income is way down as well. (Oil is selling at $34 per barrel today.) So good luck with borrowing.

That leaves the U.S. government with only one choice. The U.S. is about to embark on the greatest currency-creating binge in modern history (excluding that of Zimbabwe, perhaps.) A lot of that trillion dollars is going to come right out of nothing. The Fed is just going to monetize the debt. So we’ll have new dollars chasing the same amount of goods. That’s the basic definition of inflation.

The bottom line is you need to own precious metals. Own gold. How much? For now, the more, the better. Own coins, if you can get ‘em. Own bullion, if you can get it. Own shares in good miners with reserves in the ground while you can buy ‘em. Just get some gold.

Source: Brother, Can You Spare $1 Trillion?