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http://themostimportantnews.com/archives/the-government-debt-crisis-that-we-have-been-warned-about-for-decades-is-happening-right-now

The Government Debt Crisis That We Have Been Warned About For Decades Is Happening Right Now

 

For decades we were warned that someday our politicians would push things too far.  We were warned that someday our national debt would spiral out of control, servicing that debt would become extremely oppressive due to soaring interest rates, existing bonds would crash thanks to the shift in interest rates, and foreign sources would start stepping back from buying any new debt that we would be issuing.  Unfortunately, that time has arrived.  The government debt crisis that we have been warned about is here, and it is going to be incredibly painful.

At this moment, our national debt is sitting at $33,836,693,993,860.35.

It is probably going to hit 34 trillion dollars by the end of the year.

To put this into perspective, when Barack Obama first entered the White House we were about 10 trillion dollars in debt.

We are literally committing national suicide, but for a long time most Americans didn’t really care because we were not experiencing any serious consequences.

But now the party is ending.

Thanks to rapidly rising interest rates, U.S. Treasury bonds “are in a bear market worse than the dot-com bust and almost as bad as 2008”…

Elementary economic forces — too much supply and not enough demand — have collided to create the worst stretch for U.S. government bonds since the Civil War. The government keeps borrowing to cover its budget deficits, while once-reliable buyers of that debt, both at home and abroad, have pulled back.

The result: Investors are demanding the steepest yields since 2007. Auctions of fresh bonds that were once routine are now going terribly. And bond portfolios are getting absolutely hammered. The longest-dated Treasury bonds are in a bear market worse than the dot-com bust and almost as bad as 2008.

A bond crash normally precedes a stock market crash.

That is exactly what happened in 2008, and it appears that the same pattern is being reproduced now.

So if you have a lot of money in the stock market, you may want to brace yourself for what is ahead.

In the past, we could always rely on China, Japan and other foreign buyers to keep the party going, but now they are not very interested in our bonds…

China and Japan, once reliable buyers of Treasury bonds, have been selling them to prop up their weakening currencies. A decade ago they held more than 22% of U.S. government bonds; today it’s 7%.

The Ukraine war has dampened demand among Eastern European buyers, said Steve Ricchiuto, the chief U.S. economist at Mizuho. Increasing U.S. oil production means fewer petrodollars in the Middle East to be reinvested through the Treasury market.

U.S. banks, too, are stepping back.

I certainly can’t blame our banks for “stepping back” from buying more bonds.

Thanks to the dramatic shift in interest rates that we have witnessed, they are sitting on hundreds of billions of dollars in unrealized losses.

So who is going to buy our debt in 2024 and beyond?

That is a very good question.

And servicing the debt that we have already accumulated is becoming a major problem.

During the last year, the federal government “had to spend one-fifth of all the money it collected just on debt interest”…

The U.S. federal government has borrowed so much money that, over the past year, it has had to spend one-fifth of all the money it collected just on debt interest—which came to almost $880 billion.

Americans paid some $450 billion less in income taxes for the year, trapping the government in the pincers of a fiscal crunch.

The country teeters on the brink of a debt spiral that could devolve into a fiscal crisis or hyperinflation, several economists told The Epoch Times.

“The problem is serious because, any way you cut it, taxpayers are paying interest on the mountain of debt that has been accumulated,” said Steve Hanke, a professor of applied economics at Johns Hopkins University. “In short, they are paying something for nothing.”

In 2024, the U.S. government will spend well over a trillion dollars just in interest on the national debt.

That wasn’t supposed to happen until 2030.

A day of reckoning has arrived, and it is just a matter of time before the entire system comes crashing down like a house of cards.

This isn’t going to be just another “financial crisis”.  As James Rickards has aptly noted, what we will soon experience will be “qualitatively different” from anything that we have ever experienced before…

The next financial crisis will not be merely a bigger version of the 1998 and 2008 crises, it will be qualitatively different. It will encompass multiple asset classes on a global scale. It will exhibit inflation not seen since the 1970s, insolvency not seen since the 1930s and exchange shutdowns not seen since 1914. State power will be summoned to contain panic.

What Rickards is describing is a full-blown economic collapse.

So what will our society look like once such a scenario unfolds?

Already, economic conditions have deteriorated so dramatically that demand at local food banks has risen to “unprecedented” levels in some cities…

The demand for local food banks is on the rise as soaring prices impact average Americans under President Joe Biden.

The increasing demand for food banks demonstrates how soaring inflation driven by “Bidenomics” negatively impacts lower income families.

“We are seeing unprecedented demand,” Jackie DeCarlo, chief executive of Manna Food Center, told the Washington Post on Monday.

If things are this bad now, what will we be facing a year or two from now?

At this point, there is no escape.

All our politicians can do is to keep the party going for as long as they possibly can.

They knew that they were destroying our financial future, and they also knew that they couldn’t keep borrowing and spending insane amounts of money forever.

Of course nobody can say that we weren’t warned.

People like me have been relentlessly warning about our financial condition for years, and now I am warning about what is coming in the aftermath of the approaching financial meltdown.

Our leaders tried to outrun the basic laws of economics for a long time, and for a while they were flying high.

But now reality has caught up with them, and we are all going to pay a very bitter price for their crimes.

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https://brownstone.org/articles/the-destruction-of-the-american-middle-class/

The Destruction of the American Middle Class

Since money-printing went into permanent high gear after the dotcom crash in 2000, the top 1% of households have gained $20 million each in inflation-adjusted net worth. Likewise, the top 0.1% or 131,000 households at the tippy top of the economic ladder have gained $88 million each in inflation-adjusted net worth.

Needless to say, the net worth gains available to the wage-earning classes are almost exclusively from what they manage to save after absorbing the relentlessly rising cost of living. And we do mean relentless. Even though the CPI tends to undermeasure the cost of living on Main Street owing to its flaky hedonics’ adjustments for “quality” and other statistical razzmatazz, this imperfect proxy for the cost-of-living is still up by 82% since the turn of the century.

Accordingly, during the last 22 years the median real annual wage, as tracked by Social Security payroll tax records, has risen by only 14.5% or just $235 per annum. And, no, we didn’t omit any zeros from that figure. These piddling gains amount to just $4.50 per week on average.

These annual inflation-adjusted gains in the median wage compare to real net worth gains of nearly $1 million and $4 million per annum for the top 1% and top 0.1%, respectively. In relative terms, these annual wealth gains for the top 1% were 4,250X larger than the median real wage gain and 17,000X larger for the top 0.1%.

Needless to say, outsized gains at the top of the economic ladder are not owing to a superior growth of national income, which, in turn, might have been reflected in higher capitalized values for financial assets. Instead, the bulk of these gains are attributable to valuation multiple expansion. Thus, the net worth of the top 1% computed to 135% of GDP in 2000, but now stands at 207%. Likewise, the net worth of the top 0.1% rose from 50% to 85% of GDP during this 22-year period.

Stated differently, the values of stocks, bonds, real estate and other financial assets have soared because the Fed’s massive emissions of cheap credit and excess liquidity have caused their prices to be bid skyward by leveraged speculators. And that part of the problem can only be effectively addressed by banning the Fed from conducting open market operations on Wall Street and owning or collateralizing government debt, as we amplify below.

But that’s just half the problem. On the other end of the economic ladder, the real median wage as cited above has lagged badly because the Fed’s inflationary policies have drastically reduced the purchasing power of domestic wages. At the same time, it has also fostered a massive offshoring of high-productivity, high-pay goods and services output and employment, thereby causing the mix of wages in the US economy to skew steadily lower.

In this context, the Social Security Administration’s recent release of annual wage statistics for 2022 is an eye-opener, and also puts the lie to “Joe Biden’s” preposterous bragging about the Administration’s economic accomplishments.

It turns out that the above cited median annual wage for 2022 was just slightly above $40,000, and that by definition half of the nation’s 172 million workers with wage records earned less than that amount. To be exact, 84.5 million workers posted annual earnings of $40,000 per year or less in 2022, with an average annual earnings level of just $17,900.

That’s right. The average worker in the bottom half of the wage distribution generated earnings that do not even remotely support a middle-class living standard. In fact, this figure amounts to only 65% of the Federal poverty line for a household of 4 persons ($27,750) and is barely above the $14,580 poverty level for a single person household.

In other words, the overwhelming bulk of the 84.5 million workers in the bottom half of the wage distribution pulled in paychecks over the course of 2022 which were below or just above the Federal poverty line!

That is to say, the US economy is badly broken, yet you do not hear a peep from either wing of the Uniparty. The above cited figures have been the same in relative terms for many years, yet the Donald claimed to have produced the Greatest Economy Ever and Sleepy Joe has the nerve to endlessly tout the virtues of Bidenomics.

As it happens, a good part of the problem is that the overwhelming bulk of these 84.5 million workers not only receive low hourly rates, but also experience gainful employment only on a part-time or intermittent basis.

For instance, there were nearly 29 million payroll records in 2022 where total earnings were less than $10,000 with an average of $4,250. Even at the minimum wage, the latter would amount to only 566 hours of paid employment or about 28% of a standard 2,000-hour work year.

Likewise, there were nearly another 10 million workers who posted earnings of between $10,000 and $15,000, with an average of $12,477. Again, that amounts to just 1,650 hours of paid work, even at the Federal minimum wage.

In all, these 39 million bottom-of-the-ladder jobs generated about $244 billion of aggregate wage income in 2022. That was roughly equal to the $236 billion earned by the 28,500 workers with wages of $3.5 million or higher.

Again, the problem is not that 28,500 workers made a lot of money last year, averaging more than $8 million each. Presumably their talents and value-added in the marketplace warranted such wage and salary compensation.

The real problem is that the US economy has done such a poor job of generating middle-class employment opportunities that it took 1,400X more workers at the bottom of the labor market to generate the same amount of wage income as the top-tier earners.

In all, the 84.5 million workers below the median annual wage ($40,000) generated $1.51 trillion of aggregate wage income in 2022. That is to say, 50% of the employed labor force generated just 15% of the $10.53 trillion of aggregate wage income reported by the Social Security Administration.

Moreover, given the skew to the low wage end, the average income of the bottom 50% of workers computed to only the aforementioned $17,900. And to repeat, that’s not a typo, either. It’s the actual average wage income of 84.5 million US employees, who represent a larger work force than the total population of either England, France, Italy, or even Germany.

In short, a huge share of the workforce is no longer even remotely middle-income. That’s underscored by the fact that the other half of the US workforce—the 84.5 million workers with 2022 wages above the median level—generated an average income that was nearly six times higher at $102,000.

So the question recurs. Why isn’t the US economy generating middle-income jobs at the scale needed to provide better opportunities to the 84.5 million workers below the median wage level?

The short answer, of course, is that the US economy desperately needs far less speculation on Wall Street and far more productive investment on Main Street—when, in fact, the opposite has been happening during the past two decades.

To wit, net real private investment (i.e. after inflation and D&A) declined from 6.7% of real GDP in the year 2000 to just 4.8% as of 2022. Yet given the fearsome competitive pressures of the global labor and product markets, the US economy actually needs net investment at rates well above historical levels.

As we will show in Part 3, however, unless the Fed’s open market operations are completely shut down in favor of a return to a purely discount window-based modus operandi, there is not a snowball’s chance in the hot place that this will happen. As long as the Fed is in business cheek-by-jowl with the hedge funds and speculators of Wall Street, it will be their captive. So ensnared, it will continue to flood the financial markets with the cheap debt and artificial liquidity which is the mother’s milk of speculative excess.

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https://www.youtube.com/watch?time_continue=3&v=8chkBGYB5Cc&embeds_referring_euri=https%3A%2F%2Fjimmydore.com%2F&source_ve_path=Mjg2NjY&feature=emb_logo

Netanyahu Says He Wants Wars With Iran, Iraq, Libya & Russia! 

He's A Maniac!

13 minute video

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https://www.blogger.com/blog/post/edit/4598095214928566760/3196569414597118147

https://scheerpost.com/2023/11/30/the-pentagon-just-cant-pass-an-audit/

The Pentagon Just Can’t Pass an Audit

Conservative lawmakers calling for cuts should start with the agency that can’t account for $1.9 trillion — not the programs Americans rely on.  

The Pentagon just failed its audit — again. For the sixth time in a row, the agency that accounts for half the money Congress approves each year can’t figure out what it did with all that money.

For a brief recap, the Pentagon has never passed an audit. Until 2018, it had never even completed one.

Since then, the Pentagon has done an audit every year and given itself a participation prize each time. Yet despite this year’s triumphant press release — titled “DOD Makes Incremental Progress Towards Clean Audit” — it has failed every time.

In its most recent audit, the Pentagon was able to account for just half of its $3.8 trillion in assets (including equipment, facilities, etc). That means $1.9 trillion is unaccounted for — more than the entire budget Congress agreed to for the current fiscal year.

No other federal agency could get away with this. There would be congressional hearings. There would be demands to remove agency leaders, or to defund those agencies. Every other major federal agency has passed an audit, proving that it knows where taxpayer dollars it is entrusted with are going.

Yet Congress is poised to approve another $840 billion for the Pentagon despite its failures.

In fact, by my count Congress has approved $3.9 trillion in Pentagon spending since the first failed audit in 2018. Tens of billions have gone through the Pentagon to fund wars in Afghanistan, Ukraine, and now Israel. Accountability for those “assets” — including weapons and equipment — is also in question.

At this point, lawmakers surely know those funds may never be accounted for. And year after year, half of the Pentagon budgetgoes to corporate weapons contractors and other corporations who profiteer from this lack of accountability.

There is an entity whose job it is to prevent this sort of abuse: Congress. With each failure at the Pentagon, Congress is failing, too. Every year that members of Congress vote to boost Pentagon spending with no strings attached, they choose to spend untold billions on weapons and war with no accountability.

Meanwhile, all those other agencies that have passed their audits could put those funds to much better use serving the public. Too many Americans are struggling to afford necessities like housing, heat, health care, and child care, and meanwhile our country is grappling with homelessness, the opioid epidemic, and increasingly common catastrophic weather events.

With another government shutdown debate looming in early 2024, you’ll hear lawmakers say we need to cut those already inadequate investments in working families. But if they’re worried about spending, they should start with the agency that has somehow lost track of nearly $2 trillion worth of publicly funded resources.