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The Elephant in the Room
The most remarkable thing about our highly polarized political environment, in which there is allegedly no agreement or compromise possible between the sides on any significant issue, is that on the single issue that dwarfs all others in importance, there is broad agreement. So much agreement, in fact, that no one even talks about it.
I am referring, of course, to our national debt, which just crossed $35 trillion and is increasing at something like a trillion dollars every hundred days. Interest payments alone on the debt will shortly surpass national defense spending. The big ticket items are Social Security and Medicare, which account for about $3 trillion dollars in annual spending all by themselves. It’s not just the amount that is the problem. It’s that the rate at which we are accumulating debt is itself increasing.
The average person has become immune to these numbers because they have been mind-bogglingly large for decades. There were warnings when the debt was 5 and 10 trillion. Now it’s 35 trillion and the warnings continue. Why not 50 or 100 trillion? Why can’t it go on forever?
What the average person doesn’t get is that this debt was accumulated in a falling interest-rate environment. From 15-20% in the early 1980s to 0% recently. That 40-year debt bull market has now run its course and the machine is going in reverse. Yes, the Federal Reserve can “print money” and buy up all that debt to keep interest rates low, but at the cost of destroying the value of the currency. Either way, the debt will get unwound, which means massive destruction and transfer of wealth.
There is really nothing that can be done about it. That’s why no one talks about it, Democrat or Republican, Trump or Kamala. Some, like Kamala, are too dumb to understand the (simple) math, many others understand the dire nature of the situation but understand that any realistic plan to manage the debt must involve cuts to Social Security and Medicare, which are political suicide. So everyone tacitly agrees to never mention it, because they all know there is no stopping this train, no matter who is driving it.
The biggest reason to vote for Trump is that in the financial/economic meltdown that may happen in the next few years, we are less likely to get an authoritarian response from him. He’s not a “never let a crisis go to waste” type.
Published in Economy
Yeah, unfortunately I’ve given up hope on the government and American electorate at large doing anything to really solve this problem. You can talk about the massive amount of debt and cutting spending in general and I think most people would nod their heads, but when you get down to brass tacks almost nobody is actually willing to sacrifice their piece of the pie. And so the nuttiness must go on until it finally just can’t.
Indeed. Crazy large numbers.
That means you have to present the national debt in units that are understandable. See my post: How much is that per household?
The reason the debt is so high is that there is a ton of incentive for Congress to spend money (“wheee!”) as they get to pocket a percentage of it, and there is no incentive to be thrifty.
So an incentive is needed. Warren Buffet (and I) have a solution here: Warren Buffet Agrees with Me on Balancing the Budget
The biggest issue, I think, is how terrible the debt is going to be for future generations. Dwarfs climate change.
I guess that was something I was getting at. There is a lot of talk about climate change and how polarized the different parties are, and debate back and forth about how serious it is. As though this is an issue that really matters, when the debt is a financial tsunami that threatens to drown us all, and not in 20 or 50 years. I’m starting to have more sympathy for the theory that the border crisis, all the transgender nonsense, etc., are in place as distractions so voters won’t notice or think about the debt. Of course they are real problems. But it’s almost like both Republicans and Democrats are happy to have a border crisis to fight over so they can both ignore the debt.
When we enter the trillions, my mind can’t absorb it. All I know is that I’m willing to take the cuts, including Medicare and Social Security, but I don’t see it ever happening.
I highly recommend this episode of The Political Orphanage on this topic.
Most voters want to be told there is an easy, painless solution. “Make the rich pay their fair share” or “Cut off foreign aid,” depending on if one is on the left or the right. It would be interesting to know how much the federal government spent per citizen in 1996 vs 2022, adjusted for inflation. I suspect it is grossly more, yet few people would say that they feel like they are getting a lot better federal services than they did in the 1990s. But we’re going to keep going down this track until it all blows up, then people on both sides of the political divide will pour hatred on their political enemies and say it’s all their fault, even though few on either side tried very hard to fix it.
even though no one tried to fix it at all [FIFY]
Paul Ryan had a plan for reforming entitlements, but Democrats hated him and his plan. Now MAGA Republicans hate Paul Ryan, too. Rand Paul talks about the debt. George W. Bush (also hated by Democrats then, and by MAGA Republicans now) tried for some mild Social Security reform, but got nowhere with Congress. More recently, Nikki Haley and Ron Desantis have talked about entitlement reform, but have been rejected by Republican voters in favor of the guy who says don’t worry about it, just elect him and we’ll all be so rich the government will have all the money it needs.
You’ve got all that right, Randy. And pun intended, talk is cheap.
I do not know if it will work or if anyone has tried to put the plan down on paper. Still, it is my understanding that Trump believes that by fully opening our fossil fuel holdings and initiating some trade tariffs while keeping our country out of wars and some other painless actions to inhibit Federal government spending, he can grow the economy and pay down some debt. Donald Trump is a real estate developer. He makes educated gambles for a living. As POTUS he wouldn’t be able to control the entire playing field. Once money starts coming into the Treasury, everyone wants in on the action. We do not have serious politicians. We have malevolent politicians who are also selfish and greedy. I see a sliver of light in a very dark tunnel.
It’s going to come as a shock to us soft, decadent, and all-too comfortable Americans. I’m encouraging our garden tour committee to emphasize homesteading with the purpose of educating even urban dwellers to develop some self-sufficiency. I suspect the comeuppance will make the Great Depression look like a cakewalk. I hope I’m wrong.
I’m very confident that no one will give a rat’s patootie about a 2 degrees C temperature increase over 100 years, though. Poor Greta will become a nobody.
(Replying to myself, because I didn’t finish what I started.)
So let’s do the math… $35 trillion in debt divided by 125 million households in the US is…
A debt of $280,000 per household.
Social Security, COVID and crimes against humanity.
There were 17 to 19 trillion dollars of debt that were added to the deficit because the scenario of COVID WILL KILL US ALL allowed for Congress to waddle over to the trough and pass some juicy legislation involving Cares ACT ONE and Cares ACT II.
I am assuming that some of these trillions involved the beyond fantastic allotments given to each and every hospital in the USA during 2020 whenever they registered a new patient who tested positive for COVID. The allotment was then increased if the patient was intubated, and given 1 or more doses of remdesivir.
Since patients were isolated from their families, and were often frail elderly, the hospital personnel made the decision to intubate and to dose the poor creature up with the potion that came to be known as “run-death-is-near” and that often brought about death in the patient who was so treated. (One study found that over 90% of all those over 72 yrs of age who underwent those two treatments went on to meet their maker.)
If a patient died from these mistreatments, the hospital received another round of bonus monies.
Younger patients were separated from the family including spouses, offspring and siblings. So if they would not agree to the treatments, they would be offered enough sedatives that soon they became compliant.
Meanwhile effective, available and inexpensive medicines and treatments including hydroxychloroquine, ivermectin and hi dose vitamin therapies were prohibited.
Additionally either at the executive level or at Congressional level, contracts were signed with the COV manufacturing entities. Quite early on, some 25.3 billion dollars was paid to vaccine producers who then issued 1.2 billion doses of vaccine material.
This is quite a state of affairs, yet I know of no class action lawsuits to bring justice for families. (Although I know of individual ongoing law suits.)
So basically a lot of monies went to hospitals who gamed the system by killing us!
Yet there is always a lot more hue and cry over the few trillions that have to do with Social Security, in which people worked hard during their entire lives and they and their employers paid into the system – without for the most part killing off their fellow citizens in order to have the ability to do that.
What matters is not just the amount of a debt, but what it was incurred for. A debt of $300K for a home mortgage is different from a debt of $300K for a gambling trip to Monaco. A corporate debt of $100MM for a new factory to support sales growth is different from a corporate debt of $100MM for a new headquarters built for ego purposes.
If all the debt incurred to support education had resulted in actual good education, that would be one thing. But it mostly has not.
That exceeds our assets
OK, we’ll let you off the hook for that last 5 bucks.
Republicans will not seriously reduce spending because too many people are dependent on federal largesse. There was no great drop under Reagan or Trump. At best, the GOP reduces the rate of increase.
Recall the Democrat/media howls in the 1995 when the new GOP Congress wanted to recklessly limit the rate of increase in federal spending to 3.5% instead a more enlightened rate of 5%.
Nobody is making the deficit a lead campaign issue because it is too easy to make cuts into a compassion issue.
Also, federal employees have long since mastered the art of the “Washington Monument strategy”–punish taxpayers by killing popular services while protecting pure pork and waste.
Correct!
http://financialrepressionauthority.com/2017/07/26/the-roundtable-insight-george-bragues-on-how-the-financial-markets-are-influenced-by-politics/
https://mises.org/mises-wire/were-living-age-capital-consumption
The one percent get 20% of the income and pay 46% of the taxes.
The income flow ***volume*** is in the middle and lower class.
Government Is How We Steal From Each Other™
The system is built on ***indiscriminate loan growth***. Government. Private. It doesn’t matter. When it falls apart, they keep inflating the assets. Then they can’t do that anymore.
We have too much democracy and not enough republic.
The “Washington monument” strategy is alive and well at the state level here in California.
When times are tight the first items to go are the fire district houses where man power, fire trucks and equipment are needed. These cuts will occur even as several huge fires are raging.
The next item that gets announced as being okay for the trimming is the state paying those employees who do elder care under a low income elder care program.
Meanwhile the massive expenditures for the modernized “bullet trains” proceed unabated.
Why is it like this? Well the fire districts are closely audited, so there is no possibility of much of the funding being skimmed off by greedy politicians. Same with the elder care worker situation.
But the bullet train funding is the perfect kick back scheme. When the expenditures for one segment of track for the San Francisco to Nowheresville train finally reached 20 billion bucks, no train had ever even pulled out of the station.
But a lot of land had been purchased. (And probably by savvy people like Richard Blum, Feinstein’s hubby, who somehow always knows when and where to put in his contract bids at the state.)
###
When the centralized bank for the Global Reset crowd (aka as WEF) finally gets ants in its directors’ pants about how much the USA owes, there will be a massive handover of the resources of the United States, lock stock and barrel, comprising everything of value from wildlife and national parks to every field where lithium, coal, natural gas, and oil can be found.
Every house, business building, school, church, public rec center, etc will also be included in the hand over. Vehicles including cars trucks, planes and other aircraft as well.
Most likely even the clothes on our backs.
Or so says Catherine Austin Fitts.
The valuation of all USA’s resources will match penny for penny the amount that is owed at the time the global centralized banking crowd demand their monies.
However these days many of the rich are so super mega-rich that it is not even relevant that they might be paying 46%. Plus we peasants pay about that same amount ourselves, when you add in state and city taxes, penalties for parking tickets, speeding tickets, car registration, business licenses, permits, and money if we visit some park for the day. Plus for those of us who face an inability to pay what we owe the IRS on Apr 15th, then we owe 10 percent more to that agency.
We peasants also get audited more frequently and do not possess the incomes allowing us to have top notch lawyers who reduce what is owed by Johnny Golden Child down to 5% of what Uncle Sam originally demanded of him.
Besides that, the mega rich also put their monies into “charitable foundations” that then go about seizing control of the media, devising nefarious schemes like pandemics as well as making sure that “necessary and mandated vaccination programs” come about and that makes their owners even richer.
The summer of 2020, Bill Gates spent 55 million dollars as an investment in vaccines. Within two years, he had managed to turn that initial paltry investment into 550 million dollars.
I’m sure he cried in his beer about that, as usually he makes a flat 2000% for his investments. (If only he had held just a tighter control over the media. especially the indie media. I mean damn that upstart Joe Rogan and his boasts that ivermectin could do in COVID for pennies on the dollar over what was spent on vaccines and remdeisvir.)
The system is built on ***indiscriminate loan growth***. Government. Private. It doesn’t matter. When it falls apart, they keep inflating the assets. Then they can’t do that anymore.
This is a very big deal.
Will they cut in line ahead of the Reparations Justice folks?
I’d reccommend that the Trump Campaign and the GOP talk about any dept reduction in terms of how many Federal employees this year, vs. projected Year one, two, five and ten if implemented.
or
“the reduction of 1 billion in spending today is equivalent of the annual tax burden of X-numbers of workers in the 15% bracket”
“the reduction of 25 billion in spending this year, provides S.S. benefits for X-numbers of retired citizens”.
“the reduction of 100 billion is the equivalent of annual federal witholding of taxpayers in these states:…..”
Frame the costs in human or interest groups terms.
$5 won’t buy us a Happy Meal.
Given our age @susanquinn we probably won’t see it happening. But my grandchildren will see it happen. This whole thing is going to come crashing down in the next few decades and the resulting economic collapse will resemble the Great Depression. Our inaction is nothing more than financial child abuse.
My personal response is to teach children and grandchildren about personal responsibility and how to grow your own food, sew your own clothes, and have marketable skills. I also have assisted my children very early on in how to save for their retirement and be sure to have a significant amounts of those investments in solid consumer goods companies and hard assets.
In other words work hard and save your money in strong assets. Buckle up children you are in for a bumpy ride.