By Rudy Barnes, Jr.
Don’t expect a rapture or a great tribulation to initiate America’s end times. The cause will not likely be God, or even a pandemic or a foreign invasion. It’s likely to be an economic collapse. After all, America’s strength depends on its economy, and it will suffer an apocalyptic failure if it appears that America can’t pay interest on its massive $28+ Trillion national debt.
Over the years Keynesian economists have assured us that we need not be concerned with our national debt, and apparently most Americans agree. Few are concerned with the debt ceiling or the soaring national debt, and Congress reflects that voter indifference. Both parties have subordinated the future of America’s economy to partisan posturing for the 2022 election.
Democrats are promoting $3.5 Trillion in new spending without the tax revenues needed to amortize the increased debt. If the Federal Reserve can’t keep interest rates low, the increased cost of borrowing will cause inflation that increases interest rates and reduces the value of the dollar. That would imperil America’s credit rating and threaten an economic crisis.
If borrowing is not feasible and America has to pay its exorbitant debts with new dollars, that would also cause dangerous inflation. America has depended on the dollar as the world’s currency to absorb the inflationary effects of its free spending and excessive debt. If the dollar is no longer the world’s currency, America could suffer the same fate as Germany in the 1920s.
Since the end of World War II, the dollar has been the world’s currency and Keynesian economics have allowed America to ignore uncomfortable economic realities; but that time seems to be coming to an end. Without major monetary and economic policy changes, an apocalyptic depression even deeper and darker than that of 1929 could descend upon America.
In 1992 James Carville asserted the first priority of politics: It’s the economy, stupid. That hasn’t changed. Money remains the top priority of most Americans, and America is now approaching an “inflection point” in its economy. To pass a proposed $3.5 Trillion bill with only a paper thin majority in Congress the Biden administration needs to raise the debt ceiling.
Republicans have vowed to oppose raising the debt ceiling, and the vote is coming up soon. “The process could take days that Democrats simply do not have, meaning at least a partial or short-term government shutdown even if Congress staves off a more apocalyptic financial meltdown.” Staving off a financial meltdown will not prevent it--only delay it.
Congress will likely avoid an immediate economic crisis by raising the debt ceiling; but there are other more intractable issues that could trigger an economic apocalypse: Fed policies subsidizing an overpriced stock market and creating dangerous disparities in wealth, a prodigal Congress that continues to increase America’s massive national debt, and digital currency that could replace the dollar as the world’s currency. It’s a time of reckoning for America’s future.
“The U.S. government is careening toward an urgent financial crisis as a political standoff on Capitol Hill threatens to shutter the government and thrust Washington to the precipice of defaulting on its debt. The high-stakes feud stems from a fight to raise the U.S. government’s borrowing limit. Democrats have tied the increase to a bill that funds federal operations into December, setting off a war with Republicans, who refuse to raise the cap out of opposition to President Biden’s broader agenda — even if it means grinding the country to a halt. In recent days, Democratic lawmakers have reassured they will not allow the country to default. But the process could take days that Democrats simply do not have, meaning at least a partial or short-term government shutdown is possible even if Congress staves off a more apocalyptic financial meltdown. And it would force Democrats to vote on their own to raise the debt ceiling by a specific amount, opening them to GOP attacks later — even as Democrats contend that some of the spending was enacted on a bipartisan basis.” See
Amber Phillips has answered three questions on the debt-ceiling fight: What is the debt ceiling?, Why are we talking about this now?, and What happens if the government defaults on its debt? See https://www.washingtonpost.com/politics/2021/09/22/debt-ceiling-explained/?utm_.
President Biden has said “The cost of the Democrats social agenda bill will be zero.” See
To pay for their $3.5 Trillion spending bill, Democrats say they have a framework on tax hikes, but they squabble over specifics. “The new tax details had arrived as Democrats scrambled to salvage their $3.5 trillion proposal from political collapse, as moderates and liberals within the party continued to duel over the size and scope of the package. Just a day ago, Biden huddled in private meetings with the warring factions within Capitol Hill, the first in what is expected to be a lengthy series of outreach efforts to secure his broader economic agenda.” See https://www.washingtonpost.com/us-policy/2021/09/23/democrats-tax-reconciliation/?utm_.
According to Mark Zandi, chief economist at Moody’s Analytics “The United States could plunge into an immediate recession if Congress fails to raise the debt ceiling and the country defaults on its payment obligations this fall. ...A prolonged impasse over the debt ceiling would cost the U.S. economy up to 6 million jobs, wipe out as much as $15 trillion in household wealth, and send the unemployment rate surging to roughly 9 percent from around 5 percent. ...Failure to raise the debt limit would have catastrophic impacts on global financial markets. Interest rates would spike as investors demand a higher rate of return for the risk of taking on U.S. debt given uncertainty about repayment. An increase in interest rates would ripple through the economy, raising costs not only for taxpayers but also for consumers and other borrowers. The value of the U.S. dollar would also decline long term as investors questioned the security of purchasing U.S. treasuries. The cost of auto and home loans would rise. ...Stock prices would be cut almost in one-third at the worst of the selloff, wiping out $15 trillion in household wealth,” the Moody’s report finds. Treasury yields, mortgage rates, and other consumer and corporate borrowing rates spike, at least until the debt limit is resolved and Treasury payments resume.” See https://www.washingtonpost.com/us-policy/2021/09/21/debt-ceiling-recession-/?utm_.
On how Congress is hurtling toward a debt showdown despite the public’s waning interest, see
On how the U.S. is losing the global race to decide the future of money--and how it could doom the almighty dollar as the world’s currency with a digital form of currency being developed by China, see https://time.com/6099105/us-china-digital-currency-central-bank/.