Debt & Deficits

2020 was a milestone in the sordid history of the long-running U.S. trade deficits. As the rest of the world cut back on buying U.S. goods, U.S. consumers were doused with government money, and they switched from buying services — from haircuts to plane tickets — to buying goods, a large portion of which was imported.

The value of a currency is determined by a number of variables. In this article, I will focus on the dynamics of demand, supply, current account deficits, and aggregate government debt.

You have been warned! The financial world is descending into the trap of exponentially increasing debt that leads, slowly or rapidly, toward an abyss of monetary madness that can only mean much higher gold and silver prices in the future.

The pandemic lockdown will be blamed for the Greater Depression, but the lockdown only toppled all the dominoes that were already lined up.

Many of the public employee pension plans run by states don’t have enough money in them to make upcoming pension payments to retired state workers. The problem has been a long time coming, but COVID-19 may make it into a crisis.

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.

Warning lights are flashing. Whether it’s this year or next year, the odds of another economic downturn are high — and growing.

This short video - on the sustainability of government spending - should be watched by everyone, including those not yet old enough to vote. It should be shown in every high school and college classroom.

Central banking makes it possible for the government to expand the money supply by any amount, at any time deemed necessary and once (hyper)inflation is publicly seen as being the lesser evil of all options available for the government meeting its debt service, it cannot be dismissed out of hand that (hyper)inflation would be the consequence of an unsustainable debt-to-GDP ratio.

The term “derivative” has become a dirty, if not evil word. So much of what ails our global financial system has been laid-at-the-feet of this misunderstood, mischaracterized term – derivatives. The purpose of this paper is to outline the origin, growth and ultimately the corruption of the derivatives market – and explain how something originally designed to provide economic utility has morphed into a tool of abusive, manipulative economic tyranny. Words: 3355