Gold prices surged Monday, as stocks and oil fell, in the first full day of trading after the United States’ risk-free longterm rating was downgraded by Standard & Poor’s.
Gold is widely viewed as a post-apocalyptic currency, meaning that it’s the investment vehicle of choice for those who see national economies and governments struggling or even collapsing. The rise of gold prices in combination with the decline in growth-related stocks and industrial commodities suggests that the chances of the U.S. economy entering a second recession are more pronounced.
Invstors appear to be responding to Friday’s historic downgrade of the U.S. credit rating to AAA+ from AAA. The downgrade was largely a response to political gridlock in Washington, D.C., where the a small group of Republican Party extremists has demonstrated their willingness to hold the global economy hostage to force through their small-government policies.
The extremists, who are popularly known as “the Tea Party,” are funded largely by wealthy business interests that now seem unable to rein them in.
The Fortune 500 has successfully used small government and anti-tax rhetoric in the past to create regulatory loopholes that have allowed it to boost profits by offhsoring million of U.S. jobs, escape paying its share of taxes, and dramatically increase the share of government revenues generated by fees instead of taxes.
By relying on fees to increase government revenues in lieu of taxess, wealthy interests have been able to shift more of the overall cost of government to the poor and middle class the past 20 years. Fees, such as bridge tolls, and fines, such as speeding tickets, rely on a flat amount rather than a percentage of wealth.
The practice is continuing in the New York City metro area where The Port Authority of New York and New Jersey is now supporting significant increases in bridge and tunenel tolls and commuter train fees. The authority is controlled by the governors of New Jersey and New York, who have staked out popular public positions in opposition to higher taxes while dramatically raising fees and fines.