Posted on 03/05/2021 8:42:09 AM PST by Kaslin
Did you know America is going bankrupt? Most people don't. Maybe the saddest part about our country's state of affairs is that all our vitriol and dysfunction has come at a time when we aren't even addressing our biggest problems. It would be one thing if America collectively decided we have to be honest about where we are as a country and we were in the middle of a charged debate about how to fix it. Instead, we are fighting about trivial things while pretty much everyone in the country, on all sides of the political spectrum, has decided our real problems are so bad we may as well ignore them. Have you ever had a friend who's had some horrible, embarrassing event in their life? The last thing you want to do is mention it. That's America and our debt problem. It's so bad that we don't talk about it anymore.
It was a full 10 years ago that we were so focused on our debt that then-President Barack Obama was forced to set up a national commission to deal with it. The bipartisan commission led by former Bill Clinton Chief of Staff Erskine Bowles and former Republican Sen. Alan Simpson came up with a series of recommendations, including tax hikes and reforms to our entitlement programs. They were attacked by both the right and left, and none of the solutions were enacted into law, but at least we were trying.
When the Bowles-Simpson commission was formed, America was about $13 trillion in debt. Today, we owe more than double that, more than $26 trillion. Those numbers are so big nobody understands them. To put it in perspective, our entire economic output in 2020 was $21 trillion. If America could magically not spend a dime -- nobody bought anything, including food or other staples -- and we put it all toward paying off our federal debt for an entire year, we still wouldn't pay it off. In more personal terms, our federal debt now amounts to more than $81,000 for every single person in the country, or over $227,000 for the average household in America.
If the problem is twice as bad as it was 10 years ago, why don't we even discuss it anymore? It's as if we are so close to the iceberg that it's too late to avoid it. Let's just keep the band playing and enjoy things while we can. It's all going to be our kids' problem. This is, of course, a fundamentally anti-American sentiment. The goal of leaving things better for your kids is as American as apple pie. We are certainly not doing that any more.
Our national desire to wish our problems away is so severe that we have even come up with an intellectual framework for it. Modern Monetary Theory, or MMT, is the belief that deficits and debt don't really matter for a sovereign country that can print its own currency. Need more money? You just keep printing more. It's like magic. The bill never comes due.
MMT proponents ignore or explain away the downside to the constant printing of money and issuance of debt, including our creditors losing faith and no longer buying our bonds, hyperinflation and the consequences for the dollar as an exchange traded currency. Despite these huge flaws, it's amazing the extent to which MMT has caught on as a convenient political excuse to continue ignoring our imminent debt disaster.
What will happen in a debt crisis; why are we ignoring this obvious and impending catastrophe; and what should we do about it?
At some point, as we continue to borrow money, the interest we pay on our debt will be so high we will not be able to afford the rest of our budget. The solution will be to borrow more. As the borrowing binge grows, those buying our bonds will grow worried and demand a higher return. This, in turn, will create a vicious debt cycle, which has already happened in many countries around the world. The result is catastrophic reductions in spending and increases in taxes to try to satisfy creditors to keep the money flowing. The only reason we haven't seen it yet in America is we are such an economically powerful country that our creditors have not yet lost faith in our ability to pay it off. If that day comes -- and unless we make changes, it eventually will -- the crisis is going to hurt all Americans.
We are ignoring our looming debt crisis because it's not a winner politically. Both parties contributed to the problem. The Bush, Obama, Trump and Biden administrations will all be to blame. Republicans, traditionally the party of fiscal responsibility, have lost all credibility on the issue. After shutting down the government over spending under Obama, they spent happily at record levels under Trump.
It's attractive for politicians to keep taxes low and spending high. Each of our last four presidential administrations has benefited from this dynamic. Wall Street and global business, which dominates Washington policymaking, has also benefited greatly. These corporate actors care about their next financial quarter a lot more than our country's state of affairs 10 or more years down the road. This period will be looked upon by historians as the saddest time in our history: a once-great country behaving so selfishly and with such short-term interests that they sold their children's futures away with barely any debate.
The biggest cop-out in Washington is the presidential commission. It rarely accomplishes anything. Yet our situation is so bad that another bipartisan commission may be our best bet. The commission should include both corporatists and populists. As much of a cop-out as this is, we are not prepared to begin debating real solutions (which will involve some pain). Shining a light back on the problem may be all we can accomplish today. We should start.
If the US goes bankrupt, the whole house of cards called the world economy collapses.
That’s the plan, and all who owe are now slaves.
This plan has been going on for decades.
True. But that may be the lesser of two evils. There is going to be lots of pain, no matter what.
They have been kicking the can down the road a lot longer than most could imagine. But that day is coming when it simply hits the end. When the music stops, it’s going to hurt everyone. Everywhere.
This can be fixed with energy independence to generate some income, coupled with massive govt. downsizing, a means-tested SS, and a capitalistic free market approach to health care....for starters.
Of course, no one will believe its necessary until a gigantic recession and crash.
Dave Ramsey is awfully popular these days. My wife and I went debt free and it is absolutely exhilarating.
Lots of debt but also lots of assets including huge tracts of mineral rich real estate. I wonder what a real world balance sheet would look like?
“At some point, as we continue to borrow money, “
We are no longer borrowing money. It is simply created out of digits on a computer.
We are carrying so much debt that at some point, an up-tick of interest rates will cause an almost immediate economic collapse.
It will be wiped out by hyperinflation. Your weekly check will be in the trillions of dollars and you won’t be able to buy a gallon of gas with it.
Central banks are a license to steal and the FED is the worst.
Yes, there are free market alternatives to our debt along with common sense spending cuts.
Do you really believe that we will choose that path or will the American people follow the bidding of the media and simply turn over total control to the government and politicians?
That question scares me more than the debt, which is frightening enough for my children and grandchildren. There will be a crisis and it will be ugly.
The “solution” provided by the media will be to turn over control of our nation to the socialist democrats and many Americans will vote for it. The same people who promised success with the policies that led us here (from both parties) will provide the “answer.”
As long as we are producing food and other essentials life will go on.
A huge bank run on cash would be fun since it does not really exist.
Just a thought.
The only reason I care is because I have been very stupid with my financial decisions and the path I chose in life.
I have had a job since I was 14. I had a full time job and paid cash for my college. I never took a loan for a car and have always driven old beaters. I saved I scrapped I have lived the beans and rice lifestyle longer than I care to remember. I have zero debt. I started a business, built it up to be very successful, and lost most of it with government shut downs. I have saved for retirement just to watch the savings lose value with each passing year. These choices were STUPID.
If I knew what I know now back as a kid I would have just applied for welfare and lived off chumps like me. I should have lived in the public safety hammock and actually enjoyed a life of leisure with not a care in the world. What is my reward for decades of hard work? I am called a racist nazi white supremacists and am hated by my own government.
As long as the cost of energy keeps falling —the debt can keep piling up.
It’s great to be debt free, but I can’t help but think that even folks who are debt free will suffer massively when the hammer finally comes down.
The new covid bill will push us over 30 trillion.
Unfunded liabilities are at 159 quadrillion.
Yeah, I think we have a problem.
Gonna need a Great Reset /s
Don’t worry. We’re in a digital money system. Look at bitcoin. Cash is no longer king. In fact it’s frowned upon. Government will just add a couple of extra zeros to the balance sheet. Everything will be fine. Everyone can be millionaires now. It’s not $1400 dollars a week for government workers, but 1400 credits. Nothing will come of it because the people don’t understand such complicated matters.
(Sarc off)
We’re screwed.
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