The US Government's Dirty Secret about Economics
I've conversated about Debt, Deficits, Dependency and Inflation. Most Voters don’t care since there’s the prevailing attitude that the US Government can Borrow and Spend indefinitely. After all, it hasn’t caused a problem so far. A long fuse can burn for a long time before it reaches the Powder keg.
We're getting closer and closer every day to the Debt Bomb. The recent Government Shutdown drama is a case in point. A stopgap Spending Deal swept the Shutdown threat out of the headlines, it’s lurking in the shadows of the Halls of Congress. If the Political Indentured Servants on Capitol Hill don’t figure it out by Nov. 17th, the Government will be forced to shut down. There isn’t much talk about a Shutdown now, people almost always focus on the mythical Crisis that shuttering the US Government. That sidesteps the real problem — OUT OF CONTROL GOVERNMENT SPENDING.
The Conventional wisdom that Congress needs to do whatever it takes to avoid a Shutdown, if that means maintaining Spending at current levels or even increasing Spending, so be it. Economist Daniel Lacalle made valid points on this matter, “The narrative is that Governments and the Public Sector should never have to implement responsible Budget decisions, and spending must continue indefinitely.”
The whole Government Shutdown Charade is merely the symptom. The US Government Debt is $33+ Trillion. The Biden Administration addedhalf a Trillion Dollars in 20 days. It’s hard to overstate the ugliness of US Government's impending Fiscal Crisis. We have surging Debt,massive Deficits, and declining Revenue. In August, the Biden Administration spent $527+ Billion. In fact, the Government's Spending an average of half a Trillion Dollars EVERY SINGLE MONTH.
THERE'S NO END IN SIGHT. With Wars for Oil and Aggression raging in the Middle East, there's already an utterly Incompetent proposal for Aid to Israel and Ukraine. WHO IN THE HELL IS GOING TO PAY FOR THIS BS?!
The Biden Administration’s own projections, the accumulated Deficits between 2023 and 2032, 14+ Trillion Dollars, assuming no Recession or Employment decline. Public Debt is above 33 Trillion Dollars, the Budget Deficit is over 1.7 Trillion by itself. As of August 2023, it costs $808 Billion to maintain the Debt, 15% of the total Spending, according to the US Treasury. Interest Rates are rising at the same time as the Government rejects all Budget constraints. This is a MONETARY TIMEBOMB!
The Government keeps Spending no matter what’s happening in the Bubble Economy. When the Economy grows and there's almost full Employment, Governments announce more Spending because it's ‘time to borrow,’ as Paul Krugman believes. When the Economy is in Recession, Governments say that they need to spend even more to save the Economy. Government size in the Economy increases, and record Tax receipts are fully consumed in no time because Expenditures exceed Revenues, It's simple Math...
The Borrowing and Spending is fueled by the myth that borrowing doesn’t really matter, Modern Monetary Theory (MMT) put that Myth on Steroids. MMTrs claim that Spending doesn’t matter. As Daniel Lacalle noted, they claim that the world could “run out of Dollars” if the US Government took significant steps to rein in Deficit Spending causing a “Monetary Meltdown".
It's so ludicrous that it shouldn't even have to be discussed. The world does not run out of Dollars if the United States Government cuts its imbalances. Global Dollar liquidity is a result of Central Bank swaps between Monetary institutions. There's no such thing as a Global Dollar Liquidity Crisis because of a United States surplus, as we saw in 2001. Furthermore, the idea that the Dollar supply is created only by Government Deficit Spending is insane. This distorted view of the Economy places Government Debt at the center of growth instead of Private investment. It tries to convince you that Deficits are positive and the creation of Currency must come from unproductive Spending, not from productive investment Credit growth. They believe that since Debt hasn’t mattered yet, it won’t matter ever.
Global demand for Dollars is still high. The Dollar index (DXY) is rising because the Monetary imbalances of other Nations are larger than the United States. This has lulled the American Public, Taxpayers, and Consumers s into a false sense of Security. American Voters, including in positions of power think the US can do whatever it wants when Borrowing and Spending. Daniel Lacalle makes the point, “All Empires believe that their Currency will be eternally demanded, until it stops.”
When confidence in the Currency collapses, the impact is sudden and unsurmountable. Global Citizenry start to accepting other independent Currencies or Gold-backed Securities, and the myth of eternal US Debt demand vanishes. Governments are willing to push the limits of Fiscal Responsibility because another Administration will face the Black Hole. The United States’ Debt and Deficit irresponsibility means MORE TAXES, MORE IMPOVERISHED, AND MORE INFLATION. Government Debt isn't a gift of reserves for the Private Sector; it's a burden of Economic problems for future generations. Sound Money can only come from Fiscal responsibility.
We're getting closer and closer every day to the Debt Bomb. The recent Government Shutdown drama is a case in point. A stopgap Spending Deal swept the Shutdown threat out of the headlines, it’s lurking in the shadows of the Halls of Congress. If the Political Indentured Servants on Capitol Hill don’t figure it out by Nov. 17th, the Government will be forced to shut down. There isn’t much talk about a Shutdown now, people almost always focus on the mythical Crisis that shuttering the US Government. That sidesteps the real problem — OUT OF CONTROL GOVERNMENT SPENDING.
The Conventional wisdom that Congress needs to do whatever it takes to avoid a Shutdown, if that means maintaining Spending at current levels or even increasing Spending, so be it. Economist Daniel Lacalle made valid points on this matter, “The narrative is that Governments and the Public Sector should never have to implement responsible Budget decisions, and spending must continue indefinitely.”
The whole Government Shutdown Charade is merely the symptom. The US Government Debt is $33+ Trillion. The Biden Administration addedhalf a Trillion Dollars in 20 days. It’s hard to overstate the ugliness of US Government's impending Fiscal Crisis. We have surging Debt,massive Deficits, and declining Revenue. In August, the Biden Administration spent $527+ Billion. In fact, the Government's Spending an average of half a Trillion Dollars EVERY SINGLE MONTH.
THERE'S NO END IN SIGHT. With Wars for Oil and Aggression raging in the Middle East, there's already an utterly Incompetent proposal for Aid to Israel and Ukraine. WHO IN THE HELL IS GOING TO PAY FOR THIS BS?!
The Biden Administration’s own projections, the accumulated Deficits between 2023 and 2032, 14+ Trillion Dollars, assuming no Recession or Employment decline. Public Debt is above 33 Trillion Dollars, the Budget Deficit is over 1.7 Trillion by itself. As of August 2023, it costs $808 Billion to maintain the Debt, 15% of the total Spending, according to the US Treasury. Interest Rates are rising at the same time as the Government rejects all Budget constraints. This is a MONETARY TIMEBOMB!
The Government keeps Spending no matter what’s happening in the Bubble Economy. When the Economy grows and there's almost full Employment, Governments announce more Spending because it's ‘time to borrow,’ as Paul Krugman believes. When the Economy is in Recession, Governments say that they need to spend even more to save the Economy. Government size in the Economy increases, and record Tax receipts are fully consumed in no time because Expenditures exceed Revenues, It's simple Math...
The Borrowing and Spending is fueled by the myth that borrowing doesn’t really matter, Modern Monetary Theory (MMT) put that Myth on Steroids. MMTrs claim that Spending doesn’t matter. As Daniel Lacalle noted, they claim that the world could “run out of Dollars” if the US Government took significant steps to rein in Deficit Spending causing a “Monetary Meltdown".
It's so ludicrous that it shouldn't even have to be discussed. The world does not run out of Dollars if the United States Government cuts its imbalances. Global Dollar liquidity is a result of Central Bank swaps between Monetary institutions. There's no such thing as a Global Dollar Liquidity Crisis because of a United States surplus, as we saw in 2001. Furthermore, the idea that the Dollar supply is created only by Government Deficit Spending is insane. This distorted view of the Economy places Government Debt at the center of growth instead of Private investment. It tries to convince you that Deficits are positive and the creation of Currency must come from unproductive Spending, not from productive investment Credit growth. They believe that since Debt hasn’t mattered yet, it won’t matter ever.
Global demand for Dollars is still high. The Dollar index (DXY) is rising because the Monetary imbalances of other Nations are larger than the United States. This has lulled the American Public, Taxpayers, and Consumers s into a false sense of Security. American Voters, including in positions of power think the US can do whatever it wants when Borrowing and Spending. Daniel Lacalle makes the point, “All Empires believe that their Currency will be eternally demanded, until it stops.”
When confidence in the Currency collapses, the impact is sudden and unsurmountable. Global Citizenry start to accepting other independent Currencies or Gold-backed Securities, and the myth of eternal US Debt demand vanishes. Governments are willing to push the limits of Fiscal Responsibility because another Administration will face the Black Hole. The United States’ Debt and Deficit irresponsibility means MORE TAXES, MORE IMPOVERISHED, AND MORE INFLATION. Government Debt isn't a gift of reserves for the Private Sector; it's a burden of Economic problems for future generations. Sound Money can only come from Fiscal responsibility.
