Got a spare million bucks lying around? Because that’s your household’s share of the national debt. Excerpt:
The U.S. Treasury has published a major report revealing that the federal government has amassed $124.1 trillion in debts, liabilities, and unfunded obligations. To place this shortfall in perspective, it equates to:
- $955,407 for every household in the U.S.
- 29 times annual federal revenues.
- 86% of the combined net worth of all U.S. households and nonprofit organizations, including all assets in savings, real estate, corporate stocks, private businesses, and durable consumer goods like automobiles and furniture.
The new data reflect the government’s finances at the close of its 2021 fiscal year on September 30, 2021. Unlike other estimates of the federal government’s red ink which extend into the infinite future, the figure of $124.1 trillion only includes Americans who are alive right now. Thus, it measures the financial burden that today’s Americans are placing on future generations.
The only word that applies to this situation is “catastrophe.” The people – of both political parties – who got us in this mess, of course, will 1) never be held accountable and b) always be well-insulated against the worst results of the disaster, at least up until we get to the rope-and-lampposts stage of the reaction.
There are only three ways out of this:
- Grow our way out of it. Of course that would require some positive, pro-growth policies, and we haven’t seen too many of those coming out of the Imperial City lately. And we’re probably past the point of no return on that option in any case; we’re too far in the hole.
- Inflate our way out of it. Pay off the overwhelming debt with worthless dollars. Even with re-monetizing to shave some zeroes off the currency, that’s a horrible solution. Look at how bad things are now, with nine or ten percent inflation, and imagine a thousand percent.
- Repudiate the debt. At some point, imagine the US government just saying, “sorry, if you are holding US Government debt, well, you’re hosed, we aren’t paying it.” That’s effectively declaring bankruptcy, and considering that the US is still the largest economy on the planet and the US dollar is still the world’s reserve currency, that’s a recipe for global financial collapse.
While some believe the U.S. government can spend and borrow with abandon because it can print money, one of the most established laws of economics is that there is no such thing as a free lunch. The prolific economist William A. McEachern explains why this is so:
There is no free lunch because all goods and services involve a cost to someone. The lunch may seem free to you, but it draws scarce resources away from the production of other goods and services, and whoever provides a free lunch often expects something in return. A Russian proverb makes a similar point but with a bit more bite: “The only place you find free cheese is in a mousetrap.”
Yeah. We’re pretty hosed. And our options aren’t good; one party is driving us to ruin just a little more slowly than the other, but it’s beginning to look like the end result is inevitably bad.