
Federal (and Other) Debt

Historical perspective every investor needs now!
The federal government owes about $36 trillion. This is quite an achievement. After all, those trillions had to be borrowed. And borrowed they were, even though every lender knows that none of it can ever be paid back except by borrowing more money tomorrow to pay off the portion of the bill that comes due today.
It is a Ponzi scheme, and one astonishing for have persisted this long.
Think about how fast the national debt has ramped up. America won its independence in the Revolutionary War, fought the War of 1812, completed the Louisiana Purchase, bought Alaska, and fought a Civil War; it opened the west and expanded to the Pacific coast; it fought the Spanish-American War, won two world wars, fought wars in Korea and Vietnam, and put a man on the moon—all without accumulating a national debt of $1 trillion.
The entire federal debt did not reach $1 trillion until 1982—and I do not mean the one-year spending deficit. I mean that the entire accumulated debt of the federal government did not reach $1 trillion until 1982. That was in President Reagan’s first term. Then the debt broke above $10 trillion at the end of Bush the Younger’s presidency. It rose to $20 trillion at the end of Obama’s tenure.
Think about just the last part: the federal debt doubled during the Obama presidency.
Now President Biden leaves office and a $36 trillion debt behind him.
Throughout its history, US debt has averaged 30 percent of total US economic output. Today, it is 120 percent of GDP, four times the average. It is more than the entire annual productivity of China, Japan, Germany, India, the United Kingdom, France, Italy, and Russia combined!

Or to put it in yet another way, the US national debt is equal to $106,967 per person, or $427,868 for a family of four. That is a substantial mountain of debt to try to service, and when it has to be paid off, one might wonder how the government intends to get you to pay your share?
The US debt situation is hopeless. In fact, it is worse than $36 trillion. In addition to the acknowledged debt, the government has made all kinds of other promises to pay for things like Social Security and Medicare. This hidden debt, the unfunded liabilities of the government, runs somewhere between five and ten times the visible debt.
Yet for all of that, debt is a problem much bigger than just the US government. Debt is a global problem, a $323 trillion dollar problem!

Tom Dyson, the Investment Director of Bonner Private Research cuts to the chase:
It’s a huge wealth bubble and when it pops, $400 trillion or $500 trillion of (mostly) paper claims ($323 trillion in debt plus whatever owners’ equity the system has) will rush for the exits and seek safety. And policy makers won’t be able to stop it. They may even make it worse.
We don’t know the day and the hour that everyone will rush to safety. When you keep stretching and stretching a rubble band, we don’t know exactly when it will break. But we know it will.
When everyone rushes to safety, they will be rushing to gold and silver. Please don’t do what the masses do.
They wait until it is too late!