Posted on 02/10/2021 4:07:31 PM PST by blam
I’ve said the U.S. is caught in a debt death trap. Monetary policy won’t get us out because the velocity of money, the rate at which money changes hands, is dropping.
Printing more money alone will not change that.
Fiscal policy won’t work either because of high debt ratios. At current debt-to-GDP ratios, each additional dollar spent yields less than a dollar of growth. But because it must be borrowed, it does add a dollar to the debt. Debt becomes an actual drag on growth.
The ratio gets higher, and the situation grows more desperate. The economy barely grows at all while the debt mounts. You basically become Japan.
The national debt is $27.8 trillion. A $27.8 trillion debt would not be an issue if we had a $50 trillion economy.
But we don’t have a $50 trillion economy. We have about a $21 trillion economy, which means our debt is bigger than our economy.
The debt-to-GDP ratio is about 130%. Before the pandemic, it was about 105% (the policy response to the pandemic caused the spike).
Already in the Danger Zone
But even a ratio of 105% is in the danger zone.
Economists Ken Rogoff and Carmen Reinhart carried out a long historical survey going back 800 years, looking at individual countries, or empires in some cases, that have gone broke or defaulted on their debt.
They put the danger zone at a debt-to-GDP ratio of 90%. Once it reaches 90%, debt becomes a drag on growth.
Meanwhile, we’re looking at deficits of $1 trillion or more, long after the pandemic subsides.
In basic terms, the United States is going broke. We’re heading for a sovereign debt crisis.
I don’t say that for effect. I’m not looking to scare people or to make a splash.
(snip)
(Excerpt) Read more at dailyreckoning.com ...
People tend to live for the now and gamble on the idea that they won’t be around to experience the consequences of what they supported. Illegals will vote for as much debt as they can, so they live well, because they will go home when it comes crashing down. Everybody else gambles that the bill won’t come due when they are alive.
It’s criminal what is being done and it was so avoidable.
“it was so avoidable”
At what point in time was there a majority of REPUBLICAN swamp critters who would have voted to balance the buget?
(Much less pay back debt).
A: Never.
We’ve never had a chance. It has been heading this way since the end of the gold standard.
Bkmk
Hmm...
Buy gold? America hasn’t BEEN on “the gold standard” since Nixon went to Chy-na... or slightly before, I don’t quite recall.
But banks, countries, George effing Soros ALL have YUGE stores of gold (Germany, among other countries, had the devil to pay to force the fed’s gold reserve bank in NYC to cough up the several dozen metric tonnes they’d been holding for them, playing “rob peter and pay paul” so paul will always side with YOU), but there’s no “gold standard.”
You can’t EAT gold.
If it’s value goes up to $5,000 an ounce, and you sell it, but hyperinflation catches up in a few days, you’re no better off than you were before.
Sell the market short. Starting with banks... small ones.
If by the end of the gold standard you are referring to the federal reserve act in 1913 you are correct. Thats where our problems start and if we don’t do something about it and demand a return to sound money (Gold and silver) it’s were the republic will end.
That one act in 1913effectively stole the power from the people and placed it in the hands of congress. If congress still had to apportion taxes this country would have a much different feel to it..
As a side note congress still does have to apportion taxes but the people of this once great nation have been hoodwinked into believing that everyone is now a slave and only congress can decide how much of our labor we are allowed to keep. Since no one reads the law anyway I wont go into detail here.
The Creature from Jekyll Island
(From the article):" Economists Ken Rogoff and Carmen Reinhart carried out a long historical survey going back 800 years,
looking at individual countries, or empires in some cases, that have gone broke or defaulted on their debt. They put the danger zone at a debt-to-GDP ratio of 90%.
Once it reaches 90%, debt becomes a drag on growth."(Emphasis mine)
Meanwhile, we’re looking at deficits of $1 trillion or more, long after the pandemic subsides."
My comment : We have an open border to our South, at the insistance of the Dims, and thousands of immigrants are streaming across the border each day,
and they aren't even being tested for covid-19, after traversing Mexico, which has higher number of covid victims than what we have.
So, what does that mean ?
It means we will never have covid under control until after the border is closed, or all immigrants are tested for the virus.
Our government and the scientists are leaving us vulnerable to an indeterminate covid quarantine, mandatory masks, or constant covid vaccines for ever changing virus mutations.
Remember way back when the scientists called for a two (2) week quarantine ? They keep changing the goal posts !
Cloward - Piven. Collapse the system by flooding it with every thing you can think of to overwhelm it and make the collapse happen sooner rather than later.
I read several months ago, that if Gold was priced correctly, it would be 11,000 bucks per oz.
Guess who would be the new prisoners mining that gold.
Thanks for the PING.
These dumb*sses in Congress are starting to view it like having a mortgage... You may only make 60 or 70 grand a year but you can buy a $300,000 house and mortgage it
They honestly believe they can have a 300 to 400% debt to income ratio
Well, we keep letting politicians buy votes with our great-grandchildren’s as-yet-unearned wages...what better result did we think was going to happen other than default on some future politician’s watch?
Freedoms cancelled + epidemic + Inflation? Need to stock up on toilet paper to trade for gold soon. ;)
for that analogy to be appropriate, the income would be tax revenue (~6 trillion) and the
house price would be our national debt ($29 trillion)
adjusting for the analogy...
a mortgage of ~$300k on an income of $60k would be barely sustainable.
the home owner would be expected to pay ~5% interest which yields roughly $17k/yr in payments.
for that to work, we’d have to reduce our spending by almost 30%... which never happens
the proper analogy is more like a credit card.
15% interest.
and more applied to the card in a year than paid off.
resulting in ever increasing debt.
That’s why Trump is going to bring in a quantum currency backed by gold, silver and maybe platinum.
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