The U.S. Deficit Is Beyond Control: Markets Don’t Like Long-Term Government Insolvency

by | Feb 14, 2018 | Headline News | 34 comments

Do you LOVE America?



    Economist John Williams sat down with USA Watchdog‘s Greg Hunter to discuss the dire state of the dollar and United States economy.  The monetary path the US is on is out of control, and the unwillingness of government officials to reduce the deficit and stop spending money will cause major problems in the very near future.

    Years of socialist policies and reckless spending will eventually end in a complete collapse. Williams is not the only economist to sound the alarm either. As the tax cuts are always positive (people keeping more of their money is always good for the economy) the unwillingness to decrease the size and scope of the government with an expanded deficit will be the downfall of a once great nation.

    The interview with Williams begins with him declaring the drop in the stock market to be the fault of the federal reserve. “Did the Fed trigger this most recent round of selling?” asks Hunter.

    “It looks like it. If you recall, the story was, bond yields are rising. Rising bond yields means someone’s selling bonds. The Fed wasn’t actually selling bonds, they just were not rolling over the bonds that they normally would…I think you’re gonna see the dollar selling off very rapidly and gold rallying as a flight to safe haven.”

    Then the discussion of the tax cuts comes up, as Hunter asks Williams to deliver his take on the lower taxes.

    The tax cuts are generally positive. Anytime you cut taxes that is generally a plus for the economy. The problem is the average guy is still not making ends meet. Anything that increases the disposable income is a plus. This does not necessarily go to the guys at the lower end of the income scale, at the moment, but generally there should be a little economic pick up here from it. The problem is what happens to the budget deficit. We just went through a round of the government shutdown and a package that supposedly lays things out for the next two years, but it widens the deficit. The deficit is beyond control…We have $100 trillion in unfunded liabilities. That means you need $100 trillion in hand right now to cover the federal obligations going forward. . . . Printing money to meet obligations is what happened in the Weimar Republic in Germany. This happened in Zimbabwe. This kind of thing eventually gives you a hyperinflation. . . . Ongoing budget deficit and debasing of the dollar will give you global selling pressures in the currency markets. . . . We haven’t seen much selling in the dollar, but that is going to change. You are going to see flight from the dollar and flight from the markets as well.”

    Hunter then said that the government must make massive and deep cuts to salvage the economy, but no one in Washington wants to make the difficult decision.

    “It’s the long-term insolvency of the US government that the markets don’t like.”

    Then Hunter asked if Williams thinks there’s a “pretty severe hit” to the economy coming because of the expanding deficit, which will expand the national debt by $10 trillion. Because there are no plans to cut the deficit, Williams simply responds, “right.”




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      1. there’s no way to know how LONG a pyramid scheme can continue, but we DO know it WON’T……SOMEDAY…..i saw somebody say just yesterday that all his life people been sayin’ there’s bad stuff about to happen…..well, our DEBT says we are NEAR the end……just wish to hell i had my crystal ball back.

        • It took between 880 and 1000-years for Rome to fall. I wouldn’t hold your breath for the long preyed full-on systemic collapse of the American Empire, or a return to sanity and sound economic practices any time soon.

          This thing will go on until can’t and then it will stop. That is all.

          • The advantage to massive debt, is that it can all be manipulated. Sure $21 Trillion in debt, but there is no real inflation. They can just print more money to pay for it all, including manipulating the stock market. They set the price of Gold and Silver, and back it all up with a lying scumbag MSM Media propaganda campaign and the worlds largest Army. Sure as kids we were taught to live within our means, but if you can’t do that, then just file bankruptcy as an escape hatch and reset button to then do it all over again. There is no discipline or accountability at all. Its the truth, so what ever.

            I remember back in 1979 at 18 years old, driving to work in the AM in my gas guzzling Hot Rod. There was suppose to be this great energy crisis going on. Another guy in a little square shit box of a car, day after day yelled at me for my jack rabbit starts as if the world was about to run out of energy, and there were long lines at the pump. It was all a sham. I laughed at him every day in his shit box car, and kept on burning rubber at the stop light. Nothing has changed today, there is still plenty of energy, and there is no Debt crisis. Just my take.

            • “there is no real inflation”

              Really? Printing money IS inflation, by definition. TharYouBlow (smoke out your azz)

              • Ranger – dead on right. Printed money is supposed to only represent real worth. A dollar’s worth of something at the time it is printed. I don’t care if it is gold, silver, platinum or like some ancient Middle-American culture once did – big ass round rocks. Something tangible. Today’s money printing you’re correct IS inflation as it is backed by nothing more than an idea. And an idea is not a fact. Just a thought. Faith in some equally intangible concept ranging from things to come to some emotional appeal. Rather like porn in a way. All something to look at; but, try and touch her, LOL. Just a figment of your imagination and senses lying to you. Nothing real will happen without manipulation by something other than her!!! The above self-flagellating belief in manipulation and willingness to enter into financial mechanisms without being willing to pay a price is the same thing. Bankruptcy? To file against a principle amount or thing taken (and kept) is no different than a theft. Is it not?

                • well well well….we got TWO smart americans in the same thread!….the dumb masses will find out soon how their trust in gubmint was misplaced.

              • “Printing money IS inflation”

                Only when in excess of increased real production of goods it would be used to purchase.

                Same would be true of mining gold if we still used gold,

                More gold with the same amount of goods would be inflationary the same way more dollars with the same amount of goods is.

            • Do you buy food or other packaged products? They are either going up in price or packages are shrinking as the price remains constant. Both are forms of inflation. The government manipulates its inflation, employment, and GDP numbers to make itself look good. Sure, inflation is non-existent if you do not buy groceries, pay medical bills, pay for college indoctrination, etc. then everything is fine.

              • check a gallon can of paint now-it’s not a gallon…about 9/10ths of one. That’s inflation TSB.

              • In 1973, I was buying “Skybar” candy bars out of the vending machine for ten cents. (Cigarettes were 40c per pack.) The “Skybar” had five separate compartments, each holding a different flavor of viscous goo…. caramel, vanilla, peanut, fudge, and one more which I can’t remember.

                Today, that 5th section is long gone, and only the four bits named above remain. Amazon currently sells a box of 24 “Skybars” for $22.59 — that’s 94c each, and works out to $10.08 per pound.

                This means that in 35 years, this product has increased in cost 9.4X (940%). I believe starting pay in a typical shop, warehouse, or factory in 1973 was somewhere around $3.50 per hour. That may be a little bit off, but it was right around there.

                For wages to have kept pace with the “Skybar”, starting wages would now have to be $32.90 per hour. If you can even find an entry-level job any place, wages are about a third of that… maybe a little less.

                The cigs have gone from 40c to around $7 — an increase of 1,750%. To keep pace, starting wages would have to be $61.25. Good luck finding that!

                Price inflation, along with a substantial tax burden (which is often hidden — such as the taxes buried in the price of gasoline) explains why average Americans are falling further behind, and will never be able to catch up.

                When I was a kid, a typical dad had a job; mom raised the kids; and a modest but comfortable middle-class lifestyle was possible. Now, both parents work, often with overtime on weekends or a side job for extra money; and yet they can barely break even. Many keep falling further and further into debt.

                I cannot comprehend why so many folks who post on this site keep hollering “Bring on the re-set!” Anyone who feels that they somehow will manage to avoid the consequences of a severely broken economy would do well to carefully examine the fate of middle-class folks who lived in Germany in 1921… or the ones who were fairly well off in Venezuela ten years ago. Almost all of these people ended up in rags, starving and penniless.

                Personally, I am very fearful of all major asset classes tanking. How is anyone going to survive if their life savings melt away to nothing?

                If somebody has a magic answer as to how they will be able to keep going as money continues to hemorrhage purchasing power — which seems to be taking place at a faster and faster rate — and especially if/when programs like Social Security and Medicare are forced to drastically shrink benefits — I would be absolutely thrilled to hear about it.

                Keep in mind that whatever solution you come up with might have to sustain you for the rest of your life — decades, maybe — even when you become too old and/or too infirm to work.

                Any brilliant solutions out there?

                • Your money will never again be as valuable as it is now. Buy whatever you can to sustain you for the rest of your life, the duration of which will be determined by how much food and medical supplies you store up while your money still has value. Just ask the Venezuelans. I have 12 years’ worth of food stored in my basement because very soon food in stores will either be too expensive, or non-existent.

        • buttcrack

          I so agree. I started prepping because of the debt. Would have thought it would have crashed years ago. I know we would have if they did not kick the can down the road in 2000. Nice talking to you and I miss Eppe.

      2. “Markets Don’t Like Long-Term Government Insolvency.”

        Could have fooled me.

        The free market economy has been dead since the Crash of ’08 – ’09.

        The market we have had for the past 10-years has been fully-rigged, fully-manipulated and fully-controlled, where there are no consequences, just an open defiance in the face of classical economic theory by everybody — the FED, the Treasury, both professional political parties, and every administration since Ronald Reagan.

        And all that free money. What’s not to like? What could possibly go wrong?

        • Trumps tax cut was not to help the American people.

          Don’t get me wrong, I am all for tax cuts and am pleased to get them. Especially not having to pay the Obamacare penalty.

          But the real motive for the tax cuts was to attempt to stave off economic collapse just a little bit longer.

          The corporate rate was cut from 35% down to 20%. Clearly a push to keep collapse from happening quickly.

          When it falls, it will fall hard.

          • So the markets don’t like long-term government insolvency? GMAFB! We’ve supposedly been insolvent ever since GWB and the money he’s wasted on those stupid wars in Iraq and Afghanistan. He was hurting the economy before Obamanation came along and then that f#$%er only made things much worse. I don’t see any improvement yet, not with retail going belly-up everywhere.

      3. Who cares about the market. If you ain’t in it no problems!!!

        • Market volatility is a good thing for at home investors like me.

          When there are 5 to 10% swings in any given stock with high volume, profits can be made quickly.

          No longer should you buy and hold stock.

        • the stockmarket is a BAROMETER of america’s health….you BETTER be payin’ attention to it!

      4. I half suspect that Trump knows full well we are going to have a crash. He knows he can’t stop it. And has plans for the post crash.

        • Since he has had to deal with bankruptcy before, he is probably planning what to do.

        • A stock market crash is no indicator of our real economy. Trump is trying to bring industry back with jobs to divert a “Main street” crash, which is apart from the phony Wall Street economy. America still has one of the wealthiest economies on the planet. And our basic standard of living is a lot higher than most Countries. And seems to be plenty of safety nets for the populous.

          Now those with pensions, need to find a better investment than wallstreet.

          • Yes, bring the industry back home, that way POST collapse we will be able to rebuild quickly rather than starting from scratch.

            Like the space program. Do you realize we have to ask the Russians for a ride into space because we do not have a manned space program anymore?

            That’s fucked up. Another credit to Obama’s Presidency.

        • i don’t care what you think of trump, but i DO believe he’s VERY intelligent…..he knows.

      5. well we certainly have a head start for insolvency.. obama doubled the debt but that is forgotten ! selective amnesia.
        with obama it was bushes fault are we predicting future fault?

        • Nancy Pelosi still thinks it is Bush’s fault.

      6. The market loved the insolvency during obummers 8 years and still loved the insolvency during Trumps first year.

        • I am ready this time.

          In January of 2008 I moved all my money into treasury bills. I did not loose anything in the collapse, but I did not jump back in at the lows.

          This time I will be prepared to jump in when things hit the bottom.

      7. Measuring the state of the nation by the stock market??
        How about manufacturing and employment??

        • On the job thingy, everything as we’re told is Jimmy-crack-corn. So we’re golden there.
          pssst….but don’t you believe it.

        • manufacturing and employment?

          If you did that, then we are no better than Honduras.

      8. What we need is accountability, That the Government cannot spend more than it takes in. Which means if congress can’t balance a budget, then they don’t get paid a salary. As they did not get the job done. Failure shall not be rewarded for any Congress Member.

        • There is accountability in Congress.

          It is called Congressional Accountability Act.

          It is a special office in Congress where taxpayers pay for secret settlements of sexual harassment claims against congressmen.

          God bless America (wipes tear from eye)

      9. OH REALLY?! I guess it just crossed the line since the recent rally?

        TOTAL HOGWASH. It has been unsustainable and insolvent by default for years. The investors are not thinking about this, you give them too much credit. If they were smart then this would have happened 15 years ago.

        The only credible concern is that we monetize the debt and cause hyper inflation.

        The whole thing is a JOKE, an illusion. Musical chairs. Yeah, you are rich, on paper. But don’t be the fool holding paper when the recokoning come.

      10. A depression is more likely than Hyper-inflation.
        We don’t have a lack of “stuff” that would cause prices to rise. If it weren’t for Democrats, our economy would be cruising in overdrive.
        More likely the “stuff” we have is way overpriced; Gold, housing, stocks, land, and such. I know for sure my property is way overvalued. There is no way an average working man could afford it.
        US debt is mostly owed to Americans. We will probably have to take a “haircut”. Those promises Democrats made to their Base may well be trimmed back.

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