{"id":1100698,"date":"2019-02-14T16:56:53","date_gmt":"2019-02-14T16:56:53","guid":{"rendered":"https:\/\/dailyreckoning.com\/?p=106747"},"modified":"2019-02-14T16:56:53","modified_gmt":"2019-02-14T16:56:53","slug":"one-step-closer-to-ruin","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1100698","title":{"rendered":"One Step Closer to Ruin"},"content":{"rendered":"

This post One Step Closer to Ruin<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

\u201cBlessed are the young, for they shall inherit the national debt.\u201d
\n<\/em>\u2014 <\/em>Herbert Hoover<\/span><\/p>\n

Today we pause to acknowledge a sad mile marker… another waypoint on the road to the poorhouse\u2026<\/p>\n

This week \u2014 for the first time in its 244 years \u2014 total United States debt exceeds $22 trillion.<\/p>\n

The last $2 trillion has piled on since Mr. Trump donned the imperial purple.<\/p>\n

The United States required 205 years to ring up its first $1 trillion debt \u2014 but only 11 months for its 22nd.<\/p>\n

That is, what was previously the work of two centuries\u2026 is now the work of 11 months.<\/p>\n

Here is progress \u2014 of a peculiar and exotic sort.<\/p>\n

But large numbers exert a dulling effect on the sober senses\u2026 like large bottles of wine.<\/p>\n

A $10,000 dinner bill, for example, will freeze your blood.<\/p>\n

It will torment you, stagger you, hagride you, kill you \u2014 because though extravagant, you can relate to figures in this range.<\/p>\n

But a trillion-dollar bill will glaze your eyes.<\/p>\n

Not in 100 lifetimes could you hope to satisfy it. A trillion ranges beyond all fathoming, all imagination.<\/p>\n

You would laugh it away\u2026 and depart the restaurant instructing the owner where he can place his bill.<\/p>\n

So let us attempt to reduce the airy abstract to solid concrete\u2026<\/p>\n

How to Imagine $1 Trillion<\/strong><\/h2>\n

The nonprofit Employment Policies Institute places 1 trillion into this perspective:<\/p>\n

\n

Let’s say someone told you to wait for something. If you waited 1,000 seconds, it’d only take about 17 minutes. If you waited 1 million seconds, you’d have to wait about 11.5 days\u2026 But if you waited 1 trillion seconds, you’d have to wait 31,688 years.<\/em><\/p>\n<\/blockquote>\n

Returning to our poor example, perhaps you can tell the restaurateur he will have his money in 1 trillion seconds.<\/p>\n

Your offer would likely appear very reasonable.<\/p>\n

Let us mix the figure some\u2026<\/p>\n

Assume for the moment you are placed in command of the printing press. But you are limited to $1 bills.<\/p>\n

Being exceptionally energetic, you produce one $1 bill each second of the day, 365 days of the year.<\/p>\n

How long would you require to print 1 trillion $1 bills?<\/p>\n

Author Bill Bryson:<\/p>\n

\n

If you initialed $1 per second, you would make $1,000 every 17 minutes. After 12 days of nonstop effort you would acquire your first $1 million. Thus, it would take you 120 days to accumulate $10 million and 1,200 days \u2014 something over three years \u2014 to reach $100 million. After 31.7 years you would become a billionaire… But not until after 31,709.8 years would you count your trillionth dollar.<\/em><\/p>\n<\/blockquote>\n

But your sole concern is the national welfare. You therefore consecrate yourself to retiring the national debt.<\/p>\n

In that case, you multiply the preceding by 22. Here is what you find:<\/p>\n

Writing off today\u2019s $22 trillion debt would require 697,615.6<\/em> years of ceaseless labor.<\/p>\n

Assume the Almighty grants you your threescore and 10 \u2014 70 years.<\/p>\n

In 9,965.9 lifetimes, you would complete the business.<\/p>\n

Heaven, indeed, can wait. Fortunately\u2026 so must hell.<\/p>\n

But you say we conjure a phantom menace.<\/p>\n

The United States\u2019 GDP is $20 trillion. Put next to it, a $22 trillion debt is not half so daunting.<\/p>\n

But the trend is\u2026<\/p>\n

Debt Is Growing Faster Than the Economy<\/strong><\/h2>\n

Michael Peterson, CEO of the nonpartisan Peter G. Peterson Foundation:<\/p>\n

\u201cReaching this unfortunate milestone so rapidly is the latest sign that our fiscal situation is not only unsustainable but accelerating.\u201d<\/p>\n

GDP has increased some 35% since 2008. But the national debt… 122%.<\/p>\n

Meantime, average real annual economic growth since 2009 runs to 2.23%.<\/p>\n

And the Congressional Budget Office (CBO) estimates GDP growth will limp along at an average 1.9% per annum the next decade.<\/p>\n

But it estimates debt is expanding at a 6% annual rate.<\/p>\n

Once again\u2026 the trend.<\/p>\n

But CBO\u2019s growth forecast may be optimistic. It fails to account for possible recession.<\/p>\n

The current expansion is the second longest in U.S. history. By July it will become the longest \u2014 if the gods are merciful.<\/p>\n

How much longer can the economy peg along without a recession?<\/p>\n

Permanent Deficits Are the New Religion\u00a0<\/strong><\/h2>\n

In a growing economy, the old Keynesians preach a gospel of fiscal restraint.<\/p>\n

It is the time to squirrel away acorns\u2026 and save against a season of lean kine.<\/p>\n

When recession inevitably arrives, the government can then meet the emergency with a full war chest.<\/p>\n

\u201cCountercyclical\u201d policy, academic men term it.<\/p>\n

But even the old Keynesian religion has gone behind a cloud.<\/p>\n

In its place we find the religion of perpetual deficit.<\/p>\n

Analyst John Rubino on the new catechism:<\/p>\n

\n

Even Keynesianism, generally the most debt-friendly\u2026 school of economic thought, views deficit spending as a cyclical stabilizer. That is, in bad times governments should borrow and spend to keep the economy growing while in good times governments should scale back borrowing \u2014 and ideally run surpluses \u2014 to keep things from overheating.<\/em><\/p>\n

But now we seem to have turned that logic on its head, with fiscal stimulus ramping up in the best of times, when unemployment is low, stock prices high and inflation stirring. New… fiscal policy seems to call for continuous and growing deficits pretty much forever.<\/em><\/p>\n<\/blockquote>\n

When recession is finally upon us \u2014 depend on it \u2014 the spending floodgates will open.<\/p>\n

And today\u2019s trillion-dollar deficits will trifle in comparison.<\/p>\n

\u201cWe get a recession,\u201d affirms analyst Sven Henrich, \u201cand you are looking at $2\u20133 trillion [annual] deficits.\u201d<\/p>\n

A \u201cTripartisan\u201d Approach to Government Spending<\/strong><\/h2>\n

But perhaps we can plug the holes to keep current debt levels even.<\/p>\n

It is possible in theory\u2026 but impossible in practice.<\/p>\n

CBO estimates Congress would have to increase revenues 11% each year\u2026 while simultaneously slicing the budget 10%.<\/p>\n

Will Congress spend 10% less each year?<\/p>\n

As well imagine a circular square\u2026 a flying whale\u2026 or an honest liar.<\/p>\n

Within 10 years, CBO projects federal spending will surge from today\u2019s 20.8% of GDP to 23.0%.<\/p>\n

This is of course a bipartisan effort. Rather, it is a tripartisan effort \u2014<\/em> we the people are as responsible as the politicians we elect.<\/p>\n

Meantime, the United States spent $523 billion servicing its debt in fiscal year 2018 \u2014 a record.<\/p>\n

And CBO projects debt service will rise to $915 billion by 2028 \u2014 nearly 25% of the entire budget.<\/p>\n

$915 billion roughly approximates last year\u2019s combined Medicare and Medicaid costs.<\/p>\n

Rising debt service will likely lower the curtain on the entire show, as rising borrowing costs swamp the economic machinery.<\/p>\n

At that point the entire illusion that deficits do not matter will crash upon the rocks of mathematical fact.<\/p>\n

As we have written before…<\/p>\n

\u201cThe divine wrath is slow indeed in vengeance,\u201d said Roman historian Valerius Maximus nearly 2,000 years ago\u2026<\/p>\n

\u201cBut it makes up for its tardiness by the severity of the punishment.\u201d<\/p>\n

The current recovery is nine years old\u2026 and counting\u2026<\/p>\n

Regards,<\/p>\n

Brian Maher
\nManaging editor, The Daily Reckoning<\/em><\/p>\n

The post One Step Closer to Ruin<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

This post One Step Closer to Ruin<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

The national debt went from $21 trillion to $22 trillion in under a year… How to pay off the national debt ― in 697,615.6 years… The new religion of permanent deficits…<\/p>\n

The post One Step Closer to Ruin<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n","protected":false},"author":16,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[484,366,1566,1567,463],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1100698"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1100698"}],"version-history":[{"count":1,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1100698\/revisions"}],"predecessor-version":[{"id":1100699,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1100698\/revisions\/1100699"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1100698"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1100698"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1100698"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}