Posted on 02/15/2020 5:14:19 AM PST by Kaslin
America’s long-term national debt problem could lead to economic Armageddon. The misguided belief that we are actually paying down our debt is giving this administration a false sense of security.
We can have all the growth we can muster in our GDP but if we are spending more than what’s coming in, the debt will only keep building. The days of growing our way out of debt were lost $5 trillion ago. This week the CBO announced that for the first four months of the government’s fiscal year ending in January we had created a deficit of $1.2 trillion. As a matter of fact, we have had some of the best GDP numbers in over a decade prior to President Trump coming into office. We also had unexpected income in the billions of dollars from tariffs and we have even seen some cuts in several government department budgets. But still, almost month after month, we see deficits.
The average Joe seems to understand this, but the government just doesn’t get it and we remain addicted to spending. At some point, the house of cards will come tumbling down. We currently have an administration in which everyone is drinking from the same punch bowl and convinced that we can grow our way out of this mess. I believe the reason for at least half of this debt is due to 12 years of very low GDP growth.
The passing of the new tax bill and the reduction in regulatory burdens was a great start to stimulate growth and increase revenue—along with tariffs—which have now generated billions of dollars of new tax revenue. But these actions alone will not get us out of debt, but at best slow the runaway train down. I agree we will never cut debt or deficits with only solid growth in our GDP and a strong economy. Now, the days of only using growth to get out of debt are long gone. We have to get back to the principles of Abraham Lincoln and Ronald Reagan, and it’s not difficult to understand. It simply means a smaller government. If we don’t start cutting the size of our government, reducing the size of every government department and becoming more efficient and effective we will never cut our deficit. The values of smaller government along with a strong economy and growth is a perfect storm and nobody has set this country on a better course to see this happen than President Trump. I believe that moving forward President Trump is the only president who can make this happen, since he has created an administration that is willing to make tough decisions and not kowtow to special interest groups and lobbyists.
If we continue to spend and we continue to see this level of debt, one of the most popular responses will involve devaluing the U.S. dollar.
In other words, in order to make our debt cheaper, we will need to devalue the dollar. But here’s the problem with that approach. If we devalue the dollar and we are no longer the strongest currency in the world, all while paying little to no interest growing debt, how will we ever get people to buy our debt to fund it if our currency is no more attractive than anybody else’s?
So if we can’t sell our debt, the answer will simply be that the Federal Reserve will purchase our debt. That will only shift our debt from one balance sheet to another. The Federal Reserve is already our number one debt holder, and adding more debt to it is not the answer. A plan to cut our debt in the next 15 or 20 years will only work if we have a fiscally conservative government and a president that is as strong as President Trump. If we add to that scenario a balanced budget amendment it would help, but something tells me that the type of candidates we have running on the left will someday get a foothold and that 15 or 20 years will never come. The answer is a growing economy like we have today, while making hard decisions to create a strong smaller government with cuts across the board, with the exception of the department of defense, similar to what Ronald Reagan achieved. Growth and cuts will keep America strong and our wealth, prosperity and sovereignty will stay intact for many generations.
The longer we wait, the more drastic and disruptive the preventive actions we take will need to be.
5% deficit to GDP this year is inexcusable.
We’re going to have the Mother of ALL depressions, just a matter of when.
Spending bills originate in the House of Representatives, and it is the 435 people in the HOR who have to stop spending money they don’t have to keep the United States viable ...
Trump is a debt guy. He always has been. He will never cut spending. He has completely bought into Modern Monetary Theory. It’s QE forever now.
The Jews have it right. The answer is debt forgiveness. It is coming.
We must finally make the move back to gold and establish industry rather than the gamblers on Wall Street as the foundation of our economy. Wipe out Wall Street; shut down the Fed; renig on our debt to the thieving China; then live within our means. We can finish by forgiving all debt at a moment in time.
Once we are out of debt the key to solving our financial problems is to prevent government officials from spending one more dollar than they have in their hands.
Donald Trump will easily take care of all this. The great American people will experience absolutely zero negative consequences when he implements his completely trustworthy and great plan.
No president or Congress (no matter which party) wants to make the cuts necessary to fix the situation. And anyone that suggests making those cuts would be destroyed by voters.
So this is going to keep going until the house of cards collapse. There is no way to stop it politically. We have a country that is racing towards socialism and more government handouts.
It’s not sustainable. But no one can do anything about it.
I think Trump understands better than this idiot writer. The reality is that we will never balance our budget or pay off our debt.
The country will keep on until it completely implodes. Even when we last saw surpluses and a slow draw-down in debt during the waning Clinton administration, the Democrats were screaming for new entitlement spending which is our biggest fiscal issue.
Social Security? Can’t touch that.
Medicare? We need that for everyone including illegals.
Free money? We must guarantee a basic wage for everyone.
Climate change? We must build rail lines to cross the oceans.
And the list goes on. It will only stop after the train wreck so we might as well enjoy the ride while we can.
We do not have a partner across the aisle to work with us.
They own like 4% of US debt. 75% is owned by the public. You want to burn Ma and Pa Kettle down in one shot? Good luck with that.
Japan is at 200 percent debt to GDP.
I think we’re still at 100.
I guess it’s possible to stay afloat with 200 plus percentage numbers
Actually it’s the other way around. The politician understands the problem perfectly. He also understands that “the average Joe” will vote against any political candidate who promises to run government in a fiscally responsible manner.
This is why democracies fail.
> renig on our debt to the thieving China
There’s plenty of the debt owed to ourselves. People whose retirement nest egg is mostly in “low risk government bonds” come to mind.
I’m beginning to think that with a fiat currency , debt is meaningless. Remember , the dollar in your pocket is someone’s debt. Money is debt.
I think you’re right. I don’t like it, but the fact that no politician says both “raise taxes and cut spending” means that they know you can’t get elected saying those two things at the same time.
It’s meaningless -— right up until the moment you can’t sell any more debt. Then it becomes quite meaningful.
Their gdp growth rate has been zero for 30 years and they save like crazy.
If debt is meaninless then the currency in which it is denominated has to be meaningless, no?
It has psychological value only.
So, when the psychology of enough people shift, it's "Katy bar the door". Not a recipe for long term success.
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