October 11, 2019
We Are Doomed
By Steven Longenecker, Publisher
We are doomed.
It is only a matter of time.
And it doesn’t matter who you vote for… or even if you vote at all.
The national deficit this year is approaching $1 trillion. The last time it was this high, we were exiting the worst recession in decades. The government was taking extraordinary steps – spending because no one else was.
But today, economic growth is just fine… wages are rising… and unemployment is near all-time lows. So what’s the government’s excuse today?
As American Consequences feature contributor Bill Bonner notes in his daily Diary:
Mr. Trump is already increasing federal spending – and debt – faster than any president since Lyndon B. Johnson. During the last two fiscal years – which should have been years of surpluses – the Trump team added debt at the rate of $24 billion per week.
Imagine what will happen when the crisis comes.
First, Trump will go on a rampage against the Fed… and Fed Chair Jay Powell in particular.
Already, Federal Reserve Chair Jay Powell wants to restart the Fed’s easing. From the New York Times…
The central bank has been saying for months that it will eventually need to expand its holdings again to keep an ample supply of banking reserves – currency deposits at the Fed – in the financial system.
“That time is now upon us,” Mr. Powell said. He added that the Fed “will soon announce measures to add to the supply of reserves over time.”
Of course, he says that this is not quantitative easing. In fact, he has said it time after time after time.
He protests too much. If this isn’t quantitative easing… what is?
More from Bill…
It won’t be long before the Fed chief (Powell or someone new) is more accommodating – that is, ready to cut rates deep into negative territory and undertake a massive program of stock and bond buying, à la Japan.
Then will come the fiscal stimulus (aka inflation) in the form of a tax cut for the masses… maybe even a tax credit for everyone.
This will be quickly followed by trillions of dollars of new shovel-ready infrastructure spending, more medical care, housing credits, cash for clunkers, and other assorted bamboozles.
The deficits will soar to $2 trillion a year. And stocks… as well as corporate bonds… will collapse.
The wealthy and well-connected – on both sides of the political aisle – will be just fine, of course.
But what about the average American?
They will go deeper and deeper into debt… and fall further and further behind.
Already, American families and companies are deeper in debt than ever before in history… owing $1.5 trillion in student loans for college… $1 trillion on credit cards… and another $1 trillion in car loans.
These debts have climbed higher and higher, even in boom times.
What happens when the next crisis comes? What happens when consumer inflation finally catches up to fiscal inflation?
For most Americans, this will be a disaster from which they are unlikely to ever recover.
Financial analyst and author Porter Stansberry – who we’ve featured several times in the pages of American Consequences – has discovered a potentially different path. He writes…
There’s a reason so many Americans are losing hope – losing their sense of independence and their dignity. There’s a reason so many people are turning to the failed plans of socialism.
It’s because most Americans are being left behind… in a way we’ve never, ever seen before.
The gap between the rich and the poor has always existed. But never, ever, on this level. And never with this speed.
Every day, thousands and thousands of Americans are ascending into an entire new level of wealth – something even beyond what millionaires could afford a decade ago. And, instead of plateauing, these changes are continuing to power this new class higher… turning millionaires into billionaires.
If you’re interested in learning more about why socialism is really erupting in America… why tens of thousands of folks are about to lose their jobs… and how to potentially protect yourself and even make money as everything falls apart – .
Now here are some of the stories we’re reading…
The future is not all grim. Yes, millions of people will lose their jobs and their wealth… their retirement incomes will be cut (the government will still pass out Social Security checks adjusted for inflation… but the adjustments will be too little, too late)… consumer price increases will leave the masses destitute and desperate… leading to even more absurd politics and policies… But take heart; there’s an upside.
The central bank’s vast security holdings, which it had been shrinking until August, will soon expand again… “This is not Q.E.,” Mr. Powell said, repeatedly, in a question-and-answer session after the speech.
“It’s mathematically not sustainable. Forget about the politics. Just the budget as it exists right now is on the border of being unsustainable, but that budget excludes unfunded obligations.”
And let us know what you’re reading at [email protected].
Publisher, American Consequences
With P.J. O’Rourke and the Editorial Staff
October 11, 2019