Finally. I Have Said This Since 2005. Now it is the Front Page of the WSJ.
Will anyone listen?
Like a voice in the wilderness, I have been predicting that this day would come; the day when people began to figure out that through wanton spending by both parties—by almost all of our elected officials—we would face a time when people would begin to understand that there is no way to pay back the interest on our debt. I have been saying this for years.
I ran a campaign on this in 2006 and I lost. In 2011 I made a movie, Fixing America, that accurately foretold that if and when our country went above $20 trillion in public borrowing that there would be no going back. I started my campaign for president by telling you all it was happening— now. The first paragraph is below.
“Presidential Campaign Announcement February 1st 2023
I am running for President of the United States because we must directly confront our problems. My party, and this country, have avoided directly confronting our problems for many years, and the results have been disastrous. Our country has done the equivalent of using Band-Aids in place of major surgery. Somehow, we have “gotten by”. But because the public has borrowed over $20 trillion, the day of reckoning is upon us. My goal is to change the very nature of the debate.”
From the article:
“But the Treasury barely seized the opportunity to lock in rock-bottom rates by issuing more long-term notes and bonds. Now it is too late. The Congressional Budget Office regularly updates its long-term budget forecasts and says that U.S. debt held by the public will surpass gross domestic product this fiscal year and that interest on that debt will equal about three-quarters of discretionary, nondefense spending. By 2031, it will be as large. “
“Consider that around three-quarters of Treasuries must be rolled over within five years. Say you added just 1 percentage point to the average interest rate in the CBO’s forecast and kept every other number unchanged. That would result in an additional $3.5 trillion in federal debt by 2033. The government’s annual interest bill alone would then be about $2 trillion. For perspective, individual income taxes are set to bring in only $2.5 trillion this year.”
Read that last paragraph again. This article is literally years too late, but it is an accurate portrayal that our country is in real trouble. How long have our eyes been closed to this reality? How much longer will our electorate and the primary voters ignore the fact that none of the other candidates have any solutions to this problem?
In fact, many, if not most of those candidates, voted for the disastrous spending under the Trump Administration. At every stop on this campaign, I have spoken about our country’s inability to pay back its debt. The national news rarely speaks of this, rather they encourage the fighting among the parties, and between the parties, ignoring the biggest problem facing our country.
Let me sum it up for you one more time.
We have too much debt.
Nobody wants to buy that many 30-year treasuries. That's why they weren't issued. (At one point, when the federal reserve was buying Treasuries, they bought about 2/3 of the long-dated treasuries. They cannot do that again without reigniting inflation.)
The federal reserve can't go back to buying treasuries without creating even more inflation. They let the genie out of the bottle and it can't be put back in.
The interest on the debt is growing so much faster than the gross domestic product, so much faster than tax receipts, that it is crowding out other investments and at some point, nobody will want to buy them. In fact, in a perverse way, when rates move higher, even less will be willing to buy them.
The coming panic over this problem will come shortly and when it comes it will happen quickly and make 2008 look like small potatoes.
It would be one thing if our country had something to show for all of this debt. If we had wonderful public schools, tremendous higher education, all the roads were paved, a 700-ship navy, etc. But we don't. We have terrible schools, an aging infrastructure, a military that needs to be modernized and nearly nothing to show for all this crazy spending.
The people who will be hurt the worst will be the middle class of America and our younger generation who are already hurting badly.
Wake up America. You have been sold a bad bill of goods and the time of reckoning is here. stevelaffey.com
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