Debt & Deficits

The madmen who are responsible for the coming economic disaster continue to behave as if they can manage to avoid it. Violating Einstein’s definition of insanity, they continue to apply the same poison that caused the problem. These fools believe they can manage complexities they do not understand. The end is certain, only its timing is unknown, and, once interest rates begin to rise, and they will, it's game over so it begs the questions "How much longer this can possibly go on?" and "What will happen to the U.S. and the world when it does?"

Debt isn’t without consequences - and the consequences will be severe when the chickens come home to roost.

A BIS study warns that budgets of most advanced economies, excluding interest payments, "would need 20 consecutive years of surpluses exceeding 2 per cent of gross domestic product – starting now – just to bring the debt-to-GDP ratio back to its pre-crisis level".

In basic terms, in the bigger picture, the United States is going broke. We’re heading for a sovereign debt crisis. I don’t say that for effect. I’m not looking to scare people or to make a splash. That’s just an honest assessment based on the numbers.

A vicious upward debt spiral is gaining momentum. The budgets of most advanced economies, excluding interest payments, need 20 consecutive years of surpluses exceeding 2% of gross domestic product – starting now – just to bring the debt-to-GDP ratio back to its pre-crisis level.

The current cycle of interest rate hikes could go down in history as the shortest and weakest in recent decades. Here’s why.

The illusion that the global economy could effortlessly add trillions in debt to fund living large forever was based on a brief historical anomaly of zero interest rates enabled by low inflation that was never sustainable and the eventual consequences on supply, demand, risk and price discovery are finally visible.

Although one often hear assertions about how federal spending or federal taxes have been climbing out of control for years or decades, the actual spending and taxing totals for the federal government have been remarkably stable for a half-century

According to the Federal Reserve, U.S. consumer debt is approaching a record-breaking $16 trillion and today's infographic provides context using data from the end of 2021.

The following chart indicates...[the extent, in percentage terms, to which various] entities have loaned money to the U.S. government...[and, as such,] their share of the U.S. national debt as of 30 September 2021.