“Whenever governments are granted power to purchase their own debt, they never fail to do so, eventually destroying the value of the currency.” – Ron Paul
Let’s take a step back and look at the big picture so we can assess the US government’s financial situation, where it’s likely headed, and what these trends could mean.Observation #1: It’s Politically Impossible To Cut SpendingObservation #1: It’s Politically Impossible To Cut Spending
Observation #2: Ever-Increasing Debt Is the Only Way To Finance DeficitsObservation #2: Ever-Increasing Debt Is the Only Way To Finance Deficits
Observation #3: Over Half of US Treasury Debt Matures by 2028Observation #3: Over Half of US Treasury Debt Matures by 2028
Observation #4: An Ever-Growing Interest Expense Fuels the Debt SpiralObservation #4: An Ever-Growing Interest Expense Fuels the Debt Spiral
Observation #5: Surging Interest Expense Forces Fed To Ease Monetary PolicyObservation #5: Surging Interest Expense Forces Fed To Ease Monetary Policy
Observation #6: Ever-Increasing Currency Debasement Is InevitableObservation #6: Ever-Increasing Currency Debasement Is Inevitable
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Debt can generally only be good where you are investing in productive purposes which will return a higher rate of return than the cost of debt.
USAs exceptional privilege gained via the fiat petrodollar distorts this somewhat but in the long term it still applies.
Neoliberalism has decimated the US productive sector along with globalisation productive advantage has shifted to China.
Underlying economics are values and ethics and strategy- under neoliberalism strategy was captured by corporate lobbyists whose primary aim is private profit.
In contrast China sets the agenda for capital allocation based upon the objective of maximising the net competitiveness of China Inc.
China has won the trade war and USA has responded by attacking Chinas energy sources and trading partners.
But China argualy has a superior sense of purpose- in China rentseeking monopolies are stomped on and citizens know it- in USA rentseeking corporates set the agenda and citizens know it.
The neolioberal greed is good narrative ignores that a nation is a community in competition with other communities- other nation states and a nation of self seeking individuals where there is little or no collective sense of duty purpose and identity is highly vulnerable to competing nations states where there is.
USA has enjoyed a good run, dominating global institutions and protocols, collecting rent frtom all and sundry, but its own sense of unity, purpose and ethics have been eroded by that success and the growth of selfish individualism that neoliberalism codifies.
Iran has lost thousands of citizens to the war and stands more united in its sense of unity and purpose- the threat of losing one airman sent the US political elite into a panic.
I hadn't noticed before that Democrat deficit growth is concave down and Republican deficit growth is concave up.