(International Man)—The federal debt has been recently increasing by $1 trillion every 100 days. That’s $10 billion per day, $416 million per hour.
In fact, Uncle Sam’s debt has risen by $470 billion in the first two months of this year to $34.5 trillion and is on pace to surpass $35 trillion in a little over a month, $37 trillion well before year’s end, and $40 trillion some time in 2025. That’s about two years ahead of the current CBO (Congressional Budget Office) forecast.
On the current path, moreover, the public debt will reach $60 trillion by the end of the 10-year budget window. But even that depends upon the CBO’s latest iteration of Rosy Scenario, which envisions no recession ever again, just 2% inflation as far as the eye can see and real interest rates of barely 1%. And that’s to say nothing of the trillions in phony spending cuts and out-year tax increases that are built into the CBO baseline but which Congress will never actually allow to materialize.
So when it comes to the projection that the 2034 debt will come in at just $60 trillion, we’ll take the wonders any day of the week. The fact that it will likely be much higher also means that the Washington UniParty’s prevailing fiscal policy path will lead to $100 trillion of public debt sometime in the early 2040s. And that means, in turn, that annual interest expense will then be greater than the entire federal budget during 2019.
Needless to say, neither Trump nor Biden has said, “Boo,” about this looming calamity. Sleepy Joe has even had the audacity to brag that he has reduced the federal deficit by more than half.
Then again, the starting point for that ludicrous proposition is the Trumpian lockdown/stimmy fueled disaster of 2020 when the deficit hit an astounding 16% of GDP. That figure represented a larger burden on the US economy than the peak WWII deficits when America was actually fighting two real enemies, as opposed to Dr. Fauci’s hyped-up super-flu.
To be sure, ever since Nixon’s perfidy at Camp David, when the US dollar’s link to gold was canceled, the public debt and its share of GDP has been trending steadily skyward. But now it is literally going parabolic.
In 1970 the figure stood at $378 billion of public debt outstanding, which represented 34.9% of GDP. The latter percentage had peaked at about 120% at the end of WWII but had steadily marched downhill during the quarter century thereafter.
Yet since the dollar’s anchor to gold was severed, the debt spree has been unstoppable. Massive and persistent Fed monetization of the public debt caused interest rates to be deeply repressed and falsified, thereby transforming the partisan battles over public debt that had contained fiscal deficits prior to 1971 into a complacent Uniparty consensus that the public debt doesn’t matter much.
Accordingly, since then the public debt (purple line below) has increased by 90X to the aforementioned present level of $34.5 trillion — a gain far higher than the 25X rise of nominal GDP during the last 53 years. The burden on GDP (black line below), therefore, has returned to peak WWII levels, at 120%.
Public Debt Outstanding and % of GDP, 1970 to 2023
But the hoary idea floating around Washington that we lived to tell about it once, so we can do so again, is utter tommyrot. The great difference is that in 1945 there were virtually no consumer goods or services to buy, owing to the US economy’s total mobilization for war. In fact, wartime rationing and conversion of industry to military production resulted in a soaring household savings rate that reached 25% of disposable income during the peak years of the war.
What happened, therefore, is that consumer debt got paid off, dropping by two-thirds during the course of the war. Business debt was also reduced sharply. Consequently, America essentially saved its way through the huge government spending and borrowing increases generated by the war effort.
In all, during the five war budgets of 1942 through 1946, the federal government spent $370 billion in mainly war outlays, of which nearly half or $180 billion was financed by a huge increase in forced savings (aka federal taxation). The federal tax take from national income actually tripled from 8% of GDP to 24% during the course of the war.
On top of that another $110 billion was financed from the huge increase in private savings depicted below and which was channeled into massive war bond sales to the public. Accordingly, just $80 billion or 21% of the massive war budgets were actually monetized by the Fed.
Household Savings as % of Disposable Income, 1939 to 1945
As a result of these factors, the $180 billion increase in war debt during 1939 to 1946 was accompanied by a virtual financial miracle. That is to say, the ratio of total public and private debt-to-GDP stood at 210% in 1938 but by the end of the war it had actually shrunk considerably to just 190% of GDP.
That’s right. The greatest government borrowing spree in history until then was accomplished with an actual reduction of the debt burden on the US economy!
What happened, of course, was that wartime economic controls caused enormous amounts of private debt to be paid off, leaving immense headroom for absorption of the public debt by private savers.
Specifically, household debt shrunk from 60% of GDP in 1938 to just 20% by 1945, while corporate business debt dropped from about 90% of GDP to 40%. In all, therefore, private debt vacated a huge space on the national balance sheet, dropping from 150% of GDP in 1938 to only 60% by the end of the war.
And that’s how the war debt was financed without massive monetization of the public debt. It was a one-of-a-kind wartime feat that is utterly irrelevant in today’s financial setting.
Growth of Federal Debt During WWII
Compared to the WWII savings spree, America’s current economy is actually built on the opposite — endless and rising accumulation of debt in all economic sectors. Among households, for instance, the savings rate is now at a rock-bottom post-war level of just 2.9% of GDP.
Aside from the aberration of the pandemic lockdown/stimmy period in 2020–2021, when households were flooded with government cash but had limited venues to spend it, the current savings rate is barely one-third of the level that prevailed prior to 1980.
Net Household Savings Rate, 1970 to 2023
Needless to say, when private savings are falling and government deficits are continuous and rising, you can’t escape the devastating math. To wit, the net national savings rate (private savings minus government borrowing) has been negative for the past three quarters, and will likely get far worse from here as annual government deficits once again head back toward the $3 trillion to $4 trillion mark.
Coffee the Christian way: Promised Grounds
Stated differently, unlike WWII, there is no headroom available on the nation’s balance sheet to accommodate further chronic and large-scale increases in the public debt. And unlike during the early post war years when the net national savings rate was 10–12%, and thereby accommodated robust increases in private investment and real GDP growth, there is no chance whatsoever of “growing out” of current soaring deficits and debt.
Instead, what we have amounts to a financial doom-loop of ever lower economic growth and ever rising public debts from which there is no escape. And yet for all intents and purposes, that is the implicit fiscal policy of Washington’s sleep-walking UniParty.
Net National Savings Rate, 1965 to 2023
Of course, the sleepwalkers assume that there is an escape route via a restart of massive Fed monetization of the public debt. As the chart below shows, that is precisely what has delayed the day of reckoning for the past decade, as the Fed’s balance sheet erupted from a historical 5% of GDP to upwards of 25%.
Alas, old-fashioned sound-money folks long ago warned that such an experiment in boundless money printing was certain to fail. Both asset inflation on Wall Street and goods-and-services inflation on Main Street, they reminded, would eventually get out of hand.
This surely has happened. In spades. The days of US Treasury borrowing on the cheap and easy, therefore, are over and done. The current drift toward relentlessly rising real interest rates and falling real growth means that a financial train wreck lies directly ahead.
Unless…. Unless the electorate comes to its senses in the next eight months and sends the UniParty and its pathetic presidential candidates packing next November.
In short, there is no way out of the current fiscal calamity unless the Empire is brought home and crony capitalist domination of the agencies of government — and most especially the Fed — is decisively ended.
Public Debt Held by the Federal Reserve as a % of GDP, 1955 to 2023
Editor’s Note: The truth is, we’re on the cusp of an economic crisis that could eclipse anything we’ve seen before. And most people won’t be prepared for what’s coming.
That’s exactly why bestselling author Doug Casey and his team just released a free report with all the details on how to survive an economic collapse. Click here to download the PDF now.
Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
