US Debt is unsustainable

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The American Reality Check thread is already too long. This seems like a good point for a clean break:

The United States is almost certainly on an unsustainable path with regard to the astronomic rise in its national debt, according to a million simulations run by Bloomberg.

Bloomberg reported Tuesday that it conducted a million simulations on the U.S. debt outlook and found 88% of them show borrowing is on an "unsustainable path."

The findings come after a forecast by the Congressional Budget Office that indicates the national debt will grow to an astonishing $54 trillion in the next decade, the result of an aging population and rising federal health care costs. Higher interest rates are also compounding the pain of higher debt.
...


It's not some surprising, groundbreaking news to folks around here, but it is a bit surprising to see this broadcast in the MSM. Are folks really surprised that gold is rising given the circumstances?
 
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The Fed/govco creature must have reached the point of no return. Any tells that the fancy toilet paper is coming home?
 
They might be setting up Trump to be the bag holder?
 
The gov just needs to force all 401k's and IRA's to be fully invested in government securities. Easy peasy!

As of December 31, 2022, a total of $37.8 trillion was held in U.S. retirement plans and accounts, of which $26.3 trillion was in employer-sponsored plans and $11.5 trillion was in IRAs.


Should be even higher now.


Edited to add: Everyone say it with me now, "Enron nation". lol
 
The gov just needs to force all 401k's and IRA's to be fully invested in government securities. Easy peasy!

As of December 31, 2022, a total of $37.8 trillion was held in U.S. retirement plans and accounts, of which $26.3 trillion was in employer-sponsored plans and $11.5 trillion was in IRAs.


Should be even higher now.


Edited to add: Everyone say it with me now, "Enron nation". lol

This isn't even a discussion, at some point they WILL raid these funds. Hell people in Australia think that the compulsory superannuation scheme was set up as a means to provide a source of funds post retirement independent of the pension. Little did they know that govco was setting up a future slush fund, to be picked clean at a date and time of its choosing; the legislation even hints at it.
 
govco was setting up a future slush fund, to be picked clean at a date and time of its choosing; the legislation even hints at it.
That's the only thing a government could do with the money.
 
They might be setting up Trump to be the bag holder?
They already tried that.

Remember how the celebutards were all babbling about how NO! EFFIN'! WAY!! would they EVER take the "Trump Vaccine." They were doing that because they were told, or signalled by handlers or operatives, to say that. They didn't know why; they're mostly too stupid to ask.

But it was all set for the Jab to be sprung just after the election, and the Big Cull to start immediately. Just ask Tiffany Dover.

But...with the unexpected success of the Big Steal, all of a sudden it WASN'T Trump's vaxx; and after a year of hourly Covid Body Counts, it's...what fatalities? WHAT heart attacks? Strokes? Climb Ate Change! Don't you know NUFFIN!

Yeah, Trump dodged that one. Had he been able to defend his factual victory, he'd have been indicted in DC for a million counts of homicide, now.

I'm supporting Trump, in the coming election. But I wonder, how he's going to protect himself THIS time...and why the hell is he even bothering.
 
... at some point they WILL raid these funds. ...

Trial balloons for this are what started this thread:

 
^^^ that wouldn't work, as the people it would affect are also the ones who would be required to enact it into law.
 
...
At its current trajectory, the rising national debt—and the increasing burden of making interest payments on it—will reduce Americans' future income growth by 12 percent over the next 30 years, the CBO projects in a new report. That means the average person will earn about $5,000 less annually than they would in a scenario where the debt was not growing.
...

 
One can quibble with the exact numbers, but the underlying thesis is likely true...
Why the US cannot afford a recession:

At the end of the day, a government is no different than a business. It has costs (expenditures) and it has revenue (tax receipts). Because of the bleak fiscal position of the United States, a recession will act as a margin call on the debt and deficit. The US government is way out over its skis and over-leveraged, and a recession will act as a margin call.

Here’s how:

During a recession, expenditures go up and revenues go down- the last thing you want when you are already running a historic deficit (during peacetime and full employment)

Current situation
Currently, tax receipts (revenue) stands at $4.4T and spending is $7.7T
Of this $7.7T in spending, Social Security and Medicare are $3.2T, defense is $900B and interest is $1T, leaving us with $5.1T that cannot be cut

Expenditures
During the Dotcom bubble of 2000, expenditures increased by 13%
During 2008, expenditures increased by 9%

This leaves us an average increase of 11% and would take our total expenditures up to $8.6T

Revenue (tax receipts)
During the Dotcom bubble, revenue fell by 24%
During 2008, revenue fell by 32%

This leaves us an average decrease of 28% and would take our total revenue down to $3.2T

Deficit
Currently, we are running a $1.7T pro-cyclical deficit, (during “good times”)

Using the numbers outlined above, our deficit would blow out to $5.4T.
Each and every year.

That is a 215% increase in the deficit

GDP and the Deficit
Remember, the government cannot create anything on its own- it must leech off the economic activity of the businesses and citizens within that country. This “income”, as I always put it, is the GDP. GDP is what allows the government to service its debt and to operate

Our GDP is currently $27T and with a deficit of $1.7T, is 7% of GDP (again, during peacetime and full employment- this is unprecedented)

In the GFC, GDP fell by 4% and during COVID, by 10%

Split the difference at 7%, and our GDP will fall to $25T

The deficit of $5.4T, as a share of GDP, would be 21%

This is full-blown emerging market, money printing bonanza, imminent insolvency sort of a number

Return on debt
The return on each dollar of debt decreases as the debt to GDP increases. If you can get a $1.50 return on each $1 of debt, that’s actually a great deal.

However, in Q1 of 2024, our debt increased by $785B and we got $300B of return (GDP)

That’s a $0.35 return on every $1.00 of debt
Put another way, we now need to spend $2.60 to get a $1.00 return

And the worst part, is this return keeps getting lower (Q4 was $0.40 per $1.00 of debt) and the trend would only accelerate massively during a recession, meaning more and more debt/money needs to be issued to sustain a given amount of economic activity

Assuming this 0.35 return rate (it would likely be even lower), the government would need to issue/print $5.8T, just to keep the GDP propped up at what it was (0% GDP growth rate).

Because expenditures are (and have been for decades) growing significantly faster than receipts, we cannot sustain anything other than positive GDP growth. In fact, GDP must grow faster than expenditures, just to get back to break even (as outlined in my pinned post)

What it means
In the situation I outline above, bond yields will likely go up, not down. The bond market understands that a "normal" recession (given current fiscal picture as outlined above) requires the US to print insane sums of money, just to break even and stay stagnant. The numbers I outlined above are all public, and the math is simple.

If some nerd in his pajamas, like me, can figure this out, best believe the smartest traders in the world (bond traders) can see all of this, too.

It's not a "normal" recession. These are not "normal" numbers.

Because yields would go up, this means that the interest expense of $1T (which is already 25% of receipts) would increase, rapidly. This makes the situation exponentially worse as each dollar of debt will 'cost' that much more. And not only are these vicious cycles (negative feedback loops), but they are exponential.

This is the doom loop. This is the sovereign debt crisis of any emerging market over the past 100 years.

This is why they cannot a recession. It is an existential threat to their very existence, and best believe they will act that way. If you thought 40% M2 growth during COVID was a lot, this would make that look like child's play.

Not only is significant inflation needed to just service the debt, but even more inflation will be needed to delever


The sovereign debt crisis is already here. The Fed and US government are completely trapped.


 
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The fed gov has exactly two choices. Default or Inflate.

We already know the answer >>>>>INFLATE<<<<<<

If you live long enough, you will see $5,000 gold and $100 silver and average little houses costing a million.
And your electric bill will be $1,000 per month.

And the thieves in DC will continue to rack up trillions in debt because 99% of them have their hands in the cookie jar.
 
It's not a "normal" recession. These are not "normal" numbers.
Those are not recession nunbers, but rather multi-generation Depression numbers. It took 20 years to get back to where were prior to the last one. This one will take triple that, at least.

The US will have become a shell of its former self well before the end of this decade, and I've believed that for a long time now.
....and most of the rest of the World is positioning itself accordingly.

Edited to add: the Deagle forecasts from a Decade ago might end up proving to have been off by maybe a year or two.
 
Another voice saying the same thing:
...
“What's going on today is that the problem is we have a fiscal policy that is absolutely unimaginably irresponsible,” he says. “We're running $2 trillion deficits at a time that we're not even in a recession. All this matters because the indebtedness and the risk have been kicked all the way up to the sovereign level. The punchline is that if you have a collapse of the economy, it's the sovereign level that must stomach it completely now."

And then he lays out the case bare: "We can walk through the numbers, but the bottom line is that the US government and the Treasury have entered a debt spiral. We now have $34.7 trillion of debt, which is over 120% of GDP. If you're a country with debt over 120% of GDP, your fiat currency fails. This is where we're at, and we're just spending and spending and spending.”

“What happens if you get into a recession? Your tax revenues drop precipitously, and your spending rises at a similar rate because of all your social programs like unemployment and wage security. You could wind up having a deficit that's not $2 trillion but could be $3, $4, $5, or even $6 trillion if it gets bad enough. Just imagine that. Suddenly, we are adding over 10% to our debt in a year, maybe 20% in a year. That is the debt spiral.”

He continues: “We can't do that because the rest of the world will turn around and look at our bonds and say, 'Why would I buy those bonds if they have to keep issuing new bonds to pay me for my bond?' We are in a situation where we have to continually issue more and more debt. This is rising exponentially, and there really is no way out. That's the problem.”

“Modern monetary theory proponents think it's just driving the economy; there's no big deal. However, when the music stops and people stop having confidence in the U.S. Treasury, that feeds into the US dollar. That's when you get into a problem. Why does that happen? It happens because of inflation. It all goes back to this central problem: this constant and relentless manipulation of the monetary system through central banks that create inflation.”

“That is a soft default on that debt every single day because the dollars you're getting paid back in the future are worth less than when you lent them out to the government initially. So, who wants to lend the U.S. Treasury dollars for 30 years when they know that inflation only has to go up to continue the charade?"

"They get into what's called a debt spiral. They can't get out of it. And this is where we are. So what is the option for the U.S. government if they continue to borrow? What does that mean? Well, that means that they must have inflation. There absolutely is no way around it. That inflation allows GDP to grow nominally. Remember that $28.5 trillion number? That has to go up. Nominally meaning just in terms of dollars, not inflation-adjusted.”
...

 
Another voice saying the same thing:

Yes. What you do not want right now is cash. Go and buy a CD for 5% and pay your taxes. Now you earned 3% net in an inflationary environment of 8% or 10%, so it is a net LOSS. You want safety. Precious metals, houses, farm land, even lumber or a huge pile of coal.

This modern monetary theory is pure bullshit, just like the CO2 climate scam and the vaccines and the fake elections and the open borders and battery cars and the war on drugs and Hamas and Ukraine and the LGBTQRST+++ and . . . . . . . . . .

Can you tell that I have had enough ?
 
Social Security and Medicare are $3.2T, defense is $900B and interest is $1T, leaving us with $5.1T that cannot be cut
It can and will be cut at some point. Russia and China spend a little over 100 billion annually on defense. The US spends 900 billion and doesn't even defend the borders. So we can easily cut 800 billion there. Social security is nothing but a special tax. The payouts can be eliminated at any time and the tax can remain in place. Supreme Court hs already ruled on this and no-one is owed anything from SS. Congress pays out every year via the general fund. Political suicide to touch these things but it can be done.

So , if I were in charge I could cut 4 trillion right off the start. Then cut 90% of the federal employees and eliminate all federal pensions and I can save a lot more. Take the saving of at least 4 trillion a year in expenditures and start paying down the debt with it for the next 10 years.

So a lot could be done but it would lead to a depression. It is what's needed to right the ship. Of course none of this will ever be done and 350 million Americans will just sit by and watch as 600 politicians destroy the currency and the American way of life.
 
Here's a little food for thought. 6 mins long. DYODD

Here's who will pay for America's $35T debt​

Jul 8, 2024 #biden #trump #nationaldebt

The US national debt has ballooned to $35 trillion, but how much of this burden will be eased by US taxpayers? Yahoo Finance Senior Columnist Rick Newman explains how the US can pay down its $35 trillion debt.


6:19
 
Ehh, bet ya they are wrong without even watching. It's the owners of that debt. Their purchasing power will be evaporating, quickly.
 
Here's a little food for thought. 6 mins long. DYODD

Here's who will pay for America's $35T debt​

Jul 8, 2024 #biden #trump #nationaldebt

The US national debt has ballooned to $35 trillion, but how much of this burden will be eased by US taxpayers? Yahoo Finance Senior Columnist Rick Newman explains how the US can pay down its $35 trillion debt.


6:19

Won't work.

Why?

He says, "just need politicians willing to tackle it."


They won't do that until it's obvious to a rock that what they have been doing, no longer works. At that point, it'll be too late.

The ONLY hope to fix it, is to cut gov spending by at least 1/3rd, (preferably by 1/2) while maintaining current tax rates in order to use that money to pay down the debt.
.....but until disaster strikes, there will be no political will to do that.

Problem is, once disaster strikes, there won't be that "extra" tax revenue to collect. It's only there to collect when the economy is still relatively ok.


All we really need to do, is revert to and then freeze spending levels for the next ten years, at a point equal to what they were in 2018.

After that ten years, we'll be back to only having $26trillion in debt.

2018 gov revenue was $800 billion less than it is today, while spending is $2.1 trillion higher today than it was then.

Ten years of saving $800 billion is $8 trillion that could be used to buy back some of our debt.
Edited to add: our idiots in charge won't do what I suggest either. I'm just trying to paint a picture in peoples minds as to just what it would take to even start paying down the debt.
What is currently going on will continue until such time it can no longer go on. At that point it becomes, look out below!
 
Maybe Biden can just forgive all the government debt like he does with student loans. Just tell all the bond holders sorry, we cant pay you anymore but we will give you 10 cents on the dollar for these old ones if you agree to start purchasing our new ones at the same rate you always have.
Whats the limit to the fed purchasing the treasuries? They were up to 9 trillion. Can they go to 20? 50? 100?
 
^^^ that's not how the student loan debt forgiveness worked.

The creditors are still getting the benjamins, only dif is that those benjamins are now coming from you instead of the students.


Edited to add: actually they are coming from the nations creditors, because we don't really have the benjamins ourselves to give to the students creditors.
 
^^^ that's not how the student loan debt forgiveness worked.

The creditors are still getting the benjamins, only dif is that those benjamins are now coming from you instead of the students.
Not from me. I'm not a taxpayer but I understand your point.
 
Not from me. I'm not a taxpayer but I understand your point.
If you buy something, you're paying taxes. The "corporate tax rate" - indirectly through their cash flow.

If you have dollars, as they debase the dollar, you're paying the Inflation Tax - as your dollars are worth less every day.

If you buy food, you're paying the Green Raw Deal tax - as they work to minimize, and then outlaw, farming.
 
Ehh, bet ya they are wrong without even watching. It's the owners of that debt. Their purchasing power will be evaporating, quickly.
The Elites have waged a War on Basic Economic Terms - "Inflation" is now PRICE INCREASES, not an inflating of the currency unit without underlying wealth.

So, these Crony Elites who know nothing of economics, have no fear.
 
Not from me. I'm not a taxpayer but I understand your point.
To be honest, that's the only real way to affect any change in DC.
Ie: starve 'em of funds to the point they are forced to reduce spending.
Good Americans find a way to not pay.
 
To be honest, that's the only real way to affect any change in DC.
Ie: starve 'em of funds to the point they are forced to reduce spending.
Good Americans find a way to not pay.
Already they're funding half the cost of operation, through shell-game money-printing.

At this point they could probably move to 3/4 or moar, and it would be years before the sheeple catch on.
 
If you buy something, you're paying taxes. The "corporate tax rate" - indirectly through their cash flow.

If you have dollars, as they debase the dollar, you're paying the Inflation Tax - as your dollars are worth less every day.

If you buy food, you're paying the Green Raw Deal tax - as they work to minimize, and then outlaw, farming.
First, sales tax is not fed.gov revenue.
Second, deficit spending is mostly just borrowing already existing dollars.
Third, that's why it needs to happen soon, before they outlaw farming.

Think, accelerationism. We need to speed things up by several notches.

Like in one of your locos. We need notch 8. Lol



Already they're funding half the cost of operation, through shell-game money-printing.

At this point they could probably move to 3/4 or moar, and it would be years before the sheeple catch on.
If you took away income and ss tax, the gov would be instantly fucked.
....but not enough people have the cajones to do that, due to the risk involved.

So crashing into the train ahead, it'll prolly be.
 
First, sales tax is not fed.gov revenue.
I didn't mention sales tax.

Who pays corporate taxes? Taxes on the INCOME of CORPORATIONS. Federal taxes.

Do corporations pay it? Is a corporation a sentient being?

...NO. It's an organization under a charter. The organization has to make up its cost of Corporate Tax, by CHARGING MOAR.
 
Second, deficit spending is mostly just borrowing already existing dollars.
No.

The Fuddrel Deserve, CREATES those dollars. Buys T-Bills, and then uses them as "assets" to "make loans" on, to member banks.

CREATING that money. Fractional Reserve Lending, completely perverted.
 
I didn't mention sales tax.

Who pays corporate taxes? Taxes on the INCOME of CORPORATIONS. Federal taxes.

Do corporations pay it? Is a corporation a sentient being?

...NO. It's an organization under a charter. The organization has to make up its cost of Corporate Tax, by CHARGING MOAR.
Ok, granted. People are in fact who pays corporate income taxes.
.....but the gov can't operate on that alone. The gov needs the people to also pay, as that's where the interest $ and SS money comes from.
 
No.

The Fuddrel Deserve, CREATES those dollars. Buys T-Bills, and then uses them as "assets" to "make loans" on, to member banks.

CREATING that money. Fractional Reserve Lending, completely perverted.
The federal reserve isn't buying gov debt now though.

They are the only ones who can create money to buy it. Everyone else uses already existing funds.
 
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