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FED Chair Goes Rogue Says the National Debt Poses a Long-term Threat to the Economy

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the staff of the Ridgewood blog

Washington DC, the FED Chair goes rogue during an interview for 60 Minutes, Federal Reserve Chair Jerome Powell underscored the urgency of addressing the United States’ escalating national debt, which currently stands at over $34 trillion and continues to rise. Powell emphasized the unsustainable fiscal trajectory of the U.S. federal government, noting that the debt is growing at a faster pace than the economy.

Continue reading FED Chair Goes Rogue Says the National Debt Poses a Long-term Threat to the Economy

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Foreign ownership of US debt slips again in May


WASHINGTON (AP) — Foreign holdings of U.S. Treasury securities fell for the second straight month in May.

The Treasury Department says total foreign holdings dropped 0.5 percent to $6.21 trillion after slipping 0.8 percent to $6.24 trillion in April.

Japan, the second-biggest foreign owner of Treasury securities, reduced its holdings by 0.8 percent to $1.13 trillion. China, the biggest foreign investor in Treasurys, increased its holdings slightly to $1.24 trillion.

The national debt is nearly $19.4 trillion and is expected to grow, which means the United States will need foreigners to keep buying Treasury securities.
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$20 trillion man: National debt nearly doubles during Obama presidency


By Dave Boyer – The Washington Times – Sunday, November 1, 2015

When President Obama signs into law the new two-year budget deal Monday, his action will bring into sharper focus a part of his legacy that he doesn’t like to talk about: He is the $20 trillion man.

Mr. Obama’s spending agreement with Congress will suspend the nation’s debt limit and allow the Treasury to borrow another $1.5 trillion or so by the end of his presidency in 2017. Added to the current total national debt of more than $18.15 trillion, the red ink will likely be crowding the $20 trillion mark right around the time Mr. Obama leaves the White House.

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It Doesn’t Matter Whether Republicans or Democrats Win: the National Debt Keeps Rising


It Doesn’t Matter Whether Republicans or Democrats Win: the National Debt Keeps Rising

Stephen Moore / @StephenMoore / December 13, 2014

Sorry, but this one you can’t blame on either party. Yes, President Obama has made the problem much, much worse, but the scary truth is that the national debt keeps rising inexorably no matter who or which party is in office. That’s the new law of American politics.

When I first arrived in Washington in the early 1980s, the debt was roughly $2 trillion. This week, 30 years and five presidents later, the debt for the first time exceeded $18 trillion. We have been in the red in all but four of the last 40 years.

That’s $18,000,000,000,000. We all know that $18 million is a lot of money. This is $18 million times another million. The number is so gigantic we won’t or can’t try to fathom it.

Why worry? We owe it to ourselves, we’re told. The mighty American economy is big enough to absorb it. This country was built on debt. There is no better time to borrow than when interest rates are at a 40-year low.

There’s some truth in all these claims. Sure, we have a near–$18 trillion economy, but the problem is that the debt is outgrowing the economy. In just the last seven years — the last year of George W. Bush’s presidency and the first six of Obama’s — the debt has increased by roughly $7.4 trillion. That’s ten times the entire debt incurred in our first 200 years as a nation.

My view is that government debt isn’t inherently evil. The wisdom of borrowing depends on what you use the money for. We borrowed trillions (in today’s dollars) to win World War II. Surely that was worth it. We borrowed another $1.8 trillion during the Reagan years to finance winning the Cold War and rebuilding the private economy with growth-hormone tax cuts. That has clearly benefited future generations — so they should bear some of the cost.

But what we have bought with most of our debt of the last two decades has been a bigger, more expansive welfare state. Almost half of all American households, according to the Census Bureau, get a government check or some direct benefit from government today. More than one-third of households get some kind of unearned welfare.

Obama called his spend-and-borrow policies a “stimulus.” Really? What do we have to show for Obama’s debt? Solyndra. Forty-six million people on food stamps. The Obamacare debacle. Etc. Etc. This is one of only two times in American history (the post–Vietnam War era is the other) that we have opened up the flood gates on borrowing even as we have severely slashed the military budget.

Here is the biggest worry about an $18 trillion debt: What happens if/when interest rates start to drift back upward? Answer: This is the economic equivalent of the nuclear option.

Each 1-percentage-point rise in interest rates causes the U.S. deficit to rise by more than $1 trillion over ten years. So a 300-basis-point rise in rates — nothing more than a return to normalcy — would mean about $5 trillion in federal deficits.

If that happens, the debt-servicing costs grow astronomically and interest payments would become the biggest expense item in the budget. We start to pay more and more taxes just to finance past borrowing. This is what happened in Detroit; look at how that turned out.

Maybe this debt bubble won’t burst. Let’s pray that it doesn’t. If it does, the 2008–09 real-estate crash could look like a picnic by comparison.

The politicians think they are pulling a fast one here, but the vast majority of Americans feel in their gut that the economy is headed in the wrong direction, in no small part because of this debt time bomb. It explains why Barack Obama’s policies were so thoroughly routed during November’s midterm elections. A great nation doesn’t ring up unpaid bills month after month, year after year, decade after decade. The basic common sense of Americans tells us that you don’t borrow your way to prosperity.

Oh, and we’re still borrowing half a trillion a year, so the debt will likely hit $20 trillion sometime before 2018. Have a nice day.

Originally appeared in the National Review.

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What Happens When America Goes Bankrupt?


What Happens When America Goes Bankrupt?

Hat tip Tyler Durden,

Submitted by Simon Black via Sovereign Man blog,

Last week in the Land of the Free, I heard a radio campaign ad for a local political candidate while in Texas.

In the ad, he was talking about the debt and excessive government spending. And then he said something along the lines of, “We need to get this under control before America goes bankrupt.”

‘Buddy,’ I remember thinking, ‘America isn’t going bankrupt. It already IS bankrupt.’

Just so that we don’t mince words, my dictionary defines ‘bankrupt’ as “any insolvent debtor,” i.e. a debtor whose liabilities exceeds assets.

That’s the US government, by its own admission.

As we’ve discussed before, the US Government Accountability Office (GAO) publishes financial statements each year in which they list all official government assets and liabilities.

The liabilities far exceed the assets. Big time. And the hole is getting deeper each year.

At this point the government’s net worth is roughly NEGATIVE $17 trillion, about 110% of GDP. That’s textbook insolvency.

The only reason the US government is still able to service its debts is because they are borrowing money just to pay interest… and because the Federal Reserve keeps printing money to buy up US debt.

These are hardly sustainable fiscal strategies.

Read the rest of the story here:

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If Only a Snow Shovel Could Dig Us Out of This


If Only a Snow Shovel Could Dig Us Out of This
Amy Payne
February 13, 2014 at 6:30 am

Thanks to Congress, the U.S. now doesn’t have a debt limit for the next year. Let two Heritage experts put this into perspective.

“President Obama, after less than five years in office, has already increased the debt limit by more than any other president in U.S. history, including President George W. Bush over eight years in office,” report Romina Boccia and Michael Sargent, authors of the newly updated Federal Budget in Pictures.

For the next year, now that Congress has given Obama a blank check, we’ll be following the borrowing and the spending and all the debt Washington is piling on Americans. The national debt, at $17.3 trillion, already exceeds $140,000 per household.

Sargent and Boccia, the Grover M. Hermann Fellow, teamed up with Heritage’s Senior Data Graphics Editor John Fleming to bring us 20 charts that will convince you the country’s in trouble.

There are some scary fiscal times ahead.

Imagine all of America and all of the taxes people pay to the federal government every year. Do you have an overwhelming idea in your mind? Just 16 years from now, ALL of that money will pay for just two things: entitlement programs and interest on the debt.

All of it.

The entitlement programs include Social Security, Medicare, Medicaid, and Obamacare’s new entitlements. So if you think anything is important besides these mammoth entitlement programs—like national defense, a real constitutional priority—Congress needs to get going on some major reforms.

These are just a few of the mind-boggling facts you can see and share—if you dare—in this visual resource. Find out where your tax money went and get the latest on Obamacare’s tax hikes.