WASHINGTON, DC – In a recent interview on ‘60 Minutes,’ Federal Reserve Chairman Jerome Powell stated that our debt is unsustainable and reiterated that our debt is growing faster than Gross Domestic Product (GDP).
Having been a Registered Investment Advisor for over 30 plus years, I have seen many economic cycles which includes the 2000 Tech meltdown, as well as the 2008 near financial collapse, and have never experienced such a distorted fiscal situation that currently exists.
Something is seriously wrong in American as witnessed by over 60 percent of U.S. Citizens living paycheck to paycheck with consumer debt topping $12 trillion dollars.
Living on credit cards with sky high interest rates is a certain path to personal bankruptcy. Lie after lie is now being exposed. True inflation is not 3 percent as recently reported. In reality, it is north of 8 percent.
Dr. John Williams of Shadow States fully depicts the real figures using a more realistic pre-1980 calculation method. GDP is also phony due to exclusion of real consumer consumption data. Instead, it is pumped up with massive government spending/borrowing to stimulate the economy.
Every dollar in GDP growth costs taxpayers $1.69 in debt since most of this stimulus money is created out of thin air. We are destroying wealth at the fastest rate since 2008. The media keeps telling us that we are not in recession (quite yet) but in reality, are already there!
Our fiscal side (once a sound monetary system) is even more important than the military side of our economy. Ramped-up inflation costs the government more money to purchase arms to protect our country. In short, high inflation effects everyone caused by none other than MASSIVE MONEY CREATION.
The question is whether our elected representatives have the will to make the hard changes and to move towards a balanced budget. Unfortunately, mother’s milk of politics is money – now being devalued at a rapid rate.
How bad is the current debt problem and what are the consequences?
As Chaiman Powell stated the Federal Debt is rising to dangerous and unprecedented levels. We are now at $34 trillion-plus and within 70 days we will reach $35 trillion. The annual interest on our nation’s debt is now approaching $1 trillion. This amounts to $2 billion per day in interest!
Your individual share of the debt is now over $200,000. It is now reported that we have a revenue shortfall of $2.3 trillion per year and by 2030 we will be close to a $50 trillion deficit and over $1.5 trillion in interest.
Also note that the 7 percent increase in debt (just in 2023) exceeded our GDP growth of only 2.8 percent. The real risk to our Nation’s finances (and what may bring down the whole house of cards) is the fact that in 2024 some $10 trillion in debt must be rolled over to new buyers.
The bond vigilantes will ultimately demand that we pay higher interest rates to entice foreign and U.S. buyers to buy our debt. How long can we continue to “Mouse-Click” more money to service the new debt as well as the past debt coming due? It is critical that we enact immediate bi-partisan legislation that will put an end to the fiscal bloodletting!
Gary Timco is a frequent contributor to the County Compass.
