Posted on 04/08/2020 4:55:29 AM PDT by Kaslin
Two weeks ago, President Donald Trump signed the largest stimulus bill in U.S. history: more than $2 trillion.
For once, both Republicans and Democrats agreed. The Senate voted 96-0. The House didn't even bother with a formal vote.
At the White House, a reporter asked the president, pointing out that the bill includes $25 million for the Kennedy Center, "Shouldn't that money be going to masks?"
"The Kennedy Center has suffered greatly because nobody can go there," Trump responded. "They do need some funding. And look -- that was a Democrat request. That was not my request. But you got to give them something."
"Something" they got. The bill includes $25 million for Congressional salaries, $50 million for an Institute of Museum and Library Services and lots of other wasteful things.
Only a few politicians were wary. Rep. Thomas Massie complained that he wasn't even allowed to speak against the bill.
Rep. Alex Mooney asked: "How do you pay for it? Borrow it from China, borrow it from Russia? Are we going to print the money?"
Those are good questions.
Our national debt is already $24 trillion. Now it will jump, percentage-wise, to where Greece's debt was shortly before unemployment there hit 27%.
Greece was bailed out by the European Union. But the United States can't be bailed out by others.
How will we pay off our debt? That's the topic of my new video.
There are really three options:
1. Raise taxes.
2. Print money.
3. Default.
Let's consider each:
1. Raising taxes on rich people is popular. Even Michael Bloomberg wants "higher taxes on billionaires" like him.
But raising taxes on the rich often kills the wealth and jobs some rich people create. And it won't solve our debt problem. Even if we took all the billionaires' wealth -- reducing their net worth to zero -- it would cover only an eighth of our debt.
2. Some on the left now say, "Don't worry about debt, just print money!"
This belief, called Modern Monetary Theory, destroys lives.
Zimbabwe's dictator tried it. Eager to spend more money on wars, higher salaries for government officials and luxury for himself, he had his government print more money. But that meant more money pursued the same goods. That caused explosive inflation. Soon, a $2 bag of onions cost $30 million Zimbabwean dollars.
The more money the government printed, the more inflation there was. They eventually even issued 100 trillion dollar bills. Today those 100 trillion bills are worth about 40 cents.
Inflation wrecked lives in 1920s Germany, Argentina and Russia, and in modern-day Venezuela, too.
3. America could simply refuse to pay our debt. But that would betray everyone who invested in America, and bankrupt Americans who bought Treasury Bonds.
Defaulting on your debt wrecks economies, too. When Argentina defaulted, unemployment rose to 21%.
Once you're deep in debt, no option is good.
How did we get to this point?
Presidents have talked about the dangers of debt for decades. But they didn't deal with it; they just talked about it.
"We have piled deficit upon deficit, mortgaging our future and our children's future," warned Ronald Reagan. "We must act today to preserve tomorrow."
Bill Clinton said, "We've got to deal with this big long term debt problem."
Barack Obama called driving up the national debt "irresponsible" and then proceeded to do exactly that.
Donald Trump complained that Obama "doubled" the nation's debt. But now, under Trump's presidency and the new CARES Act, our debt will grow even faster.
This will not end well.
So far, the deficit spending hasn't done enormous harm. But it will. You can stretch a rubber band only so far, until it breaks.
Our debt will wreck our children's lives.
Yet, today politicians mostly talk about spending more.
And American Nationalism is rising.
Who buys negative interest rates? But they have them in Europe.
The answer is people looking for a safe place to store money. There are risks and costs with putting it in a vault, or even your local bank.
And it just went up another $2 trillion. And there may be another relief package to follow this one as this stretches on.
-AND-
This $26-30 is PAST debt. Money we have already spent, which we didn’t have or won’t have when it is spent. This doesn’t include FUTURE debt, in the form of unfunded liabilities, which is over $100 Trillion, and some say 200, in future spending on social security, medicare and medicaid for the remainder of the baby boomer lifespans...
This is really bad IMHO. What is the answer? What will happen? I see three possibilities;
1). we wake up, and stop all government spending, entitlements, defense and everything else, and start a repayment plan with the tax revenue, and even if this is possible with Stossel’s growth plan, it just isn’t going to happen in this political climate, with this massively undereducated population in regards to economics. They will always vote for more free stuff.
2). Hyperinflation as we come to the point in this spiral, where we can’t even pay the interest on the debt without borrowing. -Buy precious metals, and maybe cryptocurrency. Get use to a gallon of gas costing an amount with a lot of zeros... A new currency system will be the only way to pull out of this possibility, which will mean a huge transfer of wealth to those with the new currency, whatever that is.
3). The Clowerd Pivon effect has come to what Yuri Bezmenov claimed to be the “crisis” stage, and the economic system is in collapse as people on government benefits and fixed incomes discover their couple thousand dollars a month they live on won’t buy a loaf of bread. Social unrest and demands by an economically ignorant population will demand that the government does SOMETHING.
-And they will. The only thing a government can do, which is to use force to restore order, which in this case will mean confiscation of property and wealth, and probably the dissolution of the Constitution of any meaning.
Good luck folks.
4th option, cut Government to the bone. Shut it the hell down and what doesnt hurt the country is eliminated and all personel are fired
5th option - fix pensions. Working 5 years in governement should not entitle you to a lifetime pension. Pensions should be rated to 1 1/2 time service. This includes Presidents and other higher officials
6th option - 60% tax on government officials and relatives who have profited from high office. NAnZI Pelosi and her husband should be a great windfall
7th option - citizen oversite. 4th branch of government comprised of citizens compensated to oversee Congressional corruption. Having the wolves regulate wolves doesn’t work. Give them the power to oversee and indicte members of Congress for fraud and embezzlement.
At this rate, the national debt will be pushing $40 trillion by 2025. It was only $5 trillion in 1991. We are screwed.
Nobody defaults on debt if they can print money.
Yep! Big time.
Who buys a bond or T-Bill that pays 0% interest?
Why would anyone invest in a bond that is guaranteed to lose money.
...
It’s not guaranteed. Rates can go lower and the bond will go up in price.
The annual debt is been running $1.2 trillion/year under Trump. I blame the Rats, but it is what it is.
That means $9.t trilion debt during an 8 year presidency. This crisis alone is adding $4-5 trillion in new debt.
We are talking some $15 trillion new debt in Trump’s 2 terms.
The debt is now pushing $25 trillion, so it will be pushing $40 trillion by the time Gavin Newsome or Kamilla Harris wins the presidency in 2024.
Really, no new debt?
How exactly will that work?
Will those coins be sold to some one? Who is going to buy a $1 Trillion Dollar coin?
This is a pie in the sky dreamer’s solution that has no chance of working as the people who propose it think it should.
The coins would sit in treasury vault and the money they generate would be the same as every other fictional dollar produced by the Federal Reserve.
Even if inflation is 3% it is still eating your lunch.
...
It’s better than 6% inflation.
It’s also better than an economy that stops growing and producing what we need.
A damaged economy is what causes harmful inflation as evidenced by countries like Venezuela, Zimbabwe, and Iran.
That is how it ends. The Russian roulette is, which generations take the hit. I used to expect I would be dead and gone by the time that happened, but the debt is soaring so fast, I am no longer sure. My only hope is, it is stunning how long the Fed Gov can keep the plates spinning in the air atop their sticks before the entire thing comes crashing down. I am constantly wrong how soon the day of reckoning comes. I was 2 years early calling the housing crash in 2008. By 2006, I thought “this is insane, this bubble can’t last any longer”.
2). Hyperinflation as we come to the point in this spiral, where we can’t even pay the interest on the debt without borrowing.
...
Hyperinflation is the result of too much debt and a damaged economy, not debt by itself.
Look at what happened to Venezuela and Zimbabwe.
Even the Weimar Republic hyperinflation was triggered by a widespread work stoppage.
Read the whole article.
https://www.cnn.com/2020/01/23/investing/switzerland-cash-negative-rates/index.html
Some of the commercial banks have passed on negative interest rates to their customers.
Counterexample of the real-world existence of negative interest rates, complete.
A damaged economy is what causes harmful inflation as evidenced by countries like Venezuela, Zimbabwe, and Iran.
If governments are selling bonds that produce negative yields, I would say we are already have a damaged economy.
Governments are printing money and bonds have negative yields, how is this possible? Where is all of the funny money going?
SOLUTION: Phased back to work beginning now.
You ignored my previous answer on negative yields:
It’s not guaranteed. Rates can go lower and the bond will go up in price.
1. Raise taxes.
2. Print money.
3. Default.
Wow, Our founders are spinninng in their graves yelling TARIFFS TARIFFS TARIFFS!!!!
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