The U.S. is gorging itself on debt. There will come a time of reckoning…
There is a way out, however…
ZeroHedge, Nov 7, 2017 – Excerpts:
The black swan in plain sight…..
That is, monumental towers of rapidly rising debt loom everywhere on the planet. For the moment, the artificial cash flow from this unsustainable borrowing spree is keeping a simulacrum of growth and prosperity alive. Yet this whole outbreak of debt madness—-represented by $225 trillion outstanding on a global basis—-is careening toward a financial and economic dead end that will soon crush today’s fiscally profligate politicians and heedless financial punters, alike, in a devastating reset of bond yields.
For our first case in point, the always excellent Wolf Richter published a great chart over the weekend on the exploding US public debt. To say the least, it constitutes a clanging wake-up call amidst the absolute fantasy world that prevails on both ends of the Acela Corridor. That’s because during the mere 8 weeks since the public debt ceiling was suspended … in September, the national debt has spiked by $640 billion.
That’s about $16 billion per Federal business day, and they are not done yet. The US Treasury will continue to borrow heavily until the current debt ceiling “suspension” expires on December 8—-at which time it will repair to the old game of divesting trusting funds and employing other gimmicks which circumvent the ceiling, while waiting for Congress to blink and raise the ceiling or authorize a new “temporary” suspension.
As Wolf pointed out, this pattern played out during the debt showdowns of 2013 and 2015, as well, when the resulting “temporary” suspension resulted in borrowing spikes of $464 billion and $650 billion, respectively.
Indeed, when viewed in cyclical context the latest spike screams out a severe warning. To wit, in the 12 months since the election shock of November 8, 2016, the net public debt— after giving effect to the fluctuations in the cash balance—-has risen by $870 billion to the current total of nearly $20.28 trillion.
And there is no respite in sight as far as the eye can see owing to the surging numbers of baby boomers retiring and their impact on social security payments and the medical entitlements.
Indeed, we estimate that in the next four years, the US alone will add $5 trillion to the Treasury float—even as the Fed disgorges upwards of $2 trillion of existing debt securities. At the same time, the other central banks—led by the ECB and the People’s Bank of China—will be forced to exit the bond buying business as well or experience economically devastating declines in their exchange rate against the dollar.
That means, in turn, that the safety valve of the bond supply being sequestered in foreign central banks will also disappear from the global fixed income markets, thereby adding to the yield crunch coming down the pike.
Needless to say, the entire world economy will reel under the impact of rising yields because current asset valuations and the cash management practices of business and households alike are predicated upon ultra- low yields.
The U.S. needs some fresh, new ‘outside the box’ thinking.
We need a plan that is powerful enough to generate robust federal and state government budget surpluses, eliminate vast proportions of household debt, reignite healthy, sustainable economic growth, and restore economic liberty for citizens.
There is only one plan with that kind of power.
The Leviticus 25 Plan 2018 – $75,000 per U.S. citizen