Debt Up(date): This Will Not End Well


When debt increases faster than income, as it has for many years in every country of the world, it means we are borrowing money we cannot and will not repay.

This will not end well.

The end game will probably be a civil society destroying fireball of inflation and/or deflation.

Every day that we choose to ignore the elephant in the living room means we increase the pain and harm that will eventually be experienced.

We are climbing a cliff with a crumbling foundation. A wise person would reverse direction and climb down.

From ZeroHedge today…

US Ends 2016 With $19.98 Trillion In Federal Debt; Up $1,054,647,941,626.91

Putting this increase in context, during Barack Obama’s time in office, federal debt has increased by $9,349,949,902,134.72, or 88%, rising from $10,626,877,048,913.08 on Jan. 20, 2009, the day of Obama’s inauguration to $19,976,826,951,047.80 on the last day of 2016.







And even that was considered quite low by historical standards.



2.24% is still pretty cheap. But it’s nearly double the rate from just six months ago.

Back in July, the 3-month T-bill rate was just 0.02%. Now it’s more than 25 TIMES greater at 0.51%.

This is a significant increase in a short period of time.

If the government’s average interest rate returned to 2007 levels, they would be spending nearly $1 trillion each year just to pay interest.

That’s more than they currently spend on Medicare or the US military.

So as you can see, the US government is not only increasing the debt level at an astonishing rate (with absolutely nothing to show for it), but they’re going to have to start paying a LOT more interest.

Remember that they already borrow money just to pay interest on the money they’ve already borrowed.

So higher interest rates mean that they’ll have to borrow even more money to pay interest, which will cause the debt to go up even higher, requiring them to borrow even more money to pay interest.

It’s a never-ending cycle that only ends one way: default.

The idea of ‘growing their way out’ of debt is a total fantasy.


And then they conclude with the obligatory denial…

The sky is not falling.

In fact, despite this debt madness, we’re living in a world full of incredible business, investment, technological, and lifestyle opportunities.

It’s truly an incredible time to be alive.


Enjoy it while it lasts because it won’t.

9 thoughts on “Debt Up(date): This Will Not End Well”

  1. Debt is an endlessly fascinating topic. Here is a different spin on the topic.

    If Trump succeeds at increasing growth then interest rates will rise which will cause something really bad to happen.

    If Trump does not succeed at increasing growth then debt will continue to increase faster than income until something really bad happens.

    Rock meets hard spot.

    You Can Have One or The Other – But Not Both


Leave a Reply


You are commenting using your account. Log Out /  Change )

Google photo


Twitter picture


Facebook photo


Connecting to %s