America’s debt will inflict misery on Americans for this and many generations to come. From John W. Whitehead at rutherford.org:
“When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it.” ― Frédéric Bastiat, French economist
Let’s talk numbers, shall we?
The national debt (the amount the federal government has borrowed over the years and must pay back) is $23 trillion and growing.
The amount this country owes is now greater than its gross national product (all the products and services produced in one year by labor and property supplied by the citizens). We’re paying more than $270 billion just in interest on that public debt annually. And the top two foreign countries who “own” our debt are China and Japan.
The national deficit (the difference between what the government spends and the revenue it takes in) is projected to surpass $1 trillion every year for the next 10 years.
The United States spends more on foreign aid than any other nation ($50 billion in 2017 alone). More than 150 countries around the world receive U.S. taxpayer-funded assistance, with most of the funds going to the Middle East, Africa and Asia.
Meanwhile, almost 60% of Americans are so financially strapped that they don’t have even $500 in savings and nothing whatsoever put away for retirement, and yet they are being forced to pay for government programs that do little to enhance or advance their lives.
Folks, if you haven’t figured it out yet, we’re not living the American dream.
We’re living a financial nightmare.
The U.S. government—and that includes the current administration—is spending money it doesn’t have on programs it can’t afford, and “we the taxpayers” are the ones who will pay for it.
The deficit and the national debt won’t matter until they matter. From Tyler Durden at zerohedge.com:
The gaping US budget deficit hole is getting bigger with each passing month.
Earlier today, the US Treasury announced that in January (the fourth month of fiscal 2020), the US spent $32.6 billion more than it pulled in, resulting in a deficit that was materially worse than the $11.5BN expected, and also the biggest January deficit since 2011, when the US government spent a net of $49.8 billion.
Total December spending of $405 billion, was 8.8% higher than a year earlier, with the biggest outlays for the month as follows: social security ($91BN), medicare ($87BN), national defense ($53BN), Health ($49BN), Income Security ($39BN), Net Interest ($32BN)and so forth. Meanwhile, receipts increased by a slightly higher 9.5%, from $340BN to $372.3BN, thanks to $217BN in individual income taxes, and $121BN in Social insurance and retirement receipts.
Politicians bloviate, time marches on, and the nation edges ever closer to default. From Tho Bishop at mises.org:
Last night’s State of the Union was particularly noteworthy for its showmanship. Scholarships were given away, medals were awarded, families reunited. At a time when national politics is bad theater, President Trump is clearly its most gifted star.
Trump also knows what sells. As a political figure, he’s motivated not by any consistent ideology, but rather by transactional legislation. Following the performance, an MSNBC pundit noted that the speech was a “microtargeted ad” to various demographics aimed at expanding his base before next year’s election.
Combined with his Super Bowl ads highlighting criminal justice reform, his focus on charter schools and honoring a hundred-year-old Tuskegee airman are aimed at eroding away the Democrats’ 90 percent control of black voters. The cameo by Venezuela opposition leader Juan Guaidó was an appeal to Hispanic families who have fled communist regimes—perhaps a poke at Bernie Sanders. Paid family leave, a policy focus of his daughter, is intended to help him with suburban women.
What doesn’t sell? Fiscal responsibility.
The political equivalent of Crystal Pepsi, the Republican Party has given up its long-standing façade of budgetary restraint. As Donald Trump told donors earlier this year, “Who the hell cares about the budget?”
Other than some minor regulatory relief, Trump’s policies have hurt more than helped the US economy. From David Stockman at internationalman.com:
International Man: Trump’s America First economic policy seemed to help him win the 2016 election. He promised to renegotiate America’s trade deals and bring jobs back to the United States.
As president, Trump has used tariffs and other protectionist measures to try to reduce the trade deficit.
What do you think of Trump’s trade policies and tariffs?
David Stockman: The trade policies are idiotic. They haven’t improved the trade deficit. And have caused other problems.
We got the numbers in now for 2018 and we had the largest trade deficit in history!
The first point is that his trade policies are not accomplishing anything. In fact, it’s thrown many sectors under the bus. Manufacturers that import components from China are now paying much higher prices because of the tariff charge.
Farmers have gotten thrown under the bus in a major way. The whole agricultural export system that was patiently developed over many, many years has essentially been destroyed through retaliation.
Posted in banking, Business, Debt, Economics, Economy, Foreign Policy, Geopolitics, Government, Politics, Trade
Tagged central bank policies, Federal Reserve, National Debt, President Trump, Tariffs
Massive debt at the top of the business cycle is nobody’s idea of good economics, but that’s what the US is doing. From David Stockman at internationalman.com:
Doug Casey’s Note: David Stockman is a former congressman and director of the Office of Management and Budget under Ronald Reagan.
Now, anyone with connections to the government should elevate your suspicion level. But as you’ll see, David is a genuine opponent of government stupidity. Although his heroic fight against the Deep State during the Reagan Administration was doomed, he remains a strong advocate for free markets and a vastly smaller government.
We get together occasionally in the summer, when we’re both in Aspen. He’s great company and one of the few people in this little People’s Republic that I agree with on just about everything. This absolutely includes where the US economy is heading.
I read his letter the Contra Corner every day, and suggest you do likewise.
International Man: Trump is calling for a weaker dollar and negative interest rates. What does this tell you about Trump’s understanding of economics?
David Stockman: It tells you that he has no understanding of economics at all!
I think Trump is not even a primitive when it comes to economic comprehension. His views are just plain stupid when it comes to exchange rates. He seems to think it’s some grand game of global golf, where the strongest player gets the lowest score.
What sense does it make tweeting as he did recently in attacking the Fed?
According to Trump, the US economy is so much better than the rest of the world’s economies, and therefore we should have the lowest interest rate as a result. It has nothing to do with economic logic or with principles related to sound money. I think he’s just thrashing about trying to create a warning that if things go badly, it’s the Fed’s fault.
Posted in banking, Business, Cronyism, Debt, Economy, Financial markets, Government, Science
Tagged Climate Change, Fed Audit, Federal Reserve, Inflation, interest rates, National Debt, Stock Market
Welfare-state governments are reaching the point where they can’t squeeze any more out of their economies and taxpayers but cutting spending is politically difficult to impossible. From Patrick J. Buchanan at buchanan.org:
As that rail and subway strike continued to paralyze travel in Paris and across France into the third week, President Emmanuel Macron made a Christmas appeal to his dissatisfied countrymen:
“Strike action is justifiable and protected by the constitution, but I think there are moments in a nation’s life when it is good to observe a truce out of respect for families and family life.”
Macron’s appeal has gone largely unheeded.
“The public be damned!” seems to be the attitude of many of the workers who are tying up transit to protest Macron’s plan to reform a pension system that consumes 14% of GDP.
Macron wants to raise to 64 the age of eligibility for full retirement benefits. Not terribly high. And to set an example, he is surrendering his lifetime pension that is to begin when he becomes an ex-president.
Yet, it is worth looking more closely at France because she appears to be at a place where the rest of Europe and America are headed.
If bringing one’s country to fiscal ruin were an impeachable offense, you’d have to impeach the entire city of Washington. From David Stockman at lewrockwell.com:
On December 16 the gross Federal debt breached a new level to $23.1 trillion, while the net debt after $401 billion of cash weighed in at $22.71 trillion. The latter monstrous figure is notable because on June 30, 2019 it stood at $21.76 trillion.
So what has happened in the last 167 days is a $948 billion increase in the Uncle Sam’s net debt, which amounts to a gain of $5.7 billionper day – including, as we like to say, weekends, holidays and snow days.
Worse still, not a single dollar of that gain got absorbed in government trust funds. The Treasury float held by the public actually rose by $953 billion.
So why in the world do the knuckleheads on bubblevision not understand where the spiking rates and ructions in the repo market came from?
The law of supply and demand is still operative, and the US Treasury is literally flooding the bond pits with new supply. Even at the bottom of the Great Recession, Uncle Sam did not drain $5.7 billion per day from the bond market.
But nary a soul down in the Imperial City has noticed this borrowing eruption at the tippy-top of the business cycle, which now teeters on borrowed time at a record 127 months of age. Instead, this very day the Congress is busily engaged in what is a fair approximation of abolishing the election process at the heart of American democracy.
Posted in banking, Business, Collapse, Debt, Financial markets, Government, Intelligence, Investigations, Taxes
Tagged Bond Market, central bank policies, interest rates, National Debt, President Trump