Tag Archives: National Debt

In Memoriam: Reality, by James Howard Kunstler

More and amplified weirdness is coming. From James Howard Kunstler at kunstler.com:

The Golden Golem of Greatness shifted into mad bull overdrive for last night’s Minneapolis fan rally, cussing and bellowing at the picadors of the Left who have been sticking lances in his neck for three years. Decorum is not Mr. Trump’s strong suit, but then the bull is not sent into the ring to negotiate politely for his life. The narrative of the bullring is certain death. The bull must do what he can within his nature to dispute it.

It’s in Mr. Trump’s nature to act the part of a reality TV star, and, of course, it is the nature of reality TV shows to be unreal. That is perhaps the ruling paradox of life in the USA these days. Saturated in unreality, the spectators (also called “voters”) flounder through a relentless barrage of narratives aimed at confounding them, with the unreal expectation that they can make sense of unreal things. In a place like Minneapolis of an October evening, you can go see the Joker movie or take in the President’s rally — and come away with the same sense of hyper-unreality. We’re no longer the nation we pretend to be and we don’t know it. Jokers are wild and the joke’s on us.

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The National Debt Is Now More than Ten Times Annual Tax Receipts, by Ryan McMaken

Federal debt relative to tax receipts has never been higher. From Ryan McMaken at mises.org:

Politicians from Alexandria Ocasio-Cortez to Dick Cheney are united in their agreement that deficits don’t matter. Of course, that’s exactly what a politician would say. Politicians score points by spending other people’s money, so naturally, they don’t want to hear anything about how prudence suggests it might be a good idea to not spend that extra 800 billion dollars they don’t have.

But there is apparently little concern in Washington, DC as the annual deficit — for a single year, mind you — approaches one trillion dollars for the first time since the hit-the-panic-button days of the Great Recession. Except that now huge deficits are coming during “good” economic times.

Moreover, as the Congressional Budget Office has forecast, the debt load is expected to rise to 125 percent of GDP over the 20 years. That’s higher than the US debt-to-GDP ratio during World War II.

This, of course, assumes no major geopolitical or economic disruptions, whicih would make things far worse.

For those who believe huge debts are no big deal, however, there’s still no need to worry. After all, they say, actual debt payments are still only a minor issue. In fact, they’re still lower than where they were during the early 1990s.

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Congress Spending Surge is National Suicide, by Ron Paul

If you spend money you don’t have long enough, you’ll go broke. From Ron Paul at ronpaulinstitute.org:

With a national debt approaching $23 trillion and a trillion dollar deficit for this year alone, Congress last week decided to double down on suicidal spending, passing a two year budget that has the United States careening toward catastrophe. While we cannot say precisely when the economic crash will occur, we do know that it is coming. And last week Congress pounded down on the accelerator.

We are told that the US economy is experiencing unprecedented growth, while at the same time the Fed is behaving as it does when we are in recession by cutting rates…and dodging insults from the President because it’s not cutting fast enough. This is not economic policy – it’s schizophrenia!

But that’s only the beginning.

Take what they call “national defense” spending. This is the misnomer they use to try and convince us that pumping trillions into the military-industrial complex will make us safe and free. Nothing could be further from the truth: probably ninety percent of the “defense” budget is aggressive militarism and welfare for the rich.

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Things to Come, by James Howard Kunstler

A dire political and economic confluence will soon put the US in a world of hurt. From James Howard Kunstler at kunstler.com:

“American exceptionalism has led to a country that is exceptionally un-self-aware.” — Peter Thiel

The economic contraction ahead will put this borderline psychotic country through some interesting ch-ch-ch-changes. Mr. Trump now fully owns the Potemkin status quo of record stock markets poised against a withering rot of human capital at the core of an industrial society in sunset mode. Leadership at every corner of American life — politics, business, media — expects an ever-higher tech magical updraft of fortune from an increasingly holographic economy of mere fugitive appearances in which everybody can get more of something for nothing. The disappointment over how all this works out will be epic.

Globalism is wobbling badly. It was never what it was cracked up to be: a permanent new plateau of exquisitely-tuned international economic cooperation engineered to perfection. It was just a set of provisional relations based on transient advantage. As it turned out, every move that advantaged US-based corporations blew back ferociously on the American public and the long-term integrity of the social order. Sinister as it seems, the process was simply emergent: a self-organizing evolution of forces previously set in motion. And, like a lot of things in history, it seemed like a good idea at the time.

“Off-shoring” US industry jacked up corporate profits while it decimated working class livelihoods. In return, that large demographic got “bargain shopping” at Walmart, a life of ever-upward revolving debt, and dead downtowns. The country got gigantic trade deficits and government debt loads. In effect, globalism compelled America to borrow as much as possible from the future to keep running things the way they were set up to run. Now, there is just suspicion that we’ve reached the limits of borrowing. Soon it will be a fact and that fact will upend everything we’ve been doing.

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The House Passes Budget Deal to Increase Military Spending, by Bill Bonner

The US is hooked on fiat debt and the newest budget debt adds still more. From Bill Bonner at bonnerandpartners.com:

Yesterday, the House voted to go along with the budget deal, providing more money (more inflation) to just about every cockamamie scheme the feds can come up with.

The Washington Post:

The House passed a sweeping two-year budget deal Thursday that increases spending for military and domestic programs and suspends the debt ceiling through mid-2021, sending the White House-backed legislation to the Senate.

We pause to remind readers that “inflation” means an increase in the amount of money available. It can show up in consumer prices… or in asset prices.

The important thing is that once you inflate (stimulate with money and credit) an economy – either Main Street or Wall Street – people adjust their behavior. They pay more. They spend more. They borrow more.

Then, their livelihoods, their wealth, their reputations – and the entire economy – depend on more inflation. So, you’ve got to continue inflating… or go into rehab.

Inflate or Die. There’s no third choice.

Weirdness Prevails

In the meantime, strange and remarkable things happen. Inflation changes markets, economies, and even the way people think. The longer it goes on, the more distortions, perversions, and curiosities it brings.

Yesterday alone brought news from Oddity Central that…

A 20-year-old woman was recently arrested in Germany for walking into a car dealership and trying to buy a €15,000 (roughly $16,700) car with fake banknotes printed on a cheap inkjet printer using regular printing paper.

One employee told German media that he literally asked the woman if she wanted to play Monopoly or buy a car, but after seeing that she was serious, he called the police.

And this headline from CNN:

Nike’s rare ‘Moon Shoe’ is sold for $437,500, shattering the auction record for sneakers

And a tweet arrived with this shocker:

#Switzerland’s #yieldcurve is now negative for all maturities, hence anywhere between 3 months and 50 years.

All over the news spectrum, weirdness prevails. Comets shaped like dollar signs are seen in the night sky. Elvis is spotted in a mall in Kansas City. An egg is laid, etched with the Federal Reserve’s formula for the neutral rate… Surely, the second coming is at hand.

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Realizing the Full Implications of the Forthcoming Catastrophe, MN Gordon

It’s been easy to descend the staircase into national bankruptcy. From MN Gordon at economicprism.com:

Delivering Tomorrow’s Curses

Roman poet Virgil penned these words in his epic, The Aeneid, roughly a generation before the birth of Jesus of Nazareth.  They can be loosely translated to, “the descent to hell is easy.”  Those who’ve traversed this passage can attest to the veracity of this axiom.

Though not apparent in the milieu of Virgil’s poem, for our purposes today, we’ll extend its application to the insidious progression of currency debasement.  What short utterance more aptly characterizes the steady degradation, as currently practiced by today’s church of state?

Yesterday [Thursday], for example, the House acted with untroubled ease to further America’s descent to hell.  With little resistance, federal spending was increased and the debt ceiling was suspended for two years.  Having delivered tomorrow’s curses, the nation’s Representatives can skip town without missing a moment of summer recess.

As you can see, the allure of getting something for nothing is far too enticing for even the most honest politician to pass up.  And with an endless supply of fake money behind you, why stick your neck out and get clobbered?  The public debt encumbered is already well beyond honest repayment.  But that’s a problem for tomorrow; not today.

Representative government in America, circa now, has nothing to do with upholding individual freedoms and liberties.  Nor is it about making tough decisions in the interest of the long-term health of the nation.  It’s about doing the expedient – and suspending the debt ceiling so the descent to hell can be made as comfortable as possible.

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Trump can’t be both the president of growth and the president of debt, by Daniel Horowitz

The US economy is well beyond the point where debt and debt service are impeding growth, which means the more we go into debt, the less the economy will grow. From Daniel Horowitz at conservativereview.com:

With the unemployment rate below 4 percent for 16 consecutive months, one would expect economic growth to be soaring. Yet even as we experience the best job market since the late 1960s, this is the first time in modern history that we have not experienced a year of 3 percent GDP growth. What gives?

Earlier today, the Bureau of Economic Analysis announced that the economy had grown just 2.1 percent during the second quarter of this year (ending June 30). It also revised Q4 of 2018 down to just 1.1 percent, which now means that growth during the 12 months ending Q4 of 2018 was only 2.5 percent, not 3 percent as previously thought. This means that the U.S. economy has now gone 14 years without a year-over-year growth of 3 percent.  It’s been 19 years since we’ve hit 4 percent, which was during 1997-2000.

While the numbers don’t portend a coming recession, it is highly unusual for us to go for 16 consecutive months with unemployment below 4 percent and 43 months below 5 percent, yet never attain 3 or 4 percent annual GDP growth. In fact, that has never happened before. During the late 1990s, the unemployment rate ranged from 5.3 percent to 3.9 percent – not even as good as today’s 3.7 percent – yet GDP growth was over 4 percent. Ditto for the late 1960s, when we saw years of 6 percent growth. During the mid 1980s, we saw this growth even with higher unemployment rates.

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