Worried About US Debt Becoming Parabolic? The US CBO Is Just As Worried!
America is heading for a debt-to-GDP ratio of 166% in 2054 at the current pace. The current system is no longer sustainable.
Have you ever heard of the CBO?
No, I'm not talking about the CBO burger you can occasionally find at McDonald's, but rather the Congressional Budget Office.
The Congressional Budget Office is a U.S. federal agency, part of the legislative branch of the U.S. federal government. It was created in 1974 by the Congressional Budget and Impoundment Control Act of 1974.
The Congressional Budget Office produces independent, nonpartisan, analysis of economic and budgetary issues to support the Congressional budget process.
The CBO, in its role as a budget advisory body, is also responsible for determining the effects of the U.S. national debt. The CBO brings together 232 highly qualified experts, mainly economists and specialists in American public policy.
These CBO experts are worried!
Do you know what they're worried about? Like you and me, it's the trajectory of the US debt, which I wrote about recently on In Bitcoin We Trust Newsletter:
A parabolic trajectory "unprecedented" in American history. This progression could cause turmoil in the US government bond markets.
I'll explain it all in detail below.
The CBO has just published its estimate of the federal debt. Hold on to your hats, because this debt has exploded to $26,200 billion!
This debt exploded recently as a result of the tax cuts during Donald Trump's term in office. It exploded as a result of post-COVID stimulus packages. It then exploded as a result of the economic stimulus packages of recent years.
The problem lies in the projections made by the major institutes. These forecasts are breathtaking. U.S. debt will continue to grow at a breathtaking pace, reaching 166% of GDP by 2054.
You may say that 2054 is a long way off. You might think there's time to improve the situation.
Unfortunately, when we look at the short term, the situation has no chance of improving.
Two scenarios with identical outcomes await America.
If Donald Trump is elected, he will cut taxes again.
If Joe Biden is re-elected, he'll try to tax super-profits, but that won't be nearly enough.
According to the CBO, the American public deficit will be around 6% for the next 10 years, as bad as some European countries like France... Something not very glorious for America!
How will America be impacted and punished?
Investor mistrust will be reflected in long-term interest rates, which will not be able to fall as fast as inflation. Short-term rates will fall, but long-term rates will fall less.
Investor mistrust will be reflected in the dollar and will weigh on the US currency unless everyone else, starting with Europe, follows the same path as the United States, and the precarious balance between currencies is preserved.
As for American households, whose resilience surprised Jerome Powell's Fed, the situation is hardly any better.
American households have squandered the forced savings accumulated during COVID. They have embarked on a consumption frenzy that has certainly supported American growth, but which has left them with runaway debt, particularly on their credit cards.
American consumers paid 50% more on their credit cards than in 2020. Interest and fees on these loans have risen from $51 billion to $157 billion.
And the default rate is at a 13-year high!
The conclusion is simple: American debt is going to weigh heavily on the American economy in the medium term, with no solution in sight.
This might prompt you to find out a little more about Bitcoin, whose revolutionary decentralized monetary system represents an incredible opportunity for all those who want to be safe from central bankers and governments the world over.
Of course, it's up to you to study Bitcoin sufficiently to see if you want to seize this opportunity.
For those who want to study Bitcoin, feel free to come and discover my newsletter In Bitcoin We Trust:
MONEY PRINTING is designed to KEEP you POOR, RELIANT on the SYSTEM, and INCAPABLE of ACHIEVING your GOALS.
JOE BIDEN just signed a $1.2 Trillion SPENDING BILL.
Here is what $1T in cash would look like… 🤔
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