U.S. National Debt is Spiraling Out-of-Control
The U.S. national debt is quickly losing control. According to the Treasury Department’s official reports, on March 16 it reached $21.03 trillion dollars after skyrocketing $72.8 billion in only 24 hours.
This astronomical number is greater than the debts of every other country in the world combined – no other nation in history has ever accumulated this much debt.
This is an increase of $1.186 trillion since Congress suspended the debt ceiling back in September last year, when it was at $19.84 trillion. This amounts to a troubling 6% increase, which means the gross national debt now stands at 106.4% of GDP. And it doesn’t look like this debt accumulation will be slowing down anytime soon.
More Debt on the Way
The U.S. government is under pressure to close the gap. Earlier this month, the Department of Treasury announced plans to borrow nearly $1 trillion this fiscal year – an 84% increase from last year. And if that wasn’t enough, this number is expected to increase to $1.1 trillion the next fiscal year, and up to $1.3 trillion the following year.
A chart on Wolf Street that you can view here, shows the troubling trend that has resulted from the federal government’s borrowing. The U.S. Treasury is continuously raising the debt ceiling to meet the federal government’s borrowing needs with no apparent cap in sight.
The Largest Increase Since the Financial Crisis
Not since the last financial crisis have we witnessed a spike of this magnitude.
Another Wolf Street chart that you can view here shows how this is the largest increase in the gross national debt (over a period of 132 reporting days) since the financial crisis in 2011 when the economy was in a state of pandemonium with millions out of work and tax receipts collapsed.
However, this is in stark contrast to the situation we find ourselves in today. The current U.S. economy is booming, unemployment is low, and tax revenue is at record levels.
But despite these factors, the budget deficit is still growing by trillions of dollars. In fact, the national debt is expected to exceed $25 trillion by September 30, 2020. As a result, the government will have to borrow trillions of more dollars.
No One’s Coming to the Rescue
However, we can’t rely on them to keep us above water anymore.
With the Federal Reserve putting an end to its Quantitative Easing program, they will no longer be printing money to buy US debt.
And the Chinese and Japanese governments, who both own more than $1 trillion of U.S. debt, are looking less dependable. China said last month they’re not sure if they will continue to buy our debt, and Japan is dealing with their own tough times. In fact, according to official data from the U.S. Treasury Department, both countries have already been reducing their holdings of U.S. debt.
Interest Rates Will Have to Rise
With demand falling and the supply of debt rising, the U.S. government’s only option will be to raise interest rates to attract new lenders.
This is expected to put enormous pressure on the markets. Over the last few years, record low interest rates have inflated the prices of stocks, bonds, and real estate. So an increase in interest rates would see a plunge in major asset prices.
Stock prices will likely fall as companies will have to borrow and refinance at a higher rate. It could also seriously jeopardize people’s abilities to get mortgages for buying property at current prices, which could cause property prices to fall and the real estate market to suffer.
The federal government will have to pay more money on its loans too, meaning they’ll have to borrow more just to pay them back.
With this downward spiral, interest rates can only go one way: up.
With things hanging in the balance despite the economy being strong, any unforeseen crisis would be catastrophic. What would happen if a major bank went bankrupt, or some other financial contagion spread throughout the system?
The volatile nature of the stock, bonds, and real estate markets mean they’re at risk of losing billions overnight. The only sure way to protect your wealth in times like these is to hold an asset that has shown a lack of volatility such as precious metals. The stable nature of precious metals such as physical gold is a reassurance that your wealth will be protected in times of economic uncertainty.
Peter Reagan, NewsMaxFinance
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US Debt of $20 Trillion Visualized in Stacks of Physical Cash
US Debt 2017 – $20+ Trillion
If you look carefully you can see the Statue of Liberty. The Statue of Liberty no longer keeps her arm and torch up high and proud. Debt is slavery, and she knows it.
Each floor of each pillar is worth $10 Billion. There’s an American Football field hiding inside Statue of Liberty’s prison cell made of debt.
Funny fact: The first version of the US Debt illustration shown above was for $16 Trillion, back in 2012. Now with $20 Trillion, instead of completely boxing in the Statue of Liberty, where you would not be able to see her, we instead opted to extend out the her prison cell and make it larger, with more pillars of debt, while keeping the view.
China only owes 7% of US debt, while all foreign nations hold together 32.5%. 67.5% of debt is owned by US Citizens and American entities, this includes the Federal Reserve, which explained in simple terms buys US debt (government bonds) with newly “printed” Federal Reserve Notes (money). The Fed writes blank checks to itself from an unlimited checking account, then buys the debt through various financial mechanisms. New money is introduced into the financial system through this mechanism.
The debt will likely never be paid back and here is why: Unless there is a completely new paradigm in thinking, history shows that public (US) debt will very likely never be paid back. The politicians make grand promises during elections, then when they can’t find the cash to keep their promises they borrow money. Paying back means making difficult decisions and losing the seat in office. It is always easier to borrow from the nation’s children’s future. Instead of paying back these piles of money, the piles will be made worth less through inflation– money will most likely be printed . That means the holders of US debt will get back less than they were promised, arguably defaulting on the debt in terms of real purchasing power. Please share. Everyone needs to see this.
Source: Federal Reserve & www.USdebtclock.org – visit it to see the debt in real time and get a better grasp of this amazing number.
US Debt 2017 – $20+ Trillion
Statue of Liberty seems rather worried as United States national debt is soon to pass 20% of the entire world’s combined economy (GDP / Gross Domestic Product).
Here are some cool quotes from the founding fathers of United States of America, over 200 years ago saying the right things about the future and in a sense predicting today:
“I place economy among the first and most important virtues, and public debt as the greatest of dangers to be feared. To preserve our independence, we must not let our rulers load us with perpetual debt. If we run into such debts, we must be taxed in our meat and drink, in our necessities and in our comforts, in our labor and in our amusements.” – Thomas Jefferson
“If ever again our nation stumbles upon unfunded paper, it shall surely be like death to our body politic. This country will crash.” – George Washington
“I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.” — Thomas Jefferson
“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered.” — Thomas Jefferson
“A wise and frugal government… shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.” — Thomas Jefferson, First Inaugural Address, March 4, 1801
“All the perplexities, confusion and distress in America arise not from defects in the Constitution or Confederation, not from a want of honor or virtue so much as from downright ignorance of the nature of coin, credit and circulation.” – John Adams, at the Constitutional Convention (1787)
“If we can but prevent the government from wasting the labours of the people, under the pretence of taking care of them, they must become happy.” – Thomas Jefferson to Thomas Cooper, November 29, 1802
“It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world.” – Thomas Jefferson