‘The last administration alone — the last guy who served in this office for four years — increased the total national debt by 40% in just four years.’
– Joe Biden, remarks on the national debt ceiling in Valhalla, NY, 10 May
Fox News leads off:
‘The US national debt has increased by US$1 trillion in the five weeks since President Biden signed a bill into law that effectively turns off the debt ceiling until 2025.
‘On 3 June, however, Biden signed legislation reflecting negotiations with House Republicans that requires a small spending cut next year and allows unlimited federal borrowing until 2025. With no debt ceiling in effect, federal borrowing jumped more than US$350 billion in a single day and crossed the US$32 trillion mark in less than two weeks.’
Whee! It’s hi-ho…and off to the poorhouse we go!
A dereliction of duty
And who’s to blame? Donald Trump, who cut taxes and increased spending more than any president in history? Or Lyndon Johnson, who set the stage for the US’ rush to bankruptcy with his ‘guns and butter’ programs — a war in Vietnam and the Great Society at home.
Or was it Ronald Reagan? Or Barack Obama?
Or all those clowns in the House of Representatives who are supposed to be watching over our money?
They dropped the ball. The Constitution gave them the ‘power of the purse’. But they’ve been derelict in their duty to protect the finances of the US Government. And now, here’s the Committee for a Responsible Federal Budget:
‘…federal spending as a percentage of Gross Domestic Product (GDP) will grow to 29.1% over the next three decades. Driving a large part of that growth is spending on interest payments to service the national debt.
‘Net interest payments hit a nominal dollar record of US$475 billion in Fiscal Year (FY) 2022 and will nearly triple by FY 2033 to US$1.4 trillion, growing to US$2.7 trillion by 2043 and to US$5.4 trillion by 2053. As a share of the economy, net interest will rise from 1.9% of GDP in FY 2022 to hit a record 3.2% by 2030 and more than double to 6.7% by 2053.
‘By 2051, spending on interest will be the single largest line item in the federal budget, surpassing Social Security, Medicare, Medicaid, and all other mandatory and discretionary spending programs.’
Late, degenerate empire
Wait. Is this something to worry about?
Nah…it’s just business as usual. That is, it’s the business of a late, degenerate empire, squandering its most precious assets while desperately trying to ruin itself with the two sure-fire death-dealers — inflation and war.
And who complains? Who sounds the alarm? The media…hardly a word. Congress…where have they been; isn’t it their job to make sure this doesn’t happen? The public? The voters? The bankers? The Fed?
Nah…nobody really cares. Because everyone knows where this train is headed, and nobody wants to stop it. Instead, they want to get what they can, while they can. Buy Nvidia…beat Russia…stop China…and make sure we use the right pronouns…recycle our trash…and by all means, don’t doff our hats and hang our heads when Stonewall Jackson’s name is mentioned.
Rick Rule interviewed us yesterday. He asked an interesting question.
‘Could we be wrong?’, he wanted to know.
‘Maybe, despite all our worries and criticisms of the powers-that-be…and all the theoretical effects of debt, money printing, deficits, bad trade policies and dumb governments… despite the approaching bankruptcy of the US Government…and the decline and fall of the American empire…
‘…maybe it won’t happen.
‘Maybe people will invent new technologies…new industries…and new ways of doing things…And those new things will overpower the dead, destructive weight of the political class.’
Yes, of course people will invent new things. We’ll have new movies. New books. New apps. New gadgets. And some of them will be commercial successes. Some stocks will go up. Some people will make money. And won’t that be nice?
But there are forces of history…boom and bust…rise and fall…birth and death. These ‘megapolitical’ trends will be decorated and enlivened by people who invent things and try to reform the system, but the deep currents of history won’t stop.
There are always two opposite forces at work. One leads us forward — with win-win deals, aggregated in free markets, that lead to new wealth and civilised progress. But the other pulls us back to barbarism…with politics, violence, fraud — and win-lose deals that make us poorer.
If we’re right…the win-losers now have the upper hand. They are tightening their grip…on the press…on our thoughts and on our money…on trade…on just about everything. And while they haven’t totally let slip the dogs of war…they are clearly headed for the kennel.
Are we wrong about this? We hope so.
For The Daily Reckoning Australia