Debt Crisis Headlines

06 Nov

Debt Crisis Headlines

Read ‘Em and Weep! Or Buy Gold and Laugh!

At least we’re not the only ones writing about the US Treasury’s debt crisis now.  The story is starting to play far and wide now.  That’s because it is becoming impossible to ignore!

Here are three consecutive headlines from the Drudge Report on Wednesday, 11/1.  The links are all active so you can – and probably should – read the stories yourself.  Nevertheless, we will comment briefly on each.

Treasury to step up size of bond sales to manage growing debt load and higher rates…

SUMMERS: U.S. fiscal deficit more serious problem ‘than ever before’…

Druckenmiller says govt needs to stop spending like ‘drunken sailors’…

The Treasury’s borrowing needs (so that Washington can continue to spend money it doesn’t have) are exploding.  The first story reports that it needs to borrow more than Three-quarters of a trillion dollars in the current quarter.  It needs $776 billion this quarter (Oct-Nov-Dec, and even more in the following quarter, $816 billion.

In the last fiscal year ending September 30, federal red ink totaled $1.7 trillion.  Former Treasury Secretary Larry Summers, who in our memory has never been a meaningful advocate of Washington restraint, says that today’s deficits are probably the biggest economic challenge in US history.

Summer’s first avenue of attack on the deficit would be to step up collections, which is what that $80 billion in new IRS funding in the so-called Inflation Reduction Act is all about.   Despite Washington’s denial, you can expect the middle class to be hounded at new levels of intensity by the IRS. In other words, the taxman is coming for you!  This will result in barely concealed hostility setting the people even more in opposition to the government.  

 Hedge fund billionaire Stanley Druckenmiller has some choice words about Treasury Secretary Janet Yellen lately, as have we.  (See our recent post Head for the Safety Zone.)  Before Covid, notes Druckenmiller, Washington spent 20 percent of GDP.  Now it spends 25 percent.  How does he propose to fix things?  He has Social Security and seniors in his crosshairs.  Sure, go after old people, while the Deep State and Yellen think we can afford two and three-front wars.  

In any case, the spending will leave America a hollowed-out hulk, a shadow of what we were.  On CNBC the other day, Druckenmiller accused Washington of spending “like drunken sailors.”  His appearance was virtually an emotional plea for us to get a handle on spending.  “We’ve got to stop, guys. We’re drunk. We’re digging this deep hole. What are we doing here?”  More than forty years ago Ronald Reagan said comparing Washington to drunken sailors is a slur on drunken sailors!

What is the net-net-net of all these stories? Simple.  It’s every man and woman for him or herself.  The Washington institutions do not have your well-being at heart.  The ship of state is a ship of fools.  They have run it into the shallow reefs.  

Get off the sinking Washington monetary ship while you can.  Protect yourself with gold and silver today.