“The debt and deficit problem isn't what you think”...
The reason why the economy can’t really grow…
🧨 The Economy is NOT What They Tell You. Kiyosaki Exposes the Lies HERE.
Dear Reader,
“The debt and deficit problem isn't what you think.”
This we learn through Mr. Lance Roberts, he of Real Investment Advice.
What is the false debt and deficit problem over which so many tremble and quake?
The answer is financial crisis… and economic collapse.
Mr. Roberts does not believe they constitute an authentic menace.
He has beaten to quarters too many times over too many false alarms. He has heeded too many shouts of wolf.
The enemy never attacked and the wolf never bit.
Thus the calamity-howlers have been fanning false fears:
Over the past 40 years, the national debt has grown exponentially, with none of the dire consequences repeatedly predicted. Interest rates have fluctuated, political gridlock has persisted, and deficits have widened, but the U.S. economy continues to function, grow, and attract global capital.
The U.S.’s “Exorbitant Privilege”
It is true. The United States economy has continued to function, grow and attract global capital — despite all Hell’s angels — and the nearly perfect botchwork of the United States government.
As Germany’s Iron Chancellor, Herr Bismarck, once argued, “God looks after fools, drunks and the United States of America.”
Yet Mr. Roberts does not credit God. He credits instead the “exorbitant privilege” the United States enjoys:
The reason is that the U.S. continues to enjoy what economists call the “exorbitant privilege” of being the issuer of the world’s reserve currency. Treasuries remain the deepest, most liquid capital market globally, and the dollar is central to global trade, investment, and reserves.
This creates a structural advantage that allows the U.S. to run larger deficits than other nations without facing the same level of market discipline. So long as global trust in U.S. institutions and the rule of law remains intact, there is a deep and steady demand for U.S. debt, providing a long runway before any severe funding stress emerges…
While U.S. debt and deficit levels are elevated, there is no imminent risk of fiscal collapse.
Just so. Then what is the true debt and deficit problem… if not financial crisis or fiscal collapse?
SPONSORED: PARADIGM PRESS
The Trump Dump is starting
Get out of stocks now?
You’re still in stocks… Are you nuts?!
There’s one asset you should be buying during the first year of Trump’s presidency… And it ISN’T stocks.
In fact, according to one legendary investor, a modest $900 investment in this asset…
Could grow to a life-changing $108,000 in just 12 months.
See everything you need to know here.
For your best shot at these gains, you must be in by August 30th.
👉 Free instructions here.
The Real Debt and Deficit Problem
In Mr. Roberts’ telling:
The problem of rising debt levels for the U.S. is NOT a default but a continued degradation of economic growth… The problem with the growth in debt is that it diverts tax dollars away from productive investments into debt service and social welfare…
The problem with the current issuance of debt is that it is primarily non-productive debt. That is a crucially important concept concerning debt issuance and its impact on economic growth.
Here there is justice.
Debt is not what academic men might term a malum in se. That is, debt is not necessarily an evil in itself.
That is because debt can be shoveled into productive pursuits. The proceeds from these productive pursuits can repay the loan by many multiples.
Yet our doddering Uncle Samuel has not borrowed to invest in a productive American future.
He has borrowed largely to satisfy the consumptive needs of the moment. That money which enters through the front door goes instantly exiting through the back door.
It is a hand-to-mouth existence. It is a running-in-place.
And it yields economic stagnation.
Productive vs. Non-Productive Debt
Mr. Roberts:
The key distinction lies between productive and non-productive debt, and understanding the difference is critical to evaluating the risks and benefits of government borrowing.
Productive debt refers to borrowing used for investments that generate long-term economic returns, such as infrastructure, education, research, or business capital expenditures. These types of investments can increase future GDP, improve productivity, and ultimately pay for themselves through higher tax revenues.
In contrast, non-productive debt funds consumption or transfers that do not yield a measurable economic return. In the U.S., social welfare and interest payments on existing debt are a large majority of Government expenditures…
Of every dollar spent by the Federal Government, roughly 73% is “mandatory” spending on social welfare and interest expense.
Thus the United States wallows in non-productive debt. In conclusion:
This is one of the primary reasons why economic growth will continue to run at lower levels. Reversing non-productive spending is impossible due to the general population’s vast dependence on those programs.
The One Hope
In this telling we confront an economic future not of collapse.
We confront instead an economic future of habitual malaise… of gray and twilight… of dank and drizzle… month upon month… year upon year.
Thus we confront not sudden death but slow death.
Yet death is death.
Mr. Roberts holds out hope that artificial intelligence may scatter the gloom.
He believes artificial intelligence may yield annual economic growth of perhaps 3%.
I too have cited the potential artificial intelligence solution. I have conceded that artificial intelligence may catapult the economic system into vastly more productive realms.
Yet I am skeptical by nature. I observe glasses that are half empty of liquid — not half full of liquid.
The silver lining is often a gray edge and the bright side is usually the wrong side.
Thus I incline towards the pessimistic outlook.
I would remind you that looming technological leaps often remain looming technological leaps.
And the promised dawn often proves a false dawn.
Yet a benign artificial intelligence represents hope. And a fellow can hope.
Brian Maher
for Freedom Financial News
PS: Still think the economy is great? Kiyosaki has the undeniable data that proves otherwise. Protect your future. Discover the real story and how to prepare – click here!