The economy has surpassed all normal ebbs and flows, corrections, by approximately five years, since on average in each past cycle it rose for 56 months before collapsing. We’re about four and a half years past that point and our economy is only now “cooling”. We’re just about due for another economic recession, if not a collapse that makes 2008 look small. We’re at the end of the line. ~ Justin O Smith
The U.S. spends almost a third of its revenue on interest payments alone, it doesn’t seem like it can afford to pay much more.
The national debt, ever on the rise, currently sits at around $22 trillion.
In just the short decade since 2008, the debt has jumped from $10.6 trillion to $22 trillion. It also comes with a deficit that’s currently over $1 trillion currently. The interest payments alone may be forming a “black hole” from which the U.S. may never escape.
These facts alone should raise concern in any interested observer.
Mainstream media almost never hype a financial crisis, so it’s significant when they do. But when billionaires are sounding the alarm, you might want to pay close attention.
At least two billionaires are doing just that, starting with Baupost Group’s Seth Klarman. Baupost Group is a $28 billion hedge fund, and Klarman normally positions himself out of the limelight. His fund is only open to private investors, so he has little incentive to promote his brand to the public.
But recently, he felt the need to write a warning to investors about the global debt, with specific reference to the U.S., according to Sovereign Man:
In a 22-page letter to his investors, Klarman warned that government debt levels, particularly in the US (where debt exceeds GDP), could lead to the next global financial crisis.
“The seeds of the next major financial crisis (or the one after that) may well be found in today’s sovereign debt levels,” he wrote.
In the same letter, Klarman continued…
“There is no way to know how much debt is too much, but America will inevitably reach an inflection point whereupon a suddenly more skeptical debt market will refuse to continue to lend to us at rates we can afford…”
Since the U.S. spends almost a third of its revenue on interest payments alone, it doesn’t seem like it can afford to pay much more.
And Klarman isn’t the only billionaire expressing unease. At the World Economic Forum in Davos, Switzerland, Ray Dalio, founder of the world’s largest hedge fund, said that debt would be to blame for the next downturn, which he believes will be bigger than the Great Depression.
“The biggest issue is that there is only so much one can squeeze out of a debt cycle and most countries are approaching those limits”.
You might think the U.S. government would do everything to curb this problem. But according to the Congressional Budget Office, the debt is projected to skyrocket to $33 trillion by 2029.
Uncle Sam’s total debt is rapidly approaching $22 trillion, and according to the Congressional Budget Offices latest ten-year projection, it will be more than $33 trillion by 2029, with $1 trillion annual deficits set to begin again and stay above that for as far as the fiscal eye can see.
Skyrocketing debt, check. Deficit to match, check. Or will it be checkmate?
The U.S. spends almost a third of its revenue on interest payments alone, it doesn’t seem like it can afford to pay much more.
WE’VE ARRIVED AT THE END OF THE LINE.
February 9, 2019
~ The Author ~
Justin O. Smith has lived in Tennessee off and on most of his adult life, and graduated from Middle Tennessee State University in 1980, with a B.S. and a double major in International Relations and Cultural Geography – minors in Military Science and English, for what its worth. His real education started from that point on. Smith worked 8 years for the LaVergne Fire Department – two years as their clean-up boy – and became a working fireman at age 16, working his way through college and subsequently joining the U.S. Army. Since then he primarily have contracted construction and traveled – spending quite a bit of time up and down the Columbia River Gorge, in the Puget Sound on Whidby Island and down around Ft. Lauderdale and South Beach. Justin currently writes a weekly column for The Rutherford Reader in Murfreesboro, TN, which he calls home, in addition to being a frequent contributor to the Federal Observer – and spend as much time as possible with his two beautiful and intelligent daughters and five grandchildren. Justin Love God, Family and Our Majestic and Wonderful America, and am a Son of Liberty.
