The national debt crisis is set to worsen no matter who wins the election — here's what you can do to protect your portfolio

• The nationalist indebtedness has blown past $35 trillion, and it's only going to spell up nether Trump aliases Harris.
• Left unchecked, unsustainable deficits will slow GDP growth, alteration savings, and spur inflation.
• Here are 4 trades to protect your portfolio arsenic nan nationalist indebtedness continues to creep higher.

The US has a big, $35 trillion problem: nan nationalist debt.

After a bout of pandemic stimulus, nan national debt ballooned from an already hefty 103% of GDP successful 2019 to 120% currently.

Left unchecked, nan shortage will proceed to creep higher and could resistance GDP growth. Too overmuch authorities spending reduces nationalist and backstage savings levels, decreases labour productivity, and increases our dependence connected overseas investment, according to Chris Brightman, CEO and CIO of nan finance advisory Research Affiliates.

If nan US indebtedness continues connected this trajectory, Brightman predicts that nan US could travel successful nan footsteps of European economies and spot yearly GDP maturation diminution to 1%.

That's not to mention that use programs for illustration Social Security will beryllium connected nan chopping block. According to nan Social Security Administration, Social Security benefits will beryllium reduced by almost 25% starting successful 2034 if thing is done to reside nan nationalist debt.

No alteration successful November

Neither Harris nor Trump person a scheme to reside nan deficit.

In fact, some candidates are pushing policies that would summation shortage spending. If there's a bluish aliases reddish expanse successful November, authorities spending levels will beryllium moreover higher.

There are 2 main ways to trim deficits, according to Ayako Yoshioka, elder portfolio head astatine Wealth Enhancement Group. The first is to turn your measurement out. By increasing nan system astatine a faster rate, nan proportionality of indebtedness to GDP decreases.

"Nobody wants to really deliberation astir Plan B. Plan B is either raising taxes aliases cutting societal programs and raising taxes erstwhile ostentation is high," Yoshioka said.

Both of those policies are incredibly unpopular, which is why nan candidates haven't said overmuch connected nan topic.

However, increasing GDP won't beryllium capable to hole nan situation, according to Brightman. "The mathematics doesn't work," he said. If GDP continues to turn astatine its predicted gait of 2% per year, that's not moreover capable to screen nan US government's liking payments connected debt, overmuch little trim nan main amount. Interest costs are projected to scope 3.4% of GDP by 2025, and 4.1% by 2034.

How to invest

Until nan authorities takes steps to get nan shortage nether control, location are a fewer things investors tin do to protect their holdings.

Continued precocious nationalist deficits could put nan credibility of US sovereign indebtedness into question, starring to a depreciating dollar and accrued inflation.

The US authorities mightiness effort to usage ostentation to spot distant astatine nan existent worth of nan indebtedness by pursuing description ary monetary policies specified arsenic quantitative easing, according to Jeff Muhlenkamp, portfolio head astatine Muhlenkamp & Company. If nan US dollar were to alteration successful value, nan authorities could repay nan indebtedness much cheaply than erstwhile it was first incurred.

"As nan US authorities continues to get deeper successful debt, really are they going to activity their measurement retired of that?" Muhlenkamp said. "One of nan imaginable outcomes ends up being a devaluation, and gold is simply a bully hedge against that."

"Real" assets, aliases investments backed by tangible resources, are mostly a bully hedge successful a high-debt environment, according to JPMorgan. These investments person nonstop intrinsic worth and thin to shop semipermanent worth effectively. Examples see commodities, existent estate, and infrastructure. Muhlenkamp likes nan energy sector successful particular. JPMorgan besides recommends expanding vulnerability to non-US dollar-denominated assets.

Avoid semipermanent Treasurys, Muhlenkamp added.

"Where you decidedly don't want to beryllium is successful semipermanent authorities debt," he said. "[The government] will inflate distant nan worth of nan indebtedness if they tin get distant pinch it."

Muhlenkamp is predicting that nan adjacent decade will spot increased inflation, which will eat distant astatine enslaved yields.

Yoshioka points retired that there's besides nan consequence of a grounded treasury auction, which is erstwhile nan Treasury Department doesn't person capable bids to return connected nan indebtedness it's trying to sell. If this were to happen, nan Federal Reserve would request to measurement successful and acquisition nan unwanted bonds by printing money, creating much inflation.

Some costs that connection vulnerability to existent assets see nan iShares US Energy ETF (IYE), nan Fidelity MSCI Real Estate Index ETF (FREL), and nan iShares Gold Trust (IAU).