Several days ago the United States credit rating was downgraded for only the second time in history. The reason for this is fairly simple and straightforward: The financial position of the average American continues to degrade while at the same time, the Federal Debt grows at an astronomical rate. Recession – if we are not already in the midst of it – is believed to be right around the corner. The credit rating downgrade also makes it more costly for not only the government to borrow money but will negatively impact the average citizen as well. With interest rates already at extremely high levels, this additional pressure on the financial system means things will continue to get more expensive while wages remain stagnant at best.
We’ve witnessed what irresponsible printing of cash and inserting it into the economy does to inflation. For many years people have predicted that inflation will skyrocket and enter hyperinflationary levels when the National Debt reached levels of…..say……$8 trillion…….$12 trillion……$20 trillion…….even $25 trillion. The ability of the economy to remain fairly level and escape hyperinflation is more related to the complexity and strength of this country than to any remarkable actions taken by the Federal Reserve. The sheer size and aforementioned complexity of the United States economy have made it extremely strong. Regardless – it’s not indestructible and as we are seeing now it is bending. As we approach $33 trillion dollars by the end of 2023 projections do not look good.
See this chart below:
In just two short years we’re likely to be hitting $36 trillion and in four years nearly $40 trillion. I suspect that Federal Deficits will grow beyond the projections meaning we will reach these pinnacle levels sooner than expected.
The government and all our fearless “leaders” will continue to kick the can down the road to remain in power and push off the inevitable as long as possible. As the National Debt grows so does the interest on that debt. The government will need to continue to bring in more and more revenue(tax dollars and more loaned money) in order to make the payments. Think our taxes will be raised? It’s happened already and it will continue.
One major way that the government can stave off economic hardship is war. War will boost economic activity and often unites citizens. This has happened numerous times throughout history and when the economy struggles – suddenly a war is started.
See the writing on the wall?
Now is the time to get things squared away. More on that later.
Take care all!
Rourke
Unfortunately .. I think you are spot on. 🙁
John, you got it right. They have to destroy the system to rebuild it as a communist paridise.