To call the current United States national debt a catastrophe is akin to calling the Mongol invasion of Europe a “mildly disturbing event.” Our current debt is a disaster, our ability to recover from it may well be gone. Oh, some will point out that at the end of World War 2, our debt as a percentage of GDP was just as high as now; but it’s important to remember that, in 1946, the United States was the only real economic and manufacturing superpower left on the planet. The big cities of Europe and Asia were in ruins; entire national economies were destroyed. As the recovery began, for some time, the United States was the only game in town, and that helped us recover. We can’t count on anything like that now.
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And now, on Tuesday morning, we learn that the U.S. debt has jumped by another $473 billion in just the last three weeks.
You can’t make this up:
Total US debt has jumped by $473 BILLION over the last 3 weeks alone, to a record $35.8 trillion.
This means the US has taken on $1,450 of debt for EVERY American over the last 3 weeks alone.
It also means that the US now holds a record $103,700 of debt… pic.twitter.com/0ocgYe56A5
— The Kobeissi Letter (@KobeissiLetter) October 21, 2024
It’s hard to see a way back from this disaster. This is six figures of debt for every American man, woman, child, and people of indeterminate gender. Everyone has a part in this. Everyone owns a piece of this debt. And the more the government soaks up debt, the more debt costs the business sector; this calamity affects the economy from top to bottom, and we just keep racking it up. The federal debt affects interest rates, affects stock market volatility, and has the potential to destabilize the entire financial system.
US deficit spending as a percentage of GDP remains at World War 2 levels.
2024 marks the first year with over $1 trillion in interest expense.
Unsustainable is an understatement, something must change.
Follow us @KobeissiLetter for real time analysis as this develops.
— The Kobeissi Letter (@KobeissiLetter) October 21, 2024
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There are three ways out of this mess. We can repudiate the debt, which would send the global economy into a tailspin. We can inflate our way out of it, but that would take a Weimar Republic/Zimbabwe level of inflation at this point to pay off the national debt with worthless dollars.
Oh, we could grow our way out of it. But that would require a federal government that is willing to implement pro-growth policies.
But none of these tactics will work unless we stop the runaway spending.
Rand Paul, in a recent Senate speech, noted that Congress spends “like drunken sailors,” noting that this fiscal year, the federal government will spend $6 trillion while taking in only $4 trillion.
Sen. Rand Paul on Federal Spending
A few weeks ago, @RandPaul spoke about Congress, stating, ‘Congress spends like drunken sailors.’
Congress is projected to spend over $6 trillion this year, leading to a $2 trillion deficit.
What are your thoughts on federal spending? pic.twitter.com/YkTYv4eJye
— Reef Insights (@ReefInsights) October 14, 2024
There’s a problem, Senator Rand, with your statement: Drunken sailors are spending their own money. Congress is spending our money, either confiscated from us by force of law or borrowed in our name.
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The bill always comes due.
See Related: Economists’ Top Election Issues Should Put Fear in the Hearts of Democrats
Deficit Nearly Doubles to $2 Trillion As Lawmakers Continue to Borrow and Spend Like Drunken Sailors
Part of this horrendous spending is cultural, as are the anti-growth policies pushed by so many politicians – like Kamala Harris. There is an old apocryphal saying often attributed to the Chinese philosopher Confucious that reads, “In a nation with a good government, poverty is shameful. In a nation with a bad government, wealth is shameful.” That sure seems to be where we find ourselves today.
Bear in mind that when I talk about cutting federal spending, I’m not talking about reductions in the rate of increase, or nibbling around the edges. When you have a serious wound, the first step is to stop the bleeding, and the United States is facing serious arterial hemorrhaging. I’m not hearing any political candidate, anywhere, discussing what must be done: Someone needs to come in and swing a meat axe, defunding and disbanding every federal agency not specifically authorized by the Constitution.
- EPA? Gone.
- Education? Gone.
- Energy? Gone.
- Americorps? Gone.
- Labor? Gone.
- Commerce? Gone.
- IRS? You’re damn right gone.
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Cut spending. This is what it will take. This, one way or another, sooner or later, is going to have to happen. We are on an unsustainable path, and it has to be resolved sooner or later, one way or another, and the longer we put it off, the harder the solutions will be.
It’s as I keep saying: We have mortgaged our grandchildren’s futures, and history will rightly condemn us for it.
