President Biden has assured the nation that America is out of its dire economic situation. If he is to be believed, inflation and high gas prices are a thing of the past. But is there more to the narrative than meets the eye? Jeff Charles
Wake up, America. That ticking sound you’re hearing is the American debt time bomb that with each passing day is getting precariously close to detonating and crashing the US economy.
Uncle Sam has become hooked on red ink as if it were crack cocaine. Our national debt is $31 trillion when you include Social Security and Medicare unfunded liabilities driving us closer to $150% of our national gross domestic product of $22 trillion. Some $5 trillion has been added to the debt in the last three years.
Some experts are already predicting that the US will accumulate an additional $1 trillion in debt every year due to entitlement spending and new spending priorities that include health and environmental policy, aka the Inflation Reduction Act, and supporting the Ukraine in its war with Russia.
Next add in state and local government debt and unfunded liabilities which the American Legislative Exchange Council estimates at just under $6 trillion. Then there is consumer debt of $16.5 trillion according to the New York Federal Reserve. While most of the consumer debt is mortgages, debt is increasing thanks to Bidenomics as consumers are forced to use credit cards to put food on their table and gas in their cars. Credit card debt has skyrocketed by 16% to above $1 trillion just this year. Low-income Americans are taking on debt at the fastest pace of all.
And last, but not least, let’s not forget business debts which according to the Federal Reserve Board just surpassed $10 trillion.
When you add it all up, America’s debt load is $66,000,000,000,000, roughly three times our annual GDP. To create a visual: $66 trillion dollars is the equivalent of more than 256,849 trips around the earth at the equator. If you stacked $100 bills waist high on a standard wooden pallet, it would require more than 600,000 pallets to hold $66 trillion.
What makes this tsunami of debt all the more dangerous is that interest rates are rising (with at least one or two more Fed rate hikes coming), which will make the cost of turning over the debt even higher.
So far, these rate increases have not significantly reduced-price inflation
because rates still remain at historic lows. The Fed cannot afford to raise rates to anywhere near what they would be in a free market because it would cripple the government’s ability to manage its debt.
According to the Congressional Budget Office, interest on the national debt is already on track to consume 40% of the federal budget by 2052 and will surpass defense spending by 2029! A small interest rate increase can raise yearly federal debt interest rate payments by many billions of dollars, increasing the amount of the federal budget devoted solely to servicing the debt.
Wages, with only a 5% growth, are falling behind consumer price inflation of 7.5%, forcing families to borrow more just to maintain their current living standard. On average, families have lost $4,000 in purchasing power and some $30,000 in their 401(k) plans in the Biden era.
Debt isn’t necessarily a bad thing when we borrow for roads or factories or homes or to finance our military to win wars. But that isn’t what Uncle Sam is doing. The government is borrowing to pay people not to work, to finance windmills, to buy Teslas, to pay reparation to other nations, to increase financing for failing schools, ObamaCare subsides to Americans making up to $500,000 a year and to subsidize Ukraine.
At some point the party is over and it won’t be pretty. Financial implosion is just around the corner.
“The blame for [the national debt] lies with the Congress and the President, with Democrats and Republicans alike, most all of whom have been unwilling to make the hard choices or to explain to the American people that there is no such thing as a free lunch.” Warren Rudman
Source: America’s ticking time bomb: $66 trillion in debt that could crash the economy by Steven Moore, senior fellow at Heritage Foundation, New York Post; US national debt surpasses $31 trillion for the first time in history by Peter Kasperowicz, Fox News; The Mother of all Economic Crises by Ron Paul