How the Country Goes Broke…

Guest Post by Bill Bonner

DELRAY BEACH, FLORIDA – We’re down in Florida to meet a new grandchild.

It’s a different world down here – different from Ireland, Maryland, France, Argentina… our usual haunts.

Florida is flat. And barely above sea level. If the North Pole keeps warming, much of South Florida will be underwater soon.

The people here are different, too. They are either young, tanned, and taut… muscled and contoured. Or they are old, broken-down retirees. There don’t seem to be many in the middle… ordinary people, that is.

And they all seem to have a shorter outlook, as if they were aware that they will soon be swept away by the waves. People here are more eager to go out… to show off… and to spend money.

Cars, for example, are newer and cleaner than those you see on the streets of Baltimore. And they are bigger and flashier than those you see on the country roads of Ireland. Houses, too, at least along the coast here, are bigger and fancier.

There are also many more shops and restaurants here. Drive down almost any road and you’ll find strip malls, outlets, chain stores, and franchises everywhere… with dozens… hundreds… thousands of places to spend money.

With so much retail capacity to support, it is amazing that people have any money left.

And what will happen when the hurricane comes and the money disappears?

This tiny device could cut your energy bills to pennies. It’s already being installed in 2,900 homes in Prescott, Arizona. Experts explain more here.

Tiny Device Will Cut Your Energy Bill To Pennies

More Hair-Pulling

In the meantime, the taunting, tussling, and hair-pulling continues. Trump promised to punish General Motors (GM) for cutting losing operations. POTUS says he’ll even demand that old bailout money be repaid if GM goes through with its plan to cut 14,000 U.S. jobs.

And he told the Chinese how to run their business, too – insisting that they cut their tariffs on foreign-made autos.

Then, he claimed that “Mexico would pay for the wall,” just as he had promised during the election. Only, Mexico has no intention of paying for the wall. So he fudged, saying that it could be paid for from “savings” that come from something-or-other.

Real Battle

Off the political stage, the real battle has begun – the one that will affect all our lives for many years to come. From Bloomberg:

The U.S. posted the widest November budget deficit on record as spending doubled revenue.

Outlays jumped 18 percent to $411 billion last month, while receipts were little changed at $206 billion, the Treasury Department said in a monthly report on Thursday. That left a $205 billion shortfall, compared with a $139 billion gap a year earlier.

Dear readers will recall that deficits aren’t supposed to be increasing. The Christmas tax cut last year was advertised to stimulate growth; extra tax revenues would reduce deficits, we were told.

So far, the debt has gone up… and will more than likely double by 2018. Here’s Bloomberg again:

The Tax Cuts and Jobs Act that President Trump signed a year ago seems to have boosted economic growth in 2018. But there’s little evidence yet that it’s setting up the U.S. economy for faster growth over the longer term, which is what the White House and the legislation’s backers in Congress promised.

BOTTOM LINE – Trump and his backers in Congress promised tax cuts would boost the long-term growth potential of the U.S. economy. The data so far don’t support that claim.

This guru was mocked by the mainstream. But is his strange financial prediction about to come true?

Deficits Run Wild

U.S. debt is rising… about twice as fast as GDP.

And it will get worse. With a Democrat majority in the House, there is no way a broad program of spending cuts or tax increases could be passed. That leaves entitlements and military spending both running wild.

The Committee for a Responsible Budget estimates that we will see $2 trillion deficits by 2027.

But as we pointed out yesterday, this does not account for an economic recession. Come the next crisis… the problem will intensify. Tax revenues will plummet and calls to spend more money will grow louder. Deficits will grow to $2 trillion a year in 2019 or 2020.

What will happen then? Former Fed chief (the last honest one), Paul Volcker, 91, foretells the future:

Someday confidence is lost… Eventually, it breaks down…

…And then, the hurricane hits… and the country goes broke.

But at least the president isn’t worried about it. From The Fiscal Times:

As a candidate, Donald Trump said he could eliminate the national debt in eight years, largely by focusing on better trade deals. But in office, Trump has presided over a considerable increase in red ink, with annual deficits expected to surpass $1 trillion as soon as 2019. Overall debt is rising accordingly, with the national debt held by the public surpassing $16 trillion for the first time last week. Total debt outstanding is now approaching $22 trillion.

Trump isn’t too worried about it, though, The Daily Beast reports.

One early 2017 presentation by senior officials about the projected explosion in the debt was reportedly met with a blunt response by Trump: “Yeah, but I won’t be here.”

Maybe he won’t be here. And maybe we won’t either. Too bad for our new grandchild though.

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pyrrhus
pyrrhus

” If the North Pole keeps warming, much of South Florida will be underwater soon.”
Sure it will, Bill…Don’t forget to take your pills!

wdg
wdg

For Bill BoneHead…an excellent documentary on global warming. Now I have to start wondering about Bill’s economic analyses.

The Great Global Warming Swindle – Full Documentary HD

gatsby1219
gatsby1219

You live in Baltimore, that explains a lot….

Captain Obvious
Captain Obvious

Mark This: The United States will collapse from debt long before Global Warming Matters or Florida is ever under water.

The sun is half dead anyway so you will have to eventually find another earth.

In the meantime, anyone who has a house on the beach in Naples Florida which goes for 20 to 50 million dollars, I would be glad to buy it for 10 bucks, because Global Bullshit Warming.

No Thanks I Just Ate
No Thanks I Just Ate

How The Country REALLY Goes Broke….

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“I ain’t complaining!”comment image

yahsure
yahsure

Relatives in foreign countries laughed and said thanks to the U.S. Having such a large military, that their country spends very little. They just suck up a little. The military/industrial complex really is an ever-growing monster.

bob
bob

“If the North Pole keeps warming, Florida will be underwater”…or something to that effect. Because the water on the globe will run southward? Or is it that the increased water volume from the melted ice caps will cause sea level to rise? Have you ever seen a tumbler overflow because the ice cubes melted? No. You haven’t. Fallacious remark almost as fallacious as the fallacy of global warming. Almost.

Anonymous
Anonymous

Interesting. Did not realize that but apparently true. The ice cube displaces water equivalent to its mass and when the ice melts it’s the same mass of water, but now in liquid form, so no further displacement.

Anonymous
Anonymous

Sorry, @bob – I am wrong, you are correct. Looked it up and indeed the meted ice will not raise the level of the liquid in the tumbler. The water displaced by the ice is dependent on the mass of the ice and when the ice melts it is the same mass, but now in liquid form, and hence no additional rise in liquid level. Sorry for speaking too soon!

Anonymous
Anonymous

Sorry, @bob – I am wrong, you are correct. Looked it up and indeed the melted ice will not raise the level of the liquid in the tumbler. The water displaced by the ice is dependent on the mass of the ice and when the ice melts it is the same mass, but now in liquid form, and hence no additional rise in liquid level. Sorry for speaking too soon!

Dane
Dane

Yes, but the same principle applies as a White neighbor to a non-white neighbor…what is the impact?
Ice does not have the same salt salinity, so as more ice melts the currents slow and an ice age cometh.

starfcker
starfcker

Spend a little time here, Bill. Nothing wrong with a nice house and a great car. Plenty of decent restaurants doesn’t suck, either. Surrounded by people who aren’t feeling quite so doomed. Might I add it’s 70° at 2 a.m. As far as potential flooding, most of us can swim pretty good. And the tax laws are the best.

old white guy
old white guy

I as well, on the Gulf coast, not too many places I would rather be.

old white guy
old white guy

so the twenty trillion on the books when Trump took office and the over 100 trillion in unfunded liabilities and democrat socialists running things, was not really a problem until Trump came along, and trump is supposed to do something to reverse this crap. I will be willing to suggest that America as a whole, this includes state and local governments, owes more money than the entire wealth contained on the planet and it ain’t Trumps fault.

pyrrhus
pyrrhus

Exactly, and there are more than 200 trillion in unfunded liabilities….

Dane
Dane

WHOM exactly is owed 200 T? that’s their problem…declare bankruptcy. Restart the new dollar. Done.

robert h siddell jr
robert h siddell jr

Now I’m convinced you are a leftist: yes there is now a Recession and a bigger tax receipts problem but you failed to mention that the Fed kept interest rates at zero for Obama but raised them 8 times since Trump was elected and that was guaranteed to cause this Planned Recession, you leftist asshole, and I’m sure you and your Chaos Comrades Plan to make the worst of it.

Warren
Warren

North Pole melting, well except that as of the 26th of last month there is
‘Remarkable growth of Arctic ice extent continues’ – ‘Ice extent exceeds the 11 year average

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