Debt & Deficits

The U.S. government pays the interest by issuing new debt but that new debt increases total debt and (eventually) drives up interest rates, which requires more borrowing to pay the annual interest payments. Another year older and deeper in debt! A reset will occur when the debt load becomes too heavy.

Earlier this year, I wrote a series of articles, dubbed "the Great Reset", predicting a debt “train wreck” and eventual liquidation. I estimated we had another year or two before the crisis becomes evident. Now, I’m having second thoughts. Recent events tell me the reckoning could be closer than I thought just a few months ago. Words: 375

The U.S., like the EU and most western nations, is “kicking the can down the road.” Consequently, a U.S. and global debt crisis looks likely in the coming months and years.

The world is in a mess economically, financially, politically and morally. The excesses and moral decadence of the magnitude the The world is experiencing today can never vanish in an orderly way. Sadly, only a total economic collapse can solve the problem and this is, of course, inevitable. No government, no corporation and no individual can or will ever repay the $250 trillion debt that is owed.

The question is not whether there will be a crisis, but when. In the past fifty years, we have seen more than eight global crises and many more local ones, so the likelihood of another one is quite high because the factors that drive a global crisis are all lining up.

Inflation enters the economy in stages and we are now in the second stage. This is when things start to get REALLY ugly for the economy. Let me explain.

The Fed plans to increase rates to 2.5% in December so this should start putting a great deal of pressure on the U.S. economy over the next few years. Furthermore, the debt service the U.S. Treasury has to pay also increases as rates rise.

Here are some of the more interesting U.S. trade wars, and how they compare to the current spat that is evolving with major trade partners:

Most people are not experts on the subject of trade so perceptions of trade relationships in the public eye are still a crucial indicator of how one's country is doing vs. each other. If the majority of Americans think they are getting the short end of the stick on international trade, this sentiment ultimately affects how politicians campaign, how policy decisions are made, and the success of the wider economy. Today’s chart, breaks down the data from a recent Gallup poll on how Americans view the country’s trade relationships.

As an economist who studies international trade, I thought it'd be instructive to explore the trade relationships the U.S. has with each partner to show just how important they are - and what would be the consequences of a full-blown trade war.