My high school senior year (class of 1989) history teacher asked us what we thought was the single largest problem facing the United States.
We wrote our answers and anonymously submitted them. Our teacher ran the numbers and then ran down the list from most to least mentioned.
I said the federal government’s debt. I was the only one who did so. The teacher rolled his eyes when he read mine aloud, as if it was the dumbest of all possible submissions.
I said the debt not just because I think debt of any kind is bad. I said it because everyone in Washington, DC was pretending the deficit spending adding to the debt wasn’t a problem. And because no one in the United States was holding DC accountable for this titanic idiocy.
Almost 40 years later? NOTHING has changed.
Well, except for the problem is now orders-of-magnitude worse. This is exactly what happens when you ignore a problem; it gets worse.
In 1989, the federal budget deficit was $153 billion. The total debt was $2.86 trillion.
In 2024, the national government’s budget deficit was $1.8 trillion – The total debt ballooned to $35 trillion.
Last year, interest payments on the U.S. national debt reached 3 percent of GDP. Frighteningly, that’s only skyrocketing upwards going forward.
Most alarming, the United Sates faces $210 trillion in future unfunded liabilities (Social Security and Medicare predominant amongst them).
Suffice to say, the United States is broke. And most Americans seem to not care.
Meanwhile, the idiots in DC have shut down the government. The Republicans want to continue spending at currently ridiculous levels. The Democrats want to spend even more than that.
How outrageous are current spending levels? The imbeciles in DC haven’t even passed a budget since 1996. They have spent the past three decades spending via continuing resolutions (CR).
Every “temporary” bump in spending becomes permanent.
President Obama’s 2009’s $831 billion “stimulus” has been become de facto permanent because DC has never subsequently un-budgeted it by passing an actual budget.
The same is true of the $4.6 trillion DC spent on pandemic emergency “responses.”
There are likely tens of thousands of other “temporary” expenditures since DC last passed a budget. Practically every one of them has been built into every subsequent CR.
In 2024, the U.S. Gross Domestic Product (GDP) was $29.2 trillion. This means the current debt-to-GDP ratio is hovering around 123 percent. However, DC continues to spend at record deficit levels.
Although Americans may not be paying attention, the rest of the world certainly is. The U.S. Treasury holds bond auctions to sell (monetize) U.S. debt. The government sells interest-paying bonds and uses that money to fund its deficits and debt. This cannot go on forever. In fact, the government is having a harder and harder time selling bonds as deficits and debt pile up.
Treasury Auctions Are Becoming Hard Sales:
“Given the poor state of the American fiscal situation, auctions will likely remain large for the foreseeable future. The risk that markets will push back is rising. No amount of fast talk from politicians will hide the fact that we may be selling a lot of bull.”
Who Buys the Debt? The Vanishing Bid for US Treasuries in a Fractured World:
“Solvency concerns are also mounting as the US continues to run persistent and protracted deficits of $2 trillion annually.
“This staggering amount of red ink is occurring during times of relative peace and economic prosperity, raising important questions about what might happen during a recession or war.
“While some Pollyannas argue that the Federal Reserve could always intervene and replace free market demand for Treasuries, the reality is that inflation has now become a significant and potentially insurmountable obstacle.”
When the market for U.S. bonds dries up, the Federal Reserve creates new money out of thin air to buy them. This creates inflation as more dollars devalue existing dollars. We already have a massive inflation problem. Incredibly, the US dollar is down in value 87 percent since President Nixon abandoned the gold standard in 1971.
The worse U.S. bond auctions go, the more the Fed will print, which will make bond auctions even worse. At this point, the only thing still propping up the US dollar is because it remains the world’s “reserve” currency:
“A reserve currency, primarily held by central banks worldwide, is used to facilitate international trade and stabilize economies….Since 1944, the U.S. dollar has been the primary reserve currency used by other countries.” But this is a real-time reenactment of The Emperor’s New Clothes. The US dollar is naked. As long as everyone pretends it’s not naked – our dance on the head of a pin continues. But the dance may soon be ending….
US Dollar vs. BRICS in Reserve Currency Showdown:
“The BRICS nations – which include Brazil, Russia, India, China, and South Africa – are cooperating to push the king of currencies off its throne….
“Last year, Ethiopia, Egypt, Iran, and the United Arab Emirates joined BRICS, and Saudi Arabia – the world’s second-largest oil producer – has been invited to join.
“With at least 40 other countries lining up to join, BRICS is consolidating its global power and influence.
“‘This,’ says Business Insider, ‘should be a key cause of concern for the US, as new members along with countries who want to join could amplify de-dollarization.’”
The government is in a dilemma. Should it massively cut spending, tighten the money supply, and get back on much stronger financial footing? Heavens no….
Except BRICS+ isn’t undermining the US dollar. They are simply reacting to the U.S. government undermining the dollar. While Trump and the rest of DC continue to emit shrill, high-pitched sounds as they shuffle past the cemetery. And where are the American people during all of this? Sleepwalking, as they have been for so many decades.
