The National Debt. Lets assume for a moment the morons in DC wanted to get serious about repayment of the debt.
And decided to throw One Billion Dollars per day at the Debt.
Great. But that would only pay the interest.
The 21 TRILLION DOLLARS in principal still remains.
It’s important to understand, the principle will never be paid off, and that there was never any intent to pay it off. They simply borrow more or refinance.
What they must do though, is continue to make timely interest payments. Even during the Civil War, the US government didn’t miss any interest payments. Come what may, they have to do this. If you’re wondering what happens if they have to make a choice say, between paying foreign creditors and making Social Security or “Welfare” payments - you get one guess. Because, if they miss interest payments, then the costs to borrow in the future go up. Way up. Game Over.
At some point the interest payments become too unwieldy. One of the things that happened under the Clinton administration, they started rolling over long term government obligations into short term securities. As I understood it a few years ago, the entire US Government debt - all of it -now rolls over every 4 years or thereabouts. Consequently everything is extremely interest rate sensitive.
How the US government is able to continue to borrow at such low rates I’ve never understood. But, if interest rates were to ever revert to even nominal historical rates, it’s Game Over. Even just a 1/4 point rise in rates means an “extra” 50 or 100 Billion dollars of interest payments on the debt, something like that. So 4.5%, 6%, 8% rates - BOOM!
In the 1970s the Federal Reserve chairman Paul Volcker raised the overnight rates to something like 18%. monetary inflation was picking up steam, and they had to do something. It worked, although caused a recession and wiped out thousands of jobs.
Nobody is going to raise interest rates ever again. They can’t. That’s what it looks like to me anyway. Basically they have a choice, they can save the dollar, or save the markets, though not both. Politically, virtually every government chooses to “print”, or debase the currency when things get sideways.
Another twist is the fact that the US dollar is a “reserve currency”. This is a legacy of when the American dollar was based on a fixed quantity of gold. For many years Oil around the world was not only denominated in dollars, it needed to be purchased in dollars. If France or Germany or Great Britain wanted to buy oil from Venezuela, they had to convert (buy) their dollars first, then buy the oil.
So an absolutely huge number of dollars lived more or less permanently outside America, used whenever a foreign country X wanted to buy oil from foreign country Y. In theory this is not inflationary, since those dollars don’t come home to the US.
Anyway when things go Tango Uniform, and eventually they will, it will likely happen virtually or literally overnight. There’s no way for the average person to predict this, though one thing to be sure, they won’t wait give fair warning ahead of time. They’ll just pull the plug and we’ll hear “Nobody Could See This Coming, Unprecedented, Uncharted Waters” blah blah.
It’s not looking good though, simply because of the outright brazen in-your-face criminality we’ve been seeing at the highest levels of governmen for the last several years. They are apparently betting it won’t matter, they won’t be held to account, and maybe they are correct.