An article at Mises reported on the accumulation of unsustainable debt and dealt with the question of why it’s been unsustainable for 40 years, and hasn’t collapsed.
That is because it is a slow erosion, not a sudden event.
The truth is the accumulation of debt will be our downfall. Nobody knows when we’ll finally go down, but we will go down unless policies change dramatically.
With everything the administration does, we are losing the value of the dollar. The bad news is that the GDP only went up 1.6%. The wild spending, along with the destruction of our energy sector, should tell you that our time is running short. Additionally, the world is de-dollarizing.
We are going to lose our place as the world currency because we have broken the trust of too many nations and weaponized the banking system. now we’re talking about Central Banks controlling all the money with CBDCs. That won’t go well.
“Excessive public debt is unsustainable when it becomes a burden on productive growth and subjugates the economy to constant rising taxes, weaker productivity growth, and weaker real wage growth.
“However, the level of unsustainable debt accumulation may continue to rise because the state itself imposes public debt on banks’ balance sheets, and the state forces the financial sector to take all its debt as the “lowest risk asset.” However, law and regulation have merely imposed and forced this construct. Rising debt bloats the government’s size in the economy and erodes its growth and productivity potential.”
The more we survive dangerous policies, the more Americans think they can increase the bad policies.
The Federal Reserve has played games with the interest rate so they can hide the damage. They monetize the debt so that we pay less interest on it, while at the same time, we’re feeding borrowed money into the system, giving a false reading.
”An ever-weaker private sector, weak real wages, declining productivity growth, and the currency’s diminishing purchasing power all indicate the unsustainability of debt levels.”
Another big indicator: our purchasing power is decreasing.
“The state basically conducts a process of slow default on the economy through rising taxes and weakening the purchasing power of the currency, which leads to weaker growth and erosion of the middle class, the captive hostages of the currency issuer.”
People seem to think nothing has happened or it’s only temporary. Unfortunately, it’s not temporary and terrible things have happened. The middle class is being destroyed. The American dream is going down: small and medium enterprises are destroyed, and the big welfare state is getting bigger. Big governments are growing. That is how all nations fall. Everyone thought it wouldn’t happen to them.
When the federal reserves stopped protecting the currency and started hiding the debt, that’s when it all began to fail.
More units of public debt mean weaker productive growth, higher taxes, and more inflation in the future. All three are manifestations of a slow-burn default.
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