It’s not so much the size of the national debt in isolation, but rather the cost to service the debt in relation to the size of the economy and tax receipts. People often say “Reagan proved budget deficits don’t matter”, and that is not entirely true. While it is true that you can run a 2% budget deficit indefinitely if your economy grows by 3% annually and interest rates are low enough to make debt service reasonable, problems arise when these conditions are violated. We currently have a budget deficit around 6%, and our economy appears to be shrinking or at least growth is slowing dramatically. Tariffs shrink trade and thus shrink the economy (see, the Great Depression and Smoot Hawley Tariff Act), and mass deportation also shrinks the economy, as it ejects the contributions of the deported people. In addition, as global trade with the U.S. falls, and the U.S. is seen as a less reliable partner, it’s causing countries to look to shift away from the dollar, and when combined with the fiscal irresponsibility of running large budget deficits, it makes the dollar much less attractive and raises borrowing costs. Accordingly, we are setting the stage for effective U.S. insolvency, and the only way out of it will be to print money to service the debt, massively devaluing the dollar, deleveraging the debt. Billionaire Ray Dalio has been pointing this out for a while in his books and on his youtube channel, and has lots of great content explaining this in the ELI5 format with animated videos. TLDR: the U.S. is running full speed towards a financial crisis that will make the 2008 financial crisis look quaint, and will lead to what I call “The Greatest Depression”.
It’s not so much the size of the national debt in isolation, but rather the cost to service the debt in relation to the size of the economy and tax receipts. People often say “Reagan proved budget deficits don’t matter”, and that is not entirely true. While it is true that you can run a 2% budget deficit indefinitely if your economy grows by 3% annually and interest rates are low enough to make debt service reasonable, problems arise when these conditions are violated. We currently have a budget deficit around 6%, and our economy appears to be shrinking or at least growth is slowing dramatically. Tariffs shrink trade and thus shrink the economy (see, the Great Depression and Smoot Hawley Tariff Act), and mass deportation also shrinks the economy, as it ejects the contributions of the deported people. In addition, as global trade with the U.S. falls, and the U.S. is seen as a less reliable partner, it’s causing countries to look to shift away from the dollar, and when combined with the fiscal irresponsibility of running large budget deficits, it makes the dollar much less attractive and raises borrowing costs. Accordingly, we are setting the stage for effective U.S. insolvency, and the only way out of it will be to print money to service the debt, massively devaluing the dollar, deleveraging the debt. Billionaire Ray Dalio has been pointing this out for a while in his books and on his youtube channel, and has lots of great content explaining this in the ELI5 format with animated videos. TLDR: the U.S. is running full speed towards a financial crisis that will make the 2008 financial crisis look quaint, and will lead to what I call “The Greatest Depression”.
The biggest most beautiful recession. People are going to suffer “biggly”
That’s their plan and it’s going well.