U.S. Caught in Death Trap
Imagine a fellow…
This is a wastrel sunk impossibly in debt — credit card debt.
Spiraling interest payments begin to swamp him.
He must take on an additional credit card in order to satisfy interest payments on the original.
Yet he must soon take on another credit card… to service the interest on the card he previously took on… which he took on to service the interest on the first.
That is, he must borrow money to service previously borrowed money. Reduce the thing to its essentials and you will find:
The money he borrows is dead money. It lacks all productive purpose.
He is merely shoveling it into a roaring fire.
Yet Pelion goes heaping upon Ossa.
That is, his situation deteriorates further yet…
Rising Interest Rates
To his fantastic alarm, interest rates begin to gallop on him. That means he must pay more and more money to service his debt.
Before he knows what has struck him… he is undone… bankrupt.
Well friend, here you have the government of the United States.
It is the reckless and improvident fellow just described — who opens new credit cards to service the interest on existing ones — who is the slave of nonproductive debt.
Projected interest payments on the nation’s debt presently exceed $1 trillion annually.
And the cost to service that debt has doubled in the past 19 months alone — doubled!
The nation is far along the ruinous path. How far down the ruinous path has the United States wandered?
The Day of Reckoning Is in Sight
Mr. Alasdair Macleod, economist:
It is our sincere hope that you are wrong. It is our profound fear that you are correct.
Yet cannot the Federal Reserve and its brother central banks reach into the deep trick bag into which they reached last decade — interest rate suppression, quantitative easing and the rest?
Will not these magic tricks prove adequate next time?
No says Mr. Macleod…
The Black Hole of Extinction
Thus we are informed:
Just so. Yet with the highest respect, sir, we have heard this “doom and gloom” before.
In fact, we have heard it issue from an orifice upon our very face, the one directly beneath the nasal bas.
For three decades — at least — these cries have come issuing.
And for three decades it has been a cry of wolf.
In each instance the financial system has been knocked horizontal… it has shortly regained the vertical.
Whether under its own steam or assistance from the financial authorities, it has gotten up.
Why should next time prove different?
Why This Time Is Different
Here Mr. Macleod inform us why “this time is different”:
The Global South’s rise is different you say. Do you care to elaborate, sir?
A conundrum! They are chained to the dollar. It is a liability. They are prisoner to it. What can they do?
Perhaps the potential BRICS currency of which Jim Rickards so often speaks represents an omen — a straw swaying in the wind.
The Wages of Sin
Thus the United States confronts the wages of its monetary and fiscal sins.
It has cast all restraint to the scattering winds. It has sacrificed the morrow upon the altar of the present.
And it has made its dollar headache the world’s migraine.
A private concern would confront bankruptcy under Chapter 11 of United States Bankruptcy Code.
The United States government will not confront bankruptcy proceedings of course.
It does — after all — maintain access to a press that prints money.
It can make all its shortages good… in nominal terms at least.
The debtees will get their money. In reality they will get sawdust…
“I borrowed $100 from you, good sir? Well, here is your $100 back, as promised. I hereby discharge my fiduciary responsibility to you. I have fulfilled my contractual obligations.”
“But the $100 I loaned you is now only worth $22.08, because of the vicious inflation you caused” comes the bitter reply. “You’ve robbed me blind! You’re a goddarned crook, that’s what you are.”
“Your problem, not my problem,” answers the deadbeat.
That is Uncle Samuel for you.
“The wicked borroweth, and payeth not again,” Psalms informs us.
This uncle of ours is a cad. He is a bounder. He is a scoundrel.
He is wicked…
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