The $35+ Trillion Dollar Financial and Economic Train Wreck

Today the National Debt is nearly $35.3 Trillion, or roughly 125% of GDP, 25% larger than the entire size of the US Economy.

Typically even a Debt-to-GDP ratio of 60% is considered high. 80% is dangerously high. But developed Countries in Europe, North America, and especially Japan get away with higher levels of Debt because their Economies are more advanced and productive. For most of its History, the US had a very low National Debt — with periodic exceptions like World War II. The 1980s, the Debt-to-GDP ratio hovered at around 30%.

Older readers may remember Businessman Ross Perot running for President in 1992, and his Campaign was about eliminating the National Debt (then roughly 60% of GDP).

But by the end of the 90s, with the Economy booming and the Government actually running a small Budget surplus, America’s Debt-to-GDP ratio had dropped to around 50%.

It didn’t last. The War on Terror was extremely expensive, and by the end of Baby Bush’s terms, Debt-to-GDP had spiked back to 65%.

The Debt then quickly reached 100% of GDP during Barack Obama’s 1st Term, much of that due to Bailouts and Benefits paid in the aftermath of the 2008-2009 Global Financial Crisis.
The Debt-to-GDP ratio hovered at around 100% during Obama’s 2nd Term, and during Trump’s 1st Term... until the Pandemic hit in 2020. The resulting Economic Shutdowns and insane Government Spending pushed the ratio to an all-time high of 133% of GDP.


Ultimately, the US Government must stop Spending like a Drunken Sailor! This priority means ensuring that Debt-to-GDP doesn’t rise beyond 122%. Is it possible to stop the increase in debt-to-GDP? It'll come at a significant cost.

So let’s do some basic arithmetic. In order for the Debt-to-GDP ratio to remain the same, it means that both the National Debt and US Economy must grow at the same rate. If the US Economy grows by 5%, then the National Debt can also grow by 5%, and the ratio will stay the same. It’s not unusual for the US Economy to grow by 5% in a single year.

Bear in mind that this “nominal” GDP growth includes the impact of Inflation. So if inflation is 4% in a single year, and real Economic productivity growth is just 1%, then overall GDP growth will be 5% for that year, i.e. 4% + 1%. On average from 1989 through 2019 (i.e. Pre-Covid), average GDP growth in the US was right around 5%— which includes the effects of Inflation, A reasonable assumption.

Simultaneously, a 5% increase in the National Debt (which is roughly equivalent to that year’s Annual Budget Deficit) is a substantial number. The National Debt is $35+ Trillion. 5% of that is a whopping $1.75 Trillion.

As long as the size of the US Economy grows by 5% (whether through Inflation, or actual productivity growth), then the Annual Budget Deficit could be $1.75 Trillion... and the Debt-to-GDP ratio would not increase.

A $1.75 Trillion Deficit is an absurd sum of Money. You’d think that the US Government would be able to run Operations with a $1.75 Trillion Deficit. Unfortunately that’s not the case; 2024-2025 they expect to be Over-budget by nearly $2 Trillion. Right off the top, they’re going to have to shave around $250 Billion from the Budget this year in order to achieve a Deficit of “only” $1.75 Trillion. Where will they cut that money?

Well remember, there are 3 main categories of Government Spending;

Interest on the Debt:This cannot be cut without a US Government Default, which would undoubtedly spark an immense Global Financial Crisis. Mandatory spending such as the Entitlement System,No Politician has the courage to touch Mandatory Spending.

Descretionary Spending: However, cutting Discretionary Spending is no small task.

For Fiscal year 2025, the President’s Budget is set at $1.8 Trillion. Roughly $800 Billion of that is Military spending, few Politicians have the willingness to cut Defense. So that leaves $1 Trillion for “Non-Defense Discretionary Spending”. Think NASA, the Department of Education, National Parks, etc. They’ll have to trim these Budgets by 25% in order to save $250 Billion and achieve a $1.75 Trillion Budget Deficit for the year.

Making those cuts would only freezethe Debt-to-GDP ratio at its current level—notreduceit. To maintain this freeze, similar Austerity measures would need to be enforced year after year, no room for unforeseen Expenses, Emergencies, or Economic downturns.

The irony is, slashing a significant portion of the US Government — would also liberate the Economy from excessive Regulation. Fewer Government Bureaucrats means a more productive Private Sector... and precisely what’s needed to generate Economic growth. This, coupled with Technological advancements like AI could boost productivity and real GDP growth, and could even reduce Inflation. Eventually GDP could be growing faster than the National Debt, and the overall ratio would fall back to a safer level.

This is still, right now, a possible outcome for the US. But it'll require difficult decisions, Politicians who understand the problem (and are willing to solve it). And a fair amount of luck that no major Wars, Emergencies, or new Pandemics occur.

This solution also means there's no Money to bail out Social Security. When the Trust Funds run out of money within 10 years, Retirees would take an immediate 20-30% cut in Benefits.

If the US Government does nothing— and continues to overspend by Trillions of Dollars each year, Debt levels will likely rise far more quickly than the US Economy can grow. And within a few years there will finally be a Point Of No Return where it will be virtually impossible to pay down the Debt and salvage the Government's Finances.

Bottom line, America cannot afford another 4 years of ignoring this problem, no matter how much “joy” the Politicians intend to bring.


This is a key reason why we emphasize owning Real Assets, i.e. the most critical resources in the world, like Productive Technology, key Minerals, Energy, and Food. Unlike Fiat Currency, these Assets can’t be conjured out of thin air by central Banks or Politicians.

This is why it’s ultimately very difficult to see getting past 2025 without a Geopolitical Shock or a Global Market Shock and the Dollar surviving as the Global Reserve Currency through a single term of a Kamala Harris Administration. Her empty promises and policies create higher Deficits, balloon the National Debt, and Hyper Inflation.

The nature of a good Reserve Currency is stability and strength. Foreign Governments and Institutions require stability in the Reserve Currency. Countries around the World are desperate for something they can actually rely on—something that won’t be inflated away or subject to a gargantuan National Debt. Someone who backs pro-Hamas protesters is anything but strong.

Some of it is Investor speculation. The biggest driver of Gold prices is Central Bank demand, they’ve been buying literal tonnes of Gold. This is clear and obvious that they're preparing for an End of the Dollar as the dominant Global Reserve Currency.

Gold is a very reasonable Reserve Asset to hold in lieu of Dollars, because it has a 5,000-year history of maintaining its value. Central bankers know that they can trade Gold for other Currencies or Strategic Assets. It makes perfect sense that Central Banks around the World are trading Dollars for Gold.

The Jig of the Reserve Currency Status of the US Dollar is up, just like Bernie Madoff knew his Ponzi Scheme was up!

Money represents the hours of your life that you spent earning it. That’s the basic principle here. It represents concentrated life – all the things you want to have and do for yourself, and provide for others in the future. When these people destroy the value of money, they’re destroying part of your life.

“Inflation” isn’t caused by greedy Butchers, Bakers, and Gasoline makers. It’s caused by an excess of purchasing Media. MMT will give the State TOTAL CONTROL of its quantity and quality.

If the Government increases the money supply by, say, 10 times, General Prices will go up by 10 times. The value of your Dollar Savings will drop 90% – perhaps most American Voters won’t care, because they have no Savings, but Debt. Some people will get hold of a lot more of that 10x increase than others. And they’ll get hold of it earlier, before Prices really take off. Who? Inevitably Cronies.

Moral Question;
Look, absolutely every Government intrusion into the Economy – whether it’s Taxes, Regulations, or Inflation – always benefits the people in and around Government. It damages society.

They’re sold to the Voters as something that'll put them on easy street. The average American Taxpayer and Consumer doesn’t understand Economics; he doesn’t Think, he Feels.

Furthermore, no one talks about whether Cockamamie ideas like MMT are morally right or wrong. Instead, they have pointless and ridiculous arguments about whether it works or not. This matter is essentially a moral question; Does somebody in Government have a right to determine your Economic destiny or not?

The fact that Alexandria Ocasio-Cortez [AOC] – an ambitious, terminally ignorant, morally crippled 34-year-old Puerto Rican bartender – is setting the tone for this whole discussion tells you how degraded the United States actually is. It’s nothing more than a giant Welfare/Warfare and Police State.

AOC, The Donald, Bolton and his Mustache, Bernie Sanders, Pocahontas, The Wicked Witch of the West Hillary Clinton, Spiro Kamala, etc., etc. They’re all dangerous Megalomaniacs. The Chimps and Chumps listen to them, hang on to their every word, support them, and are easily incited to slobber all over them.

The American Public is going to get exactly what they deserve. I have about as much sympathy as I would have had for the Romans in the 5th century, when the Empire was collapsing.

This is an over-exaggeration and misguided interpretation of events. Yes, there is debt, but debt fuels growth. This crazy school-girl notion that a country (or a company) should solely operate on revenue that comes in to "balance the checkbook" is about the dumbest thing promoted by morons who have no idea what makes nations (and businesses) strong and great in longevity.

This doesn't mean money should be wasted, but an Elon Musk testimony to slash programs to cut expense at a national level or a Project 2025 initiative to treat all government programs as discretionary is a sure road to immediate ruin. Fiscal responsibility does make sense. Living in fear over a credit downgrade is a fool's errand.

Use debt wisely and prosper... or suffer the consequences.

All by design.
The installations have one job. Steal and give away the countries wealth as fast as possible..

It's been said most of my life if we the people ballanced our check books like the government does we'd all be in prison.
Neither party has any intention of constraining themselves with a real budget.

The best approach as well as liquidation. Is domestic production of goods. Exportation of those goods etc. Increasing domestic production of fuel. Not by drilling but by agricultural fuels. Most notably organic petroleum extracted from domestically grown hemp will offset trade deficits and allow net export of fuel (especially gasoline) furthermore the legalization and taxation of marijuana\hemp fuel; if federal, will allieviate the ever increasing burden on average citizen taxpayers. Yes health care cost reduction can be acheived and social security cost also reduced by hemp and marijuana production. We need to start domestic production(s) and solutions; isolationism militarily will help but only address less than 50% of the deficit spending
Agricultural fuel production, exportation of, and the resultant health care cost reduction is the other 40ish%. tightening our belts and "butting out" of world affairs is the only other solution that exists.

Don’t worry about a thing. Joe Stupid showed us a little preview as did Jimmy Peanuts and the hapless Gerald Ford.

We’ll simply inflate our way out of debt. When a US dollar is worth what a US penny is worth today, the debt will effectively be only $350 billion. Then when the dollar is worth 1/10,000th of what it’s worth today the debt will be only (effectively) three and a half billion.

See? The geniuses in the Uniparty have got it all covered. Don’t worry you little head about a thing.

Oh, one more thing, buy gold or silver or maybe crypto because the dollar is doomed.

Calvin Coolidge stripped down the Federal government when faced with financial crisis. Kamala will increase spending, and inflation. I like the idea of Elon working with the Trump administration to incease efficiency and reduce waste. He eliminating 90% of the Twitter staff and ended up with a better product. Imagine all the DC bureaucrats fitting into one building and the cost of Maryland real estate at ten cents on the dollar. Winning!

The numbers sound bad, no doubt. Thought the debt-to-GDP ratio is 3% lower than it was 4 years ago. So it is going in the right direction.

The debt is impossible to fix, so no one will. Many other countries are in the same boat. It will eventually all collapse.

Everything is going as planned. Destroy dollar bring in cbdc 🤷‍♀

Im so tired of the lies america is telling itself. Ive been saying exactly what u just did for most of my 35 years. I know how to fix it. Simply put the current system is so bankrupt they think all those weapons will hold the debt collectors at bay. It has so far. What happens when they stop building ammunition to sell to the us! Im praying it happens soon.

OR....

We could actually let the DJT tax cuts expire and go after non-paying high earners to boost our income and accelerate payments on higher-interest-rate debt.

Ok, what do you want to cut? Or should taxes on the wealthy be increased?

America could rebrand.
Title 9 bankruptcy. Become the United States of North America. Then the debt "disappears" but much of its property gets repossessed. Might be fun though.

America has to learn to pay its credit card bill , I can acknowledge that politicians do spend alot and both parties do spend alot too . Cutting back on certain things will help .

You tell 'em kid!! I have been trying for years...😷

I think the only way for the USA to pay off it's National Debt is to actually start selling US assets. That's what corporations do when their debt load becomes unsustainable... they start selling off assets to pay-down their debt to erase the monthly interest-owing. Eventually, their debt is paid off and if they're lucky, the corporation can still stay in business with the skeletal remains of what remains of their business, minus it's core assets.

The USA is in the same boat right now, no different than Greece was when Greece went into Receivership during the EU fiasco several years ago. Greece literally started selling property assets, like Real Estate, like actual Greek islands to foreign interests to provide immediate cash for the Greek treasury.

The exact same option is available to the USA but in truth, there is no other option available to the USA than to start selling it's property assets to foreign interests.