Even without changes to the current spending policy, the government’s spending is on an unsustainable path. By the time a child born in 2018 reaches retirement age, the United States national debt will be six times the size of the economy according to an analysis released this week.
Without making any changes to current policy (in other words, even without the glut of new entitlement spending proposed by some of Bernie Sanders’ acolytes) that’s the trajectory for the national debt over the rest of the 21st century, according to the Congressional Budget Office (CBO), as reported by Reason. It’s an outlook that the Committee for a Responsible Federal Budget (CRFB), in an analysis released this week, calls “frightening and almost certainly unsustainable.”
Under current law—which assumes, among other things, that last year’s tax cuts will expire in 2025 and not be extended—the national debt will double from 78 percent of gross domestic product (GDP) this year to 160 percent of GDP by 2050. It would hit 360 percent of GDP, and still be climbing, by the end of the CBO’s 75-year projection window in 2093. In the so-called “alternative fiscal scenario,” which assumes current policies (such those tax cuts) are kept in place, the debt would hit 225 percent of GDP by 2050 and more than 600 percent of GDP by 2093. -Reason
The CBO’s 75-year budget forecast (its longest of long-term projections) makes it clear that the current budgetary course must change dramatically. The United States simply cannot afford the size of government it has now, let alone the size of government demanded by socialists. The spending must be cut, there’s no other way around it.
Unsurprisingly, spending is still the main culprit of the coming fiscal catastrophe. Driven largely by the forced Ponzi scheme of Social Security and Medicare, total government spending under the “current law” scenario will double as a share of the economy in the next 75 years. It’ll go from about 21 percent of GDP today to more than 42 percent.
“While today’s high levels of debt already threaten to slow economic growth, there is literally no precedent for deficits and debt at the levels projected over the next 75 years,” warns the CRFB. “If policymakers don’t act to avoid such high levels of debt, a financial or inflation crisis would likely force action and severely damage the global economy in the process.”
In other words, as bad as the 75-year outlook appears, it’s actually revealing a bigger and much more immediate problem: spending way too much money.
Of course, all of this means the government is to blame for all of the financial destruction currently occurring. They’ll also be ones to usher in the global economic crash, but will people learn? Or will they constantly go down the road of large totalitarian and unsustainable government control over vast swaths of what should be free human beings?
It appears to this layman W/O any formal economics education that with the fiat money system we have the bust cycle is necessary to destroy money to keep inflation in check. The overall numbers are relatively meaningless as fiat money pays the interest on fiat money. Its a scam that works as long as the USD Reserve Currency status can be not only maintained but increased in volume (more globalization) so create demand for the USD in the future. Wars are fought to maintain it. It will likely collapse one day as those nations being scammed switch incrementally to another means of international exchange. Sooner or later the wars and overthrowing of nations will become intolerable. When the USD goes WWIII arrives.
Should proof read but you get the point.
“When the USD goes WWIII arrives.”
Maybe (hopefully?) not as debt is meaningless if you can print up the money to pay it. All that matters to people is that they keep getting the check. After all, we see plenty of people continuing to invest in debt that has a negative rate of return. So much for the Rational Man theory of economics.
But your point is well taken.
Stuart
The money has to have purchasing power. That is maintained by the USD being the world reserve currency. Nations. need UDS for international transactions especially oil, hence the “oil peg”. To paraphrase Vince Lombardi on its importance to the US, “Its not everything, its the only thing”. As nations “ditch the dollar” its value diminishes. Crashes destroy a lot of them so the inflationary effects of too many chasing too few goods is reduced. The “boom / bust” is created. Its economics by chaos.
Nations are not going to “ditch the dollar”. Like Vince said: “it’s the only thing”. There is nothing to replace it in the foreseeable future.
The concepts you speak of are true, they’re just a very low probability event in the medium-run – and in the long-run we’re all dead.
There are more important things to worry about IMO.
Stuart
As China rises it trades in its own currency. Its happening between China and Russia now. Its incremental and its occurring. How much of it is tolerable? I don’t know.
I don’t know either.. I suspect we will find out in due time but consider; China would need to inflate their currency about ten thousand times to create the amount of money needed to be the world’s reserve currency. It ain’t gonna happen. It would destroy China.
I’m gonna worry about other things. (and like everybody on this site, I can find lots to worry about!)
Although Social Security is labeled as an “Entitlement”, it is anything but. The problems began with two administrations treating Social Security account as having more money than it needed and leaving government IOU;s for the $2.7 trillion they “borrowed” from it. Pay that money back and the fund would be good for the next 40 years with no changes. Allowing it to fail only means the 2 thieving administrations (one being GWB) succesfully pulled off the biggest government sponsored heist in history, without being answerable criminally, to we the people…
I believe raiding it started with Johnson to pay for Vietnam.
LBJ was the second worst President only behind Wilson.
How many dollars did the Chinese & Russians use in trade before Globalism ??? What impact did it have on American GDP or currency value then ???
Eventually, with the marriage of block chain & quantum computers all money will be digitized. It won’t matter what currency you are using locally. And it won’t matter what percentage of a particular currency is “USED” most, globally.
Because the currency used most will be DIGITAL. What will be relevant is the value of your local currency, and or what currency your wages & salaries are paid in (if you are a global IT worker). The Indian Rupee is 75 to the dollar; the Ukrainian “dollar” 25 to 1.
If you have some cash and want to speculate long term, you may want to buy Indian Rupees and stuff them into a number ten can !!! I mean, how low can it get ??? 🙂
DK
How can the US finance its deficits in a “marriage of block chain & quantum computers all money will be digitized”? If the US cannot dilute its supply of money into the world and facilitate a false demand for its dollars what would the US look like with a balanced budget?
” …. what would the US look like with a balanced budget?”
Wealthy beyond belief as Nature’s God intended America to be where regular men & woman worship HIM, care for one another as HE cares for US through our churches, spreads the Gospel of Jesus Christ to other nations and leads by an example of prosperity, christian charity, and personal freedom, coupled with self reliance, self discipline and personal responsibility.
In America the Creator designed a political system and society that required personal choice as we exercised our free will and it rewarded personal excellence. God designed America to be an environment where INDIVIDUALS SOULS could magnify the gifts, attributes, characteristics and aptitudes given to each soul through personal choice and application of those qualities physical, mental, and spiritual with which we are embedded.
The US would have a balanced budget if the NWO had not been spending $500 billion on ILLEGALS (it would be much cheaper to help them where they live) $400 billion subsidizing Communist China (atheist), $160 billion subsidizing the EU (a perverted, Satanic entity), Mexico with $125 Billion a year (a perverted society exploiting the poor, run by the Catholic Church which is itself the Synagog of Satan) and Canada $25 Billion.
With respect to your first question, the system itself doesn’t change with digital money and blockchain technology. Only the mechanism and access to it. The digital system will be overlaid on top of the current system and current functions integrated into it.
I don’t have all of the answers to our future economic system, or how it may come about (yes “collapse” could be the trigger).
I just know where the trends are converging. 🙂
“By the time a child born in 2018 reaches retirement age, the United States national debt will be six times the size of the economy according to an analysis released this week.
In 65 years, WHO CARES ??? Retirement age will be 100 years of age by then.If civilization as we know it still exists.
The Changes that are coming will make the Nat’l Debt insignificant. And NO ONE has a fucking clue as to what American GDP will or will not be in 65 years; particularly with an accelerated pace of technological change.
So are we to put our faith in GOLD ???
LMFAO !!! By then, entire asteroids of gold and platinum in the asteroid belt will be dragged into near earth orbit like icebergs from Antarctica, and mined by data like androids. Forward thinking industrialists are already making such plans.
There is soooo much precious metal in these asteroids at current prices that precious metals could be as common as copper is today. Just one asteroid, identified and analysed, contains $14 TRILLION dollars worth of platinum at current prices.
Keep packing & stacking. That’s what really matters. And vote. The election of 2016 evidences the importance of our participation. Red Tsunami in November !!! 🙂
At some point, we will repeat history from a currency value perspective.
Look up the historical phrase “Ain’t worth a Continental.”
(it has nothing to do with those fine Lincoln-Ford cars :-))
I think the people who have been earnestly warning us for the last generation about our foolishness have been right, but many of them have had some ulterior motive (usually something to sell.)
Combine that with our Normalcy Bias, we became tired of the ‘Sky is Falling’ warnings and callous to there important truths.
We (USA) won’t make it anywhere close to the 75 year projection without a reset…but when?
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Ah yes, the old bias of projecting current conditions decades into the future. Here’s the thing… it NEVER works like that. Things change.
Another worthless fear porn article but hey, at least there is a cool video of how to properly flush out my bowels by boiling bananas. Thank god for that.
I don’t necessary believe that it’s patriotic, to audit this debt, without decoupling it from natural and social resources.
Odious debts are repudiated.
I’m 51 and not so worried about my generation, but it’s my kids and future grandkids that will bare the sins of the father. There will come a day when the freebies will end. You watch the news and think people are mean, rude and nasty now, you ain’t seen nothing yet. The debt getting to 6 times the GDP is hogwash. There’s no way it will make it that high, the economy will crash before it gets there.
In the eighties, the current 21 trillion dollar debt was unforeseeable. A trillion dollars was (and still is) a number we can’t get our minds around, it’s so large…a forty mile high stack of 100 dollar bills, I believe Rand Paul said.
Since fiat uncoupled from precious there are no longer any limits on creation of credit. All banks create money backed by nothing at the point of the loan with usury attached. Compound usury is an exponential function. The debt must continue to grow to pay for the compound usury. No payment of usury means the banks collapse and take the world along with them. Growth = debt expansion…one and the same.
The hockey stick of M2 money supply is in a vertical climb to repay debt.
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“Banking was conceived in iniquity and born in sin. Bankers own the earth. Take it away from them but leave them the power to create money and with the flick of a pen, they will create enough money to buy it back again.”
“Take this great power away from them and all the great fortunes like mine will disappear and they ought to disappear, for then this would be a better and happier world to live in.”
“But, if you want to continue to be a slave of the bankers and pay the cost of your own slavery, then let the bankers continue to create money and credit.”
Josiah Stamp, the director of the Bank of England (the first central bank circa 1640) in 1928.
JRS:
Excellent post and all so very true.
What can we, the little people do about it?
My feeling is that we just disconnect, and create our own systems of exchange by producing, even on a small scale, as much of what we use as we possibly can. What this means is learning the skills our ancestors knew. If you BUY a pair of wool socks from Walmart, or any store, it is not that big of a deal. Or, is it?
Raise sheep. Shear the sheep. Turn the wool into yarn. Knit the socks. Wear the socks.
This is how you eliminate the banker, bit by bit. You only need so many socks. The rest are for barter. Someone else might make apple pie.
_
Hello B from CA
I used to think that becoming self sufficient would work. I have come to the conclusion that the equipment and animals to do that an a longer time scale no longer exist.
I think a Mad Max situation is in the future. You may prep enough to survive a couple years but without the supply chains in place, you will always find a gap in your preps somewhere. It’s impossible to think of everything you would need for an 1800’s existence. It will be root hawg or die.
I am pretty self sufficient but should this type of scenario unfold, I have little hope of long term survival.
Not trying to harsh your buzz, but I have a much gloomier vision than most on here. I would say to enjoy the luxuries and advantages of industrial civilization while you still can. Maybe the collapse can be postponed by some miracle. Who knows…it seems way overdue, so us older ones may get lucky and not see it.
cheers
I think of it like this.
1 billion = 1000 millions
10 billion = 10,000 millions
100 billion = 100,000 millions
1 TRILLION = 1 MILLION MILLIONS
That is a lot of money
You’d think a little bit of it would flow my way. After all, they ain’t gonna miss it.
Which raises an interesting question: Why prosecute forgery any more?
Traditionally forgery was bad because money was gold & silver or paper currency backed by those metals. Now money is all slugs and currency is green paper. If the government is printing massive amounts of paper to stimulate the economy, why can’t I help out?
Methinks the answer might be that everyone would catch on to the “stimulus” scam pretty fast and that would be all she wrote.
Money is what you spend on vacation at Disneyland or piss away at a casino somewhere. One Trillion Dollars is Investment Capital, begging to be put to work. 🙂
“In the eighties, the current 21 trillion dollar debt was unforeseeable.”
That’s because the NWO spearheaded by GHW Bush did not take power until 1988. Since then the NWO has rung up an inconceivable amount of public debt by funding their Agenda for US, year after year:
ILLEGALS cost the US Taxpayer $500 billion every year; China $400 billion; EU $160 Billion; Mexico $125 Billion, Canada $25 Billion, and that does not include tens of billions of dollars in direct foreign and military aid.
TRUMP is moving aggressively to roll back & eliminate these financial burdens upon Americans. We know it. That’s why lines for his political rallies are bigger than Star Wars. 🙂
What will cause a collapse is not the unbridled creation of credit, but when it costs more to bring to bring a barrel of oil to market than that barrel contains. Then the world economy collapses.
The world economy runs on oil. Credit creation pulls forward energy surplus. When the surplus vanishes so does usury repayment and growth/debt.
I should say “…when it takes more energy to bring a barrel of oil to market than that barrel contains.”
Two whom is the debt owed? A family who has wiggled its way into being the printer of money?
“The United States simply cannot afford the size of government it has now, let alone the size of government demanded by socialists.”
As long as we have Democrats that is not going to change.
Maybe some 4GW types will take down power grids in large metropolitan areas and solve America’s problem.
“Maybe some 4GW types will take down power grids in large metropolitan areas and solve America’s problem.”
That, my friend, causes me more sleeplessness than the stock market or national debt. I keep thinking back to that incident in California several years ago where the communications cables were purposely cut and the power substation transformers were shot. You cannot make me believe that was anything other than a test of our vulnerability. Those people are still around.
I remember the days of grocery store credit,no banks or credit cards needed just old fashioned honesty no interest or legs broken you paid every week,
Thanks to the $2.7 trillion dollars borrowed (heisted) from the Social Security fund by two inept administrations, one GWB, Social Security is now an “Entitlement”. Where were the budget watchdogs when the biggest heist in the history of man took place??? Washington sickens me!!!
Don’t let the LSM foist a euphemism upon you by stating that SS is an “entitlement”. It is a annuity retirement plan bought and paid for and monthly payments represent Return on Investment and Return of Investment.
That’s MY fucking money and I will get it back if I have to live until I am 150 !!! 🙂
A very simple incident, like World-wide recognition of American government involvement in 9-11, is going to make borrowing money slightly more difficult.
The US has been bankrupt – borrowing money to pay the interest on the debt – since sometime early in the Bush43 administration.
There was a tax revenue bump that occurred during the late 90’s, in conjunction with Dotcom Bubble #1, where revenues temporarily exceeded outgoes.
https://www.youtube.com/watch?v=JxjinjBv4l4&t=8s