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Although the U.S. is still dealing with a steep economic recession, there’s another threatening crisis looming on the horizon: our national debt. Most Americans are unaware of how the government debt is compromising their wealth, their economic stability, and their future. Our massive outstanding debt isn’t the “good” kind of debt resultant from spending related to economic growth or crisis management. Instead, it was created to fund a series of unrelated projects that do not actually stimulate production, therefore, it does not support solid economic growth. Even worse, it continues to rise without any prospects of repayment, and the largest share of our tax dollars are spent on such reckless mandatory spending. In addition to our staggering debt and our expanding annual budget deficits, at this point, every major trust fund is spiraling toward insolvency. Politicians and policymakers are aware of the consequences this will have on the economy and our lives, yet they have no plan, or real revenue, to fix the mess they have created.
We’re only four months into 2021, and the current administration already ran a record $1.7 trillion budget deficit. Last month, the national debt surpassed $28 trillion for the first time. But the problem goes much deeper than that. As the chief economist and global strategist Peter Schiff warned in a recent article, the US debt problem is even worse than advertised. According to the Financial State of the Union 2021 published by Truth in Accounting, when liabilities are included, the actual US debt stands at shocking $123.11 trillion. This means that if we were to pay off all of Uncle Sam’s liabilities, every taxpayer in the country would have to write a check for $796,000. Can you imagine having to pay for that?
In other words, if it were a private company, the US government would be bankrupt. Ironically, the Treasury Department only features $175.30 billion of Social Security and Medicare liabilities on the federal balance sheet. That is to say, politicians have been deliberately hiding the risks such liabilities will be passed on to future generations who will have to unconsciously assume the burden of the government debt before even being born. That’s just outrageous and utterly absurd.
In essence, we have become a consumption economy rather than a production economy. Over the past year, as shutdowns halted production across several industries, we have been mostly relying on strong international economies to produce what we consume. Consequently, we have been seeing prices dramatically surge. But Peter Schiff reminds us that the soaring prices are not the inflation. “They’re the consequence of the inflation. The inflation is created by the Fed as it inflates the money supply to buy up all the bonds the government is selling so the stimulus checks don’t bounce,” he explained. Right now, the question that remains is for how long will the rest of the world finance America’s standard of living?
“When the dollar crashes, that’s the end of this game. Because to the extent that we can only spend our dollars on the things that we produce ourselves, that’s where it hits the fan, because we’re not producing things. And then price increases are going to explode in a much more visible manner,” Schiff warned, maintaining that our leaders keep pretending this is a one-time thing, that it will be transitory, saying that price increases are happening because of supply shocks or shortages. But the economist exclaims that isn’t true. “It’s a surplus of money. That is the problem. And we’re creating even more,” he asserted. The new administration has assumed office less than six months ago, but alongside Congress, it’s already fleshing out a new trillion-dollar “infrastructure” spending plan, despite the fact it has just passed a $2 trillion fiscal package.
There will always be an excuse to borrow and spend more. At the moment, the health crisis is being used as the cue they needed to engage in reckless spending. If we were in good times, they would tell us it would be necessary to maintain such inflationary policies to “invest in our future”. The time of prioritizing real concerns about the budget deficits and paying down the national debt never comes. “It’s always “kick the can down the road”. That works fine – until you run out of road. That road is looking mighty short.,” Schiff says. Right now, the US government is overdosing on debt, and it must stop the borrowing and spending binges – or the U.S. house of cards will fall, with dangerous political, social and global implications.