David Stockman, former Budget Director under President Reagan, appeared on Fox Business to warn that the United States faces a financial “time bomb” of $19 trillion of ballooning debt. This debt load will eventually become unsustainable when interest rates rise, which is an inevitability. Stockman points to the same historical data as Alan Greenspan – interest rates are traditionally 2-4% above the rate of inflation, and no amount of manipulation by the Federal Reserve can suppress them forever.

The 2% [inflation] is totally a made up target that conveniently allows them to shovel free money into Wall Street. It never does get to Main Street. The whole idea of zero interest rates is to get consumers and households all jiggy, and get them borrowing and spending. But that doesn’t work anymore, because we’re at peak debt. Households have $13 trillion of debt. “

Stockman’s warnings about debt are one of the key reasons investors should consider buying gold now.

Highlights from the interview: