From Peter Reagan at Birch Gold Group
In what has been a fairly common occurrence lately, the U.S. federal government debt has shattered yet another record: $34 trillion.
It remains just short of that incredible figure according to the latest official data from the U.S. Treasury Department. ($33.994 trillion at last count.)
But perhaps even more spectacularly, the total debt has shot up $1 trillion since September 2023, according to Wolf Richter.
The total US national debt spiked by $1.0 trillion in 15 weeks since September 15, to $34.0 trillion, according to the Treasury Department’s figures this afternoon.
These are huge gigantic numbers that are piling up as a result of the incredible hard-to-fathom daredevil reckless shake-your-head deficit spending by Congress. Congratulations, America! We made it, $34 trillion!
Since the beginning of 2016, the total debt has spiked by $15 trillion, or by 80%! This stuff is just breathtaking.
You can witness the meteoric rise of the U.S. debt on the official line graph below. Also note that more than ⅔ of the total debt has been added since the 2008 financial crisis:
via U.S. Treasury “Debt to the Penny”
The debt is piling up so fast, that the Congressional Budget Office can’t even keep up, according to a PBS article that reported on it:
The national debt eclipsed $34 trillion several years sooner than pre-pandemic projections. The Congressional Budget Office’s January 2020 projections had gross federal debt eclipsing $34 trillion in fiscal year 2029.
Can you think of any other time the government has accomplished anything fully five years ahead of schedule?
The article blames the sooner-than-expected debt acceleration on, “a multi-year pandemic that shut down much of the U.S. economy.”
That’s not quite true…
The government’s panicked response to the pandemic shut down businesses nationwide. That obviously meant a significant shortfall in tax collection – which, by itself, wouldn’t be a calamity. Rational humans have a response to unexpected reductions in income: We spend less money. We tighten our belts.
The federal government did the opposite. To the tune of $9 trillion in deficit spending in just four years:
via U.S. Treasury Department Fiscal Data
Now, that money has to come from somewhere… For decades, the federal government has relied on other nations to buy IOUs. Recently, though, the government has written so many IOUs that other countries are getting nervous:
Foreign buyers of U.S. debt – like China, Japan, South Korea and European nations – have already cut down on their holdings…
A Peterson Foundation analysis states that foreign holdings of U.S. debt peaked at 49 percent in 2011, but dropped to 30 percent by the end of 2022.
Yes – that means that, even as the government is spending money faster than ever, the rest of the world is a lot less interested in extending loans.
That means borrowing costs are rising at a time when over a third of tax revenue is already being spent on interest payments:
The ratio of interest payments to tax receipts spiked to 35.7% in Q3.
History shows that when interest payments eat up close to half of the tax receipts, the rest of the world gets very nervous about the U.S. debt, and then finally Congress gets more serious about dealing with this issue, but not until then.
The federal government may treat the dollar as “funny money.” They may believe debt levels don’t matter, and there’s an infinite supply of funding for student loan forgiveness and bridges to nowhere.
Leaders of other nations, even our allies, are increasingly eyeing the spendthrift federal government with concern. “Should we hand over our hard-earned savings to these people,” they ask themselves, “who love spending but don’t seem terribly concerned about repayment?”
The U.S. is rapidly becoming a subprime borrower. Which means higher borrowing costs we simply can’t afford.
I expect a time, in the very near future, when the U.S. Treasury Department can’t unload new IOUs at any price. Of course, the Federal Reserve will step in and manufacture new dollars to “buy” the IOUs. Still, that will be a wake-up call – but it will arrive far too late to solve the problem.
In the meantime, we’re all paying the price…
Our dollars are decaying before our eyes
Deficit spending creates more dollars.
More dollars doesn’t mean more wealth, though – rather, creating new dollars erodes the purchasing power of every other dollar in existence.
We experience that as inflation, prices rising. Other nations experience the same thing as dollar devaluation. They’re getting paid back in money that’s worth significantly less than the money they loaned. As you’d imagine, that’s pretty frustrating for them.
So it’s no surprise that other nations are diversifying away from dollars:
For the past 20 years, the USD’s share has been on a slow downward trend, with other currencies nibbling at it from all sides.
Foreign exchange reserves are a nation’s savings account. Global leaders are buying fewer dollars, and more of a few things – especially gold.
2022 was the biggest year for central bank gold buying in history. According to latest reports, 2023 gold buying by central banks was 14% ahead of 2022’s numbers.
We’ve seen a lot of records broken over the last few years…
It’s very likely we’ll see even more broken in the years ahead. For better and for worse.
Let’s hope for the best and prepare for the worst…
Don’t forget you still have options
Deficit spending creates new dollars – and there’s no limit to the number of dollars created in this way. $34 trillion (so far) and counting…
New dollars lower the purchasing power of every other dollar in existence. It’s how the federal government picks your pocket without touching your wallet.
The trends we’re seeing point to a total collapse of the U.S. dollar. As my colleague Phillip Patrick says:
If your financial future depends on the dollar’s future, you may have no future.
That’s exactly why global central banks are reducing their exposure to dollars and adding gold at a ferocious rate…
Physical precious metals (especially gold and silver) have historically served as safe-haven stores of value, preserving wealth during troubling economic times. That’s because precious metals have intrinsic value (based on both their inherent utility as well as supply and demand).
In fact, the price of physical gold in 2023 grew almost 13% overall (beating inflation).
As the world moves away from dollars and toward Central Bank Digital Currencies (CBDCs), is your 401(k) or IRA really safe? A smart and conservative move is to diversify into a physical gold IRA. That way your savings will be in something solid and enduring. Get your FREE info kit on Gold IRAs from Birch Gold Group. No strings attached, just peace of mind. Click here to secure your future today.
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And China, Japan, and other countries who buy U.S. Treasuries and other commerical paper loan it so there’s lot’s of funding options. The Fed can print as much as it wants. Borrowing from the yet unborn puts the fun in funding, serf.
“Another strange notion pervading whole peoples is that the State has money of its own; and nowhere is this absurdity more firmly fixed than in America. The State has no money. It produces nothing. It existence is purely parasitic, maintained by taxation; that is to say, by forced levies on the production of others. “Government money,” of which one hears so much nowadays, does not exist; there is no such thing.”
― Albert Jay Nock, Memoirs of a Superfluous Man
“There are two methods, or means, and only two, whereby man’s needs and desires can be satisfied. One is the production and exchange of wealth; this is the economic means. The other is the uncompensated appropriation of wealth produced by others; this is the political means.”
― Albert Jay Nock
“All the power [the State] has is what society gives it, plus what it confiscates from time to time on one pretext or another; there is no other source from which State power can be drawn. Therefore every assumption of State power, whether by gift or seizure, leaves society with so much less power.” ― Albert Jay Nock, Our Enemy, the State
https://www.goodreads.com/author/quotes/228606.Albert_Jay_Nock
Mr. Washington has already burnt out his bearings spinning over the last hundred years.
What is needed is mo’ inflation. Gots to get inflation higher than interest rates to deflate the value of all that debt.
Llpoh,
You needed to add a smiley face or an LOL.
The FED thinks 2% inflation is the right amount of inflation.
Translation: stealing 2% of everybody’s money each year is the right amount of hidden theft.
….yeah, if only….