The debt crisis is America’s greatest threat. Not China. Not nuclear war. Not identity politics.
Larger than the U.S. Economy and growing. Public Debt outstanding is approximately $31.4 trillion, significantly larger than the U.S. economy as fiscal spending far outpaces Real GDP growth. Public Debt outstanding will almost certainly continue to grow as fiscal deficits are the norm. If you were to review the CBO’s data dating back to 1962, the U.S. has run deficits every year except 1969, 1998, 1999, 2000 and 2001. Most recently we ran deficits of $3.1 Trillion and $2.8 Trillion in 2020 and 2021 respectively. When the going gets tough, politicians spend (to buy votes).
Fiscal spending begets more fiscal deficits and debt, more money printing and more inflation. It is impossible to have meaningful, sustainable Real GDP growth when a Central Government spends as our Federal Government does. Spending outside of our means forces the Fed to print money to make fiscal deficits whole which by definition inflates the Money Supply and devalues the U.S. Dollar (i.e. “inflation”).
Yellen did what? Why Treasury Secretary Yellen issued so much short-term paper when real interest rates were below zero does not make sense. Why did she not issue 30-year bonds? As a result the U.S. has to roll over that paper at higher rates.
Pay the Piper. If we don’t resolve our fiscal debt addiction the market will do it for us. How? The value of the Dollar will eventually erode to zero as has been the case with every single fiat currency in history. The U.S. Dollar has lost approximately 99% of its value versus gold since Nixon took the U.S. off of the Gold Standard in 1971. What’s another 1%?
Central Banks know gold is real money. Perhaps that is why Central Banks are hoarding gold (charts and tables HERE).
Corporate debt mountain. We did not mention the record levels of corporate debt that will roll over in the coming years, most likely at higher rates.
Our Excel spreadsheet with daily Public Debt levels HERE.
CBO historical revenues, outlays and deficits HERE.