Government Shutdown, Treasury Default, and U.S. Treasuries

I prefer not commenting on current events because it’s mostly pointless noise for investors following a passive investing strategy like the Permanent Portfolio.

However, the news is abuzz with the supposedly world-ending government shutdown. Some are wondering how it may affect U.S. debt (which the Permanent Portfolio holds in cash and long-term bonds). I’ll offer these comments:

It’s all theater. 

The government has “shutdown” in the past and it gets resolved. This is not a new thing. I was working in D.C. in the early 90’s last time it happened and the only thing I really saw affected was less traffic during my commute. Yeah there were some other outcomes, but mostly it was quickly forgotten except in the minds of partisan pundits and the news media that get paid to stir people up about this stuff.

At this time, the U.S. government  isn’t going to default. If people think closed parks under the current situation are bad news, wait until social security, medicare, and government checks to civilian and military personnel stop going out for prolonged periods. That will light a fire to get things moving again.

I can only hope for a massive spending cut to come out of all of this, but we all know that’s not going to happen. At least, not this year…

Just hold tight, stop reading the news about the shutdown, and let it blow over.

 

Craig Rowland

I own the place.