We're caught in a trap
I can't walk out
Because I love you too much, baby
Why can't you see
What you're doing to me
When you don't believe a word I say?
-Suspicious Minds, Elvis Presley, 1969
Elvis PresleyrCOs rendition of Suspicious Minds topped the record charts
in 1969. The lyrics portray a romance that couldnrCOt work, but was also impossible to escape. ThatrCOs also a good way to describe our
relationship with government debt. We know it canrCOt last, but we canrCOt walk out. We love government spending and its benefits (like Medicare, Social Security, and unemployment insurance) too much.
In other words, we are in a debt trap. Our political process canrCOt
reduce spending and/or raise taxes enough to balance the budget, so the
debt grows and grows. As it does, paying the interest plus the
accumulated debt load pulls more capital away from more productive uses. This depresses economic growth, thereby generating even more spending
and debt.
This has to end, and I think it will do so in the event IrCOve called The Great Reset. When I first started talking about The Great Reset, we werenrCOt in the debt trap. We were rCLmerelyrCY in a situation with only bad
choices. I didnrCOt think we would make them. Thus the underlying presumption was that we would end up in a debt trap.
The Great Reset will be our escape from the debt trap. It wonrCOt be fun
for anyone, as taxes will go up and government spending of all types cut.
Diverted Capital
Each additional dollar of debt in 1980 generated a rise in GDP of 60
cents, up from 54 cents in 1940. The 1980s was the last decade for the productivity of debt to rise. Since then, this ratio has dropped
sharply, from 42 cents in 1989 to 27 cents in 2019.
LetrCOs unpack this. Debt, even government debt, isnrCOt necessarily bad. It can actually be positive depending on how it is used. Borrowing to build
a productive asset can make sense, if its output is sufficient to repay
the debt and then produce even more.
Like many temptations, debt can be good in moderation but destructive if abused. Some infrastructure spending doesnrCOt have a direct payoff, but clearly helps the overall economy, like the US interstate highway system.
Let me offer a few illustrations. It seems that every congressional representative gives lip service to the concept of rCLinfrastructure spending.rCY And they never really get around to doing it in any
sufficient quantity. Airports are necessary infrastructure and are
typically paid for by landing fees. ThatrCOs productive debt.
I have read that much of the US loses up to 20% of the water our water systems produce due to leaky pipes. To rebuild the national water system would take hundreds of billions if not over $1 trillion. Congress can
easily allow the formation of a public-private partnership and guarantee
the bonds so the Federal Reserve could buy them. Cities could access
those bonds and raise the cost of water by 1% or so to pay for the
bonds. Consumer water bills should still drop since we would be saving
the lost water.
Everyone knows this. Congress does nothing. The same could be done with electric power. A smart grid could pay for itself even with debt costs.
And consumer power prices would likely go down. I could go on and on.
But the debt we are accumulating today is not productive in that way. We
use it to finance current expenditures like Medicare and Social
Security. Necessary? Absolutely. But not the economic definition of productive debt.
Problems arise when debt becomes excessive, relative to the output it
will produce. The cost of repaying it diverts capital from other uses, leaving less capital available for productive investment. You start
needing more debt to generate the same amount of production. Or, said another way, each additional dollar of debt produces less benefit.
Debt service comes from taxation and even more borrowing (which is the definition of a Ponzi scheme), which leaves businesses and families with less money to spend on other things. This results in lower economic
growth, more inflation, and higher interest rates.
Why is it a trap? HererCOs where I have to get political.
Fiscal Futility
To those on the conservative side, the problem is simple. We have excessively high taxes and debt because the government spends too much.
ThatrCOs easy to say but gets a lot more difficult when you talk specifics rCo particularly if you are a member of Congress who must answer to
voters. Exactly which government spending would you like to cut? What programs, departments, and agencies would you eliminate? Every dollar
the government spends has a constituency rCo people who benefit from it
and will fight to preserve it.
Large amounts of spending are essentially on autopilot: Social Security, Medicare, assorted social programs, interest on the debt. These rCLmandatoryrCY expenditures happen automatically, no matter the amounts, without Congress acting at all. The simple fact is that this mandatory spending plus defense spending is now consuming all tax revenue before
any other government services are paid for on the federal level.
The so-called rCLdiscretionaryrCY budget that Congress votes on (defense and all the assorted departments and agencies) is relatively minor. You
could cut it all in half and we would still have a serious problem.
When Trump first entered office the US deficit as percentage of GDP was
less than 5%. That pandemic-year deficit peaked at 16% of GDP, or $3.1 trillion. Fast-forward to today: the FY2025 deficit came in at $1.8
trillion rCo 5.9% of GDP, well below the pandemic peak but still about 55% above the 50-year historical average of 3.8% of GDP. And itrCOs headed the wrong way again. The CBOrCOs latest FY2026 estimate is $2.1 trillion, up from $1.9 trillion projected back in February, after the Supreme Court struck down the IEEPA tariffs in February 2026 and blew a roughly $200 billion hole in expected tariff revenue. Whoever is in the White House,
the deficit keeps landing in roughly the same trap.
Sad to say, government spending just keeps growing no matter which party
is in power. We have crossed a form of political Rubicon where past performance is not indicative of future results. The few serious fiscal conservatives are now gone after finding the Republican Party under
Trump spends differently than Democrats would, but has no desire to
spend less.
And thatrCOs the real problem: Voters like all this spending. They differ
on priorities, but no one really wants to balance the budget. There is
no desire to make the sacrifices and endure the pain it would take to
change the course we are on. So, it wonrCOt change, and debt will keep piling up.
Jaws of the Trap
Debt, as I have said many times, is future consumption pulled forward in time. It lets us consume more today by consuming less in the future.
There is a school of thought which says this doesnrCOt matter because we
can always just keep pushing the due date further out. I disagree, and
Lacy HuntrCOs research explains why.
While debt can be a problem, private debt is also critical to economic growth. It finances innovation and adds to the economyrCOs productive capacity. Excessive government debt diverts resources away from
investment, without which growth slows to a crawl. Lacy proves this mathematically but really, all you have to do is look at GDP growth
around the world since 2008. Europe, Japan, and the US have all
struggled to maintain positive growth. It was only a matter of time
until something pushed us all underwater. The pandemic did it. By 2026 itrCOs a different pressure doing the pushing rCo elevated-for-longer interest costs and a wall of AI-driven capital spending are testing the
same limit from the other direction.
All that being said, this can continue far longer than most people
think. Japan is now at 248.7% (2025) of debt to GDP. Eurozone debt is
about 87.8% (2025), but that understates the true situation in most countries. The US, on the same gross-debt basis, was at 122.6% in early 2026. Europe and Japan both have low or nonexistent GDP growth. The explosion of US debt means the US will soon join them. The answer from almost every economist of any stripe about how to fix the debt problem
is to rCLgrow our way out of it.rCY The problem is we have passed the point of no return.
We canrCOt stop growing debt. That would bring down the system in a true greater-than-the-Great Depression crash. What do you cut? Social
Security? Medicare? Military pensions? Education? Interest payments on
the debt? The State Department? The only way to maintain that spending
is to keep adding debt, which sends us further into the debt trap.
Anomalies in Paradise
At some point, this will simply stop working. That moment is when the
world will face what I first called The Great Reset over a decade ago. I
am often asked exactly when it will happen. I typically demur as taking
a date is tricky. But I think we can narrow it down.
Right now, the Social Security Administration says that Social Security
will have to be cut by roughly 22% at some point in 2033. 10 years ago
they said 2034. Without some major changes in the economy, that will probably slip to 2032. It will be an election year and that will become
the major topic.
We are now at $39.9 trillion of US [federal] debt. Interest on the debt
is $1.1 trillion, at an interest rate of a little under 3%. That rate is obviously rising. Deficits are climbing over $2 trillion per year. By
2031, the debt will be over $50 trillion. Interest costs will run
anywhere from an optimistically estimated low of $1.5 trillion to over
$2 trillion. ThatrCOs assuming no recession.
We are not going to cut Social Security for the vast majority of
recipients. The compromise will likely be some combination of raising
the age of benefits, means testing and increasing Social Security taxes.
But that doesnrCOt solve the rest of the deficit problem. Somewhere around that time the bond markets will finally say, rCLEnough, already!rCY Congress will be forced by markets to act.
Spoiler alert: We will need to completely revamp our tax code, with a greater percentage of GDP going to taxes than any of us want. But werCOll have to collect it differently and not destroy incentives as Europe and Japan have done. Sadly, I donrCOt expect a willingness to do that, at
least political willingness, until we are already in the middle of a
deep crisis. The bad news is we will get one and maybe change some things.
We built our dreams on excessive debt. Now we canrCOt go on together. WerCOre caught in a trap. We canrCOt walk out.
https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap
We're caught in a trap
I can't walk out
Because I love you too much, baby
Why can't you see
What you're doing to me
When you don't believe a word I say?
-Suspicious Minds, Elvis Presley, 1969
Elvis PresleyrCOs rendition of Suspicious Minds topped the record charts
in 1969. The lyrics portray a romance that couldnrCOt work, but was also impossible to escape. ThatrCOs also a good way to describe our
relationship with government debt. We know it canrCOt last, but we canrCOt walk out. We love government spending and its benefits (like Medicare,
Social Security, and unemployment insurance) too much.
In other words, we are in a debt trap. Our political process canrCOt
reduce spending and/or raise taxes enough to balance the budget, so the
debt grows and grows. As it does, paying the interest plus the
accumulated debt load pulls more capital away from more productive uses.
This depresses economic growth, thereby generating even more spending
and debt.
This has to end, and I think it will do so in the event IrCOve called The Great Reset. When I first started talking about The Great Reset, we
werenrCOt in the debt trap. We were rCLmerelyrCY in a situation with only bad choices. I didnrCOt think we would make them. Thus the underlying
presumption was that we would end up in a debt trap.
The Great Reset will be our escape from the debt trap. It wonrCOt be fun
for anyone, as taxes will go up and government spending of all types cut.
Diverted Capital
Each additional dollar of debt in 1980 generated a rise in GDP of 60
cents, up from 54 cents in 1940. The 1980s was the last decade for the productivity of debt to rise. Since then, this ratio has dropped
sharply, from 42 cents in 1989 to 27 cents in 2019.
LetrCOs unpack this. Debt, even government debt, isnrCOt necessarily bad. It can actually be positive depending on how it is used. Borrowing to build
a productive asset can make sense, if its output is sufficient to repay
the debt and then produce even more.
Like many temptations, debt can be good in moderation but destructive if abused. Some infrastructure spending doesnrCOt have a direct payoff, but clearly helps the overall economy, like the US interstate highway system.
Let me offer a few illustrations. It seems that every congressional representative gives lip service to the concept of rCLinfrastructure spending.rCY And they never really get around to doing it in any
sufficient quantity. Airports are necessary infrastructure and are
typically paid for by landing fees. ThatrCOs productive debt.
I have read that much of the US loses up to 20% of the water our water systems produce due to leaky pipes. To rebuild the national water system would take hundreds of billions if not over $1 trillion. Congress can
easily allow the formation of a public-private partnership and guarantee
the bonds so the Federal Reserve could buy them. Cities could access
those bonds and raise the cost of water by 1% or so to pay for the
bonds. Consumer water bills should still drop since we would be saving
the lost water.
Everyone knows this. Congress does nothing. The same could be done with electric power. A smart grid could pay for itself even with debt costs.
And consumer power prices would likely go down. I could go on and on.
But the debt we are accumulating today is not productive in that way. We
use it to finance current expenditures like Medicare and Social
Security. Necessary? Absolutely. But not the economic definition of productive debt.
Problems arise when debt becomes excessive, relative to the output it
will produce. The cost of repaying it diverts capital from other uses, leaving less capital available for productive investment. You start
needing more debt to generate the same amount of production. Or, said
another way, each additional dollar of debt produces less benefit.
Debt service comes from taxation and even more borrowing (which is the definition of a Ponzi scheme), which leaves businesses and families with
less money to spend on other things. This results in lower economic
growth, more inflation, and higher interest rates.
Why is it a trap? HererCOs where I have to get political.
Fiscal Futility
To those on the conservative side, the problem is simple. We have
excessively high taxes and debt because the government spends too much.
ThatrCOs easy to say but gets a lot more difficult when you talk specifics rCo particularly if you are a member of Congress who must answer to
voters. Exactly which government spending would you like to cut? What programs, departments, and agencies would you eliminate? Every dollar
the government spends has a constituency rCo people who benefit from it
and will fight to preserve it.
Large amounts of spending are essentially on autopilot: Social Security, Medicare, assorted social programs, interest on the debt. These rCLmandatoryrCY expenditures happen automatically, no matter the amounts, without Congress acting at all. The simple fact is that this mandatory spending plus defense spending is now consuming all tax revenue before
any other government services are paid for on the federal level.
The so-called rCLdiscretionaryrCY budget that Congress votes on (defense and all the assorted departments and agencies) is relatively minor. You
could cut it all in half and we would still have a serious problem.
When Trump first entered office the US deficit as percentage of GDP was
less than 5%. That pandemic-year deficit peaked at 16% of GDP, or $3.1 trillion. Fast-forward to today: the FY2025 deficit came in at $1.8
trillion rCo 5.9% of GDP, well below the pandemic peak but still about 55% above the 50-year historical average of 3.8% of GDP. And itrCOs headed the wrong way again. The CBOrCOs latest FY2026 estimate is $2.1 trillion, up
from $1.9 trillion projected back in February, after the Supreme Court
struck down the IEEPA tariffs in February 2026 and blew a roughly $200 billion hole in expected tariff revenue. Whoever is in the White House,
the deficit keeps landing in roughly the same trap.
Sad to say, government spending just keeps growing no matter which party
is in power. We have crossed a form of political Rubicon where past performance is not indicative of future results. The few serious fiscal conservatives are now gone after finding the Republican Party under
Trump spends differently than Democrats would, but has no desire to
spend less.
And thatrCOs the real problem: Voters like all this spending. They differ
on priorities, but no one really wants to balance the budget. There is
no desire to make the sacrifices and endure the pain it would take to
change the course we are on. So, it wonrCOt change, and debt will keep
piling up.
Jaws of the Trap
Debt, as I have said many times, is future consumption pulled forward in time. It lets us consume more today by consuming less in the future.
There is a school of thought which says this doesnrCOt matter because we
can always just keep pushing the due date further out. I disagree, and
Lacy HuntrCOs research explains why.
While debt can be a problem, private debt is also critical to economic growth. It finances innovation and adds to the economyrCOs productive capacity. Excessive government debt diverts resources away from
investment, without which growth slows to a crawl. Lacy proves this mathematically but really, all you have to do is look at GDP growth
around the world since 2008. Europe, Japan, and the US have all
struggled to maintain positive growth. It was only a matter of time
until something pushed us all underwater. The pandemic did it. By 2026
itrCOs a different pressure doing the pushing rCo elevated-for-longer interest costs and a wall of AI-driven capital spending are testing the
same limit from the other direction.
All that being said, this can continue far longer than most people
think. Japan is now at 248.7% (2025) of debt to GDP. Eurozone debt is
about 87.8% (2025), but that understates the true situation in most countries. The US, on the same gross-debt basis, was at 122.6% in early
2026. Europe and Japan both have low or nonexistent GDP growth. The
explosion of US debt means the US will soon join them. The answer from
almost every economist of any stripe about how to fix the debt problem
is to rCLgrow our way out of it.rCY The problem is we have passed the point of no return.
We canrCOt stop growing debt. That would bring down the system in a true greater-than-the-Great Depression crash. What do you cut? Social
Security? Medicare? Military pensions? Education? Interest payments on
the debt? The State Department? The only way to maintain that spending
is to keep adding debt, which sends us further into the debt trap.
Anomalies in Paradise
At some point, this will simply stop working. That moment is when the
world will face what I first called The Great Reset over a decade ago. I
am often asked exactly when it will happen. I typically demur as taking
a date is tricky. But I think we can narrow it down.
Right now, the Social Security Administration says that Social Security
will have to be cut by roughly 22% at some point in 2033. 10 years ago
they said 2034. Without some major changes in the economy, that will
probably slip to 2032. It will be an election year and that will become
the major topic.
We are now at $39.9 trillion of US [federal] debt. Interest on the debt
is $1.1 trillion, at an interest rate of a little under 3%. That rate is obviously rising. Deficits are climbing over $2 trillion per year. By
2031, the debt will be over $50 trillion. Interest costs will run
anywhere from an optimistically estimated low of $1.5 trillion to over
$2 trillion. ThatrCOs assuming no recession.
We are not going to cut Social Security for the vast majority of
recipients. The compromise will likely be some combination of raising
the age of benefits, means testing and increasing Social Security taxes.
But that doesnrCOt solve the rest of the deficit problem. Somewhere around that time the bond markets will finally say, rCLEnough, already!rCY Congress will be forced
by markets to act.
Spoiler alert: We will need to completely revamp our tax code, with a
greater percentage of GDP going to taxes than any of us want. But werCOll have to collect it differently and not destroy incentives as Europe and
Japan have done. Sadly, I donrCOt expect a willingness to do that, at
least political willingness, until we are already in the middle of a
deep crisis. The bad news is we will get one and maybe change some things.
We built our dreams on excessive debt. Now we canrCOt go on together.
WerCOre caught in a trap. We canrCOt walk out.
https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap
We're caught in a traphttps://www.youtube.com/watch?v=yh18YXKMk3g
I can't walk out
Because I love you too much, baby
Why can't you see
What you're doing to me
When you don't believe a word I say?
-Suspicious Minds, Elvis Presley, 1969
Elvis PresleyrCOs rendition of Suspicious Minds topped the record charts
in 1969. The lyrics portray a romance that couldnrCOt work, but was also impossible to escape. ThatrCOs also a good way to describe our
relationship with government debt. We know it canrCOt last, but we canrCOt walk out. We love government spending and its benefits (like Medicare, Social Security, and unemployment insurance) too much.
In other words, we are in a debt trap. Our political process canrCOt
reduce spending and/or raise taxes enough to balance the budget, so the
debt grows and grows. As it does, paying the interest plus the
accumulated debt load pulls more capital away from more productive uses. This depresses economic growth, thereby generating even more spending
and debt.
This has to end, and I think it will do so in the event IrCOve called The Great Reset. When I first started talking about The Great Reset, we werenrCOt in the debt trap. We were rCLmerelyrCY in a situation with only bad
choices. I didnrCOt think we would make them. Thus the underlying presumption was that we would end up in a debt trap.
The Great Reset will be our escape from the debt trap. It wonrCOt be fun
for anyone, as taxes will go up and government spending of all types cut.
Diverted Capital
Each additional dollar of debt in 1980 generated a rise in GDP of 60
cents, up from 54 cents in 1940. The 1980s was the last decade for the productivity of debt to rise. Since then, this ratio has dropped
sharply, from 42 cents in 1989 to 27 cents in 2019.
LetrCOs unpack this. Debt, even government debt, isnrCOt necessarily bad. It can actually be positive depending on how it is used. Borrowing to build
a productive asset can make sense, if its output is sufficient to repay
the debt and then produce even more.
Like many temptations, debt can be good in moderation but destructive if abused. Some infrastructure spending doesnrCOt have a direct payoff, but clearly helps the overall economy, like the US interstate highway system.
Let me offer a few illustrations. It seems that every congressional representative gives lip service to the concept of rCLinfrastructure spending.rCY And they never really get around to doing it in any
sufficient quantity. Airports are necessary infrastructure and are
typically paid for by landing fees. ThatrCOs productive debt.
I have read that much of the US loses up to 20% of the water our water systems produce due to leaky pipes. To rebuild the national water system would take hundreds of billions if not over $1 trillion. Congress can
easily allow the formation of a public-private partnership and guarantee
the bonds so the Federal Reserve could buy them. Cities could access
those bonds and raise the cost of water by 1% or so to pay for the
bonds. Consumer water bills should still drop since we would be saving
the lost water.
Everyone knows this. Congress does nothing. The same could be done with electric power. A smart grid could pay for itself even with debt costs.
And consumer power prices would likely go down. I could go on and on.
But the debt we are accumulating today is not productive in that way. We
use it to finance current expenditures like Medicare and Social
Security. Necessary? Absolutely. But not the economic definition of productive debt.
Problems arise when debt becomes excessive, relative to the output it
will produce. The cost of repaying it diverts capital from other uses, leaving less capital available for productive investment. You start
needing more debt to generate the same amount of production. Or, said another way, each additional dollar of debt produces less benefit.
Debt service comes from taxation and even more borrowing (which is the definition of a Ponzi scheme), which leaves businesses and families with less money to spend on other things. This results in lower economic
growth, more inflation, and higher interest rates.
Why is it a trap? HererCOs where I have to get political.
Fiscal Futility
To those on the conservative side, the problem is simple. We have excessively high taxes and debt because the government spends too much.
ThatrCOs easy to say but gets a lot more difficult when you talk specifics rCo particularly if you are a member of Congress who must answer to
voters. Exactly which government spending would you like to cut? What programs, departments, and agencies would you eliminate? Every dollar
the government spends has a constituency rCo people who benefit from it
and will fight to preserve it.
Large amounts of spending are essentially on autopilot: Social Security, Medicare, assorted social programs, interest on the debt. These rCLmandatoryrCY expenditures happen automatically, no matter the amounts, without Congress acting at all. The simple fact is that this mandatory spending plus defense spending is now consuming all tax revenue before
any other government services are paid for on the federal level.
The so-called rCLdiscretionaryrCY budget that Congress votes on (defense and all the assorted departments and agencies) is relatively minor. You
could cut it all in half and we would still have a serious problem.
When Trump first entered office the US deficit as percentage of GDP was
less than 5%. That pandemic-year deficit peaked at 16% of GDP, or $3.1 trillion. Fast-forward to today: the FY2025 deficit came in at $1.8
trillion rCo 5.9% of GDP, well below the pandemic peak but still about 55% above the 50-year historical average of 3.8% of GDP. And itrCOs headed the wrong way again. The CBOrCOs latest FY2026 estimate is $2.1 trillion, up from $1.9 trillion projected back in February, after the Supreme Court struck down the IEEPA tariffs in February 2026 and blew a roughly $200 billion hole in expected tariff revenue. Whoever is in the White House,
the deficit keeps landing in roughly the same trap.
Sad to say, government spending just keeps growing no matter which party
is in power. We have crossed a form of political Rubicon where past performance is not indicative of future results. The few serious fiscal conservatives are now gone after finding the Republican Party under
Trump spends differently than Democrats would, but has no desire to
spend less.
And thatrCOs the real problem: Voters like all this spending. They differ
on priorities, but no one really wants to balance the budget. There is
no desire to make the sacrifices and endure the pain it would take to
change the course we are on. So, it wonrCOt change, and debt will keep piling up.
Jaws of the Trap
Debt, as I have said many times, is future consumption pulled forward in time. It lets us consume more today by consuming less in the future.
There is a school of thought which says this doesnrCOt matter because we
can always just keep pushing the due date further out. I disagree, and
Lacy HuntrCOs research explains why.
While debt can be a problem, private debt is also critical to economic growth. It finances innovation and adds to the economyrCOs productive capacity. Excessive government debt diverts resources away from
investment, without which growth slows to a crawl. Lacy proves this mathematically but really, all you have to do is look at GDP growth
around the world since 2008. Europe, Japan, and the US have all
struggled to maintain positive growth. It was only a matter of time
until something pushed us all underwater. The pandemic did it. By 2026 itrCOs a different pressure doing the pushing rCo elevated-for-longer interest costs and a wall of AI-driven capital spending are testing the
same limit from the other direction.
All that being said, this can continue far longer than most people
think. Japan is now at 248.7% (2025) of debt to GDP. Eurozone debt is
about 87.8% (2025), but that understates the true situation in most countries. The US, on the same gross-debt basis, was at 122.6% in early 2026. Europe and Japan both have low or nonexistent GDP growth. The explosion of US debt means the US will soon join them. The answer from almost every economist of any stripe about how to fix the debt problem
is to rCLgrow our way out of it.rCY The problem is we have passed the point of no return.
We canrCOt stop growing debt. That would bring down the system in a true greater-than-the-Great Depression crash. What do you cut? Social
Security? Medicare? Military pensions? Education? Interest payments on
the debt? The State Department? The only way to maintain that spending
is to keep adding debt, which sends us further into the debt trap.
Anomalies in Paradise
At some point, this will simply stop working. That moment is when the
world will face what I first called The Great Reset over a decade ago. I
am often asked exactly when it will happen. I typically demur as taking
a date is tricky. But I think we can narrow it down.
Right now, the Social Security Administration says that Social Security
will have to be cut by roughly 22% at some point in 2033. 10 years ago
they said 2034. Without some major changes in the economy, that will probably slip to 2032. It will be an election year and that will become
the major topic.
We are now at $39.9 trillion of US [federal] debt. Interest on the debt
is $1.1 trillion, at an interest rate of a little under 3%. That rate is obviously rising. Deficits are climbing over $2 trillion per year. By
2031, the debt will be over $50 trillion. Interest costs will run
anywhere from an optimistically estimated low of $1.5 trillion to over
$2 trillion. ThatrCOs assuming no recession.
We are not going to cut Social Security for the vast majority of
recipients. The compromise will likely be some combination of raising
the age of benefits, means testing and increasing Social Security taxes.
But that doesnrCOt solve the rest of the deficit problem. Somewhere around that time the bond markets will finally say, rCLEnough, already!rCY Congress will be forced by markets to act.
Spoiler alert: We will need to completely revamp our tax code, with a greater percentage of GDP going to taxes than any of us want. But werCOll have to collect it differently and not destroy incentives as Europe and Japan have done. Sadly, I donrCOt expect a willingness to do that, at
least political willingness, until we are already in the middle of a
deep crisis. The bad news is we will get one and maybe change some things.
We built our dreams on excessive debt. Now we canrCOt go on together. WerCOre caught in a trap. We canrCOt walk out.
https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap
On Aug 15, 2026 at 1:34:32rC>PM EDT, "Wilson" <Wilson@nowhere.invalid> wrote:
We're caught in a trap
I can't walk out
Because I love you too much, baby
Why can't you see
What you're doing to me
When you don't believe a word I say?
-Suspicious Minds, Elvis Presley, 1969
Elvis PresleyrCOs rendition of Suspicious Minds topped the record charts
in 1969. The lyrics portray a romance that couldnrCOt work, but was also
impossible to escape. ThatrCOs also a good way to describe our
relationship with government debt. We know it canrCOt last, but we canrCOt >> walk out. We love government spending and its benefits (like Medicare,
Social Security, and unemployment insurance) too much.
In other words, we are in a debt trap. Our political process canrCOt
reduce spending and/or raise taxes enough to balance the budget, so the
debt grows and grows. As it does, paying the interest plus the
accumulated debt load pulls more capital away from more productive uses.
This depresses economic growth, thereby generating even more spending
and debt.
This has to end, and I think it will do so in the event IrCOve called The
Great Reset. When I first started talking about The Great Reset, we
werenrCOt in the debt trap. We were rCLmerelyrCY in a situation with only bad
choices. I didnrCOt think we would make them. Thus the underlying
presumption was that we would end up in a debt trap.
The Great Reset will be our escape from the debt trap. It wonrCOt be fun
for anyone, as taxes will go up and government spending of all types cut.
Diverted Capital
Each additional dollar of debt in 1980 generated a rise in GDP of 60
cents, up from 54 cents in 1940. The 1980s was the last decade for the
productivity of debt to rise. Since then, this ratio has dropped
sharply, from 42 cents in 1989 to 27 cents in 2019.
LetrCOs unpack this. Debt, even government debt, isnrCOt necessarily bad. It >> can actually be positive depending on how it is used. Borrowing to build
a productive asset can make sense, if its output is sufficient to repay
the debt and then produce even more.
Like many temptations, debt can be good in moderation but destructive if
abused. Some infrastructure spending doesnrCOt have a direct payoff, but
clearly helps the overall economy, like the US interstate highway system.
Let me offer a few illustrations. It seems that every congressional
representative gives lip service to the concept of rCLinfrastructure
spending.rCY And they never really get around to doing it in any
sufficient quantity. Airports are necessary infrastructure and are
typically paid for by landing fees. ThatrCOs productive debt.
I have read that much of the US loses up to 20% of the water our water
systems produce due to leaky pipes. To rebuild the national water system
would take hundreds of billions if not over $1 trillion. Congress can
easily allow the formation of a public-private partnership and guarantee
the bonds so the Federal Reserve could buy them. Cities could access
those bonds and raise the cost of water by 1% or so to pay for the
bonds. Consumer water bills should still drop since we would be saving
the lost water.
Everyone knows this. Congress does nothing. The same could be done with
electric power. A smart grid could pay for itself even with debt costs.
And consumer power prices would likely go down. I could go on and on.
But the debt we are accumulating today is not productive in that way. We
use it to finance current expenditures like Medicare and Social
Security. Necessary? Absolutely. But not the economic definition of
productive debt.
Problems arise when debt becomes excessive, relative to the output it
will produce. The cost of repaying it diverts capital from other uses,
leaving less capital available for productive investment. You start
needing more debt to generate the same amount of production. Or, said
another way, each additional dollar of debt produces less benefit.
Debt service comes from taxation and even more borrowing (which is the
definition of a Ponzi scheme), which leaves businesses and families with
less money to spend on other things. This results in lower economic
growth, more inflation, and higher interest rates.
Why is it a trap? HererCOs where I have to get political.
Fiscal Futility
To those on the conservative side, the problem is simple. We have
excessively high taxes and debt because the government spends too much.
ThatrCOs easy to say but gets a lot more difficult when you talk specifics >> rCo particularly if you are a member of Congress who must answer to
voters. Exactly which government spending would you like to cut? What
programs, departments, and agencies would you eliminate? Every dollar
the government spends has a constituency rCo people who benefit from it
and will fight to preserve it.
Large amounts of spending are essentially on autopilot: Social Security,
Medicare, assorted social programs, interest on the debt. These
rCLmandatoryrCY expenditures happen automatically, no matter the amounts,
without Congress acting at all. The simple fact is that this mandatory
spending plus defense spending is now consuming all tax revenue before
any other government services are paid for on the federal level.
The so-called rCLdiscretionaryrCY budget that Congress votes on (defense and >> all the assorted departments and agencies) is relatively minor. You
could cut it all in half and we would still have a serious problem.
When Trump first entered office the US deficit as percentage of GDP was
less than 5%. That pandemic-year deficit peaked at 16% of GDP, or $3.1
trillion. Fast-forward to today: the FY2025 deficit came in at $1.8
trillion rCo 5.9% of GDP, well below the pandemic peak but still about 55% >> above the 50-year historical average of 3.8% of GDP. And itrCOs headed the >> wrong way again. The CBOrCOs latest FY2026 estimate is $2.1 trillion, up
from $1.9 trillion projected back in February, after the Supreme Court
struck down the IEEPA tariffs in February 2026 and blew a roughly $200
billion hole in expected tariff revenue. Whoever is in the White House,
the deficit keeps landing in roughly the same trap.
Sad to say, government spending just keeps growing no matter which party
is in power. We have crossed a form of political Rubicon where past
performance is not indicative of future results. The few serious fiscal
conservatives are now gone after finding the Republican Party under
Trump spends differently than Democrats would, but has no desire to
spend less.
And thatrCOs the real problem: Voters like all this spending. They differ
on priorities, but no one really wants to balance the budget. There is
no desire to make the sacrifices and endure the pain it would take to
change the course we are on. So, it wonrCOt change, and debt will keep
piling up.
Jaws of the Trap
Debt, as I have said many times, is future consumption pulled forward in
time. It lets us consume more today by consuming less in the future.
There is a school of thought which says this doesnrCOt matter because we
can always just keep pushing the due date further out. I disagree, and
Lacy HuntrCOs research explains why.
While debt can be a problem, private debt is also critical to economic
growth. It finances innovation and adds to the economyrCOs productive
capacity. Excessive government debt diverts resources away from
investment, without which growth slows to a crawl. Lacy proves this
mathematically but really, all you have to do is look at GDP growth
around the world since 2008. Europe, Japan, and the US have all
struggled to maintain positive growth. It was only a matter of time
until something pushed us all underwater. The pandemic did it. By 2026
itrCOs a different pressure doing the pushing rCo elevated-for-longer
interest costs and a wall of AI-driven capital spending are testing the
same limit from the other direction.
All that being said, this can continue far longer than most people
think. Japan is now at 248.7% (2025) of debt to GDP. Eurozone debt is
about 87.8% (2025), but that understates the true situation in most
countries. The US, on the same gross-debt basis, was at 122.6% in early
2026. Europe and Japan both have low or nonexistent GDP growth. The
explosion of US debt means the US will soon join them. The answer from
almost every economist of any stripe about how to fix the debt problem
is to rCLgrow our way out of it.rCY The problem is we have passed the point >> of no return.
We canrCOt stop growing debt. That would bring down the system in a true
greater-than-the-Great Depression crash. What do you cut? Social
Security? Medicare? Military pensions? Education? Interest payments on
the debt? The State Department? The only way to maintain that spending
is to keep adding debt, which sends us further into the debt trap.
Anomalies in Paradise
At some point, this will simply stop working. That moment is when the
world will face what I first called The Great Reset over a decade ago. I
am often asked exactly when it will happen. I typically demur as taking
a date is tricky. But I think we can narrow it down.
Right now, the Social Security Administration says that Social Security
will have to be cut by roughly 22% at some point in 2033. 10 years ago
they said 2034. Without some major changes in the economy, that will
probably slip to 2032. It will be an election year and that will become
the major topic.
We are now at $39.9 trillion of US [federal] debt. Interest on the debt
is $1.1 trillion, at an interest rate of a little under 3%. That rate is
obviously rising. Deficits are climbing over $2 trillion per year. By
2031, the debt will be over $50 trillion. Interest costs will run
anywhere from an optimistically estimated low of $1.5 trillion to over
$2 trillion. ThatrCOs assuming no recession.
We are not going to cut Social Security for the vast majority of
recipients. The compromise will likely be some combination of raising
the age of benefits, means testing and increasing Social Security taxes.
But that doesnrCOt solve the rest of the deficit problem. Somewhere around >> that time the bond markets will finally say, rCLEnough, already!rCY Congress >> will be forced
by markets to act.
Spoiler alert: We will need to completely revamp our tax code, with a
greater percentage of GDP going to taxes than any of us want. But werCOll
have to collect it differently and not destroy incentives as Europe and
Japan have done. Sadly, I donrCOt expect a willingness to do that, at
least political willingness, until we are already in the middle of a
deep crisis. The bad news is we will get one and maybe change some things. >>
We built our dreams on excessive debt. Now we canrCOt go on together.
WerCOre caught in a trap. We canrCOt walk out.
https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap
And if you raise taxes, you lose the vote?
I don't understand economics so can't say if this is true or not, but
This was an article in the Globe&Mail
The United States is headed for a fiscal cliff
Andrew Coyne
Published August 12, 2026
In the time it takes you to read this column, the United States will add another US$20-million to its national debt. By the end of the day, it will be nearly US$9-billion more than it was yesterday; in a week, US$60-billion, more
than the government of Canada borrows in a year.
The annual U.S. federal budget deficit is now running at close to US$2-trillion: nearly 6 per cent of GDP, and headed for 9 per cent or more by 2036, assuming current tax and spending policies continue. The total national debt, at nearly US$40-trillion, now exceeds 120 per cent of GDP.
Of course, some of that includes money the federal government owes itself: U.S. Treasury securities purchased by the Social Security Trust Fund out of the surpluses it racked up in years past. The Congressional Budget Office calculates that, net of these holdings, the national debt amounts to rCLonlyrCY
US$32-trillion, or just over 100 per cent of GDP, though that, too, is projected to grow rCo to nearly 140 per cent by 2036, 175 per cent by 2056.
However, Social Security is now rapidly burning through its reserves, the surpluses having long since turned to deficits. By 2032, they are expected to run out. At that point, barring major change, the U.S. government will have to
meet its Social Security obligations out of current taxes. And since those taxes are already more than claimed by other obligations, that means the government will have to go even further into debt to cover the difference: roughly another 3 per cent of GDP annually, by 2056.
The Social Security Board of Trustees calculates the present value of the unfunded liability in Social Security over the next 75 years at roughly US$29-trillion.
Global debt hits record of near US$353-trillion, with signs of investors moving away from the U.S.
Add it up, and thatrCOs close to US$70-trillion in debt. But thatrCOs not all.
Including the unfunded liabilities in Medicare (what the U.S. calls their system of public health care for the poor and the elderly) would add about US$60-trillion to the total; the pension plan for federal government employees, civilian and military, roughly US$3-trillion, plus another US$9-trillion and change in unfunded health benefits for those same employees.
Throw in state and local government debts of about US$3.7-trillion, and the net unfunded liabilities in their pension plans, at a measly US$700-billion, and you get something approaching the consolidated debt of the U.S. public sector: on the order of US$146-trillion, more than four times their GDP.
Of late, the people who buy U.S. debt have begun to notice. The yield on 30-year U.S. Treasuries, which fell through 40 years of disinflation after the
early 1980s, has lately been rising. It now stands at more than 5.2 per cent, the highest it has been since 2004.
Some of that is real rCo all those government bonds competing for buyers with other bonds, from other issuers rCo and some of it is a premium for expected higher inflation, itself related to all that debt. At some point, market participants are betting, the U.S. may try to inflate its way out of its debts, paying back its lenders in devalued dollars. The interest rate they require to hold U.S. debt adjusts accordingly, to cover themselves against this risk.
Either way, itrCOs all kinds of trouble. The higher the interest rate on its debt, the more the U.S. government will have to pay its lenders, and the greater its debts will grow. Interest costs on U.S. government debt currently amount to about 3.3 per cent of GDP. They are projected to be nearly three times that much, relative to GDP, in 30 years.
But that assumes the average interest rate on U.S. debt, now at 3.4 per cent all maturities combined, rises only to 4.2 per cent. Were it to rise instead to, say, 5.2 per cent, the interest-to-GDP ratio rises to 15 per cent. At an average interest rate of 6.2 per cent rCo a rate more commensurate with the size
of U.S. liabilities rCo it hits 22.4 per cent.
Even at 10 per cent of GDP rCo the rCLrosyrCY scenario rCo interest costs would be
eating up more than half of all federal revenues. (For comparison, at the height of CanadarCOs debt woes, interest costs consumed 36 per cent of federal
revenues.) At higher interest rates rCo well, itrCOs just too horrible to even
contemplate.
The U.S. is heading straight for a fiscal cliff. And at its helm is a President who proposes to spend even more, and who demands the Federal Reserve, in the face of rising prices, cut interest rates. It is all going to end in an ocean of tears.
On 8/15/2026 2:17 PM, Tara wrote:
On Aug 15, 2026 at 1:34:32rC>PM EDT, "Wilson" <Wilson@nowhere.invalid> wrote:
We're caught in a trap
I can't walk out
Because I love you too much, baby
Why can't you see
What you're doing to me
When you don't believe a word I say?
-Suspicious Minds, Elvis Presley, 1969
Elvis PresleyrCOs rendition of Suspicious Minds topped the record charts >>> in 1969. The lyrics portray a romance that couldnrCOt work, but was also >>> impossible to escape. ThatrCOs also a good way to describe our
relationship with government debt. We know it canrCOt last, but we canrCOt >>> walk out. We love government spending and its benefits (like Medicare,
Social Security, and unemployment insurance) too much.
In other words, we are in a debt trap. Our political process canrCOt
reduce spending and/or raise taxes enough to balance the budget, so the
debt grows and grows. As it does, paying the interest plus the
accumulated debt load pulls more capital away from more productive uses. >>> This depresses economic growth, thereby generating even more spending
and debt.
This has to end, and I think it will do so in the event IrCOve called The >>> Great Reset. When I first started talking about The Great Reset, we
werenrCOt in the debt trap. We were rCLmerelyrCY in a situation with only bad
choices. I didnrCOt think we would make them. Thus the underlying
presumption was that we would end up in a debt trap.
The Great Reset will be our escape from the debt trap. It wonrCOt be fun >>> for anyone, as taxes will go up and government spending of all types cut. >>>
Diverted Capital
Each additional dollar of debt in 1980 generated a rise in GDP of 60
cents, up from 54 cents in 1940. The 1980s was the last decade for the
productivity of debt to rise. Since then, this ratio has dropped
sharply, from 42 cents in 1989 to 27 cents in 2019.
LetrCOs unpack this. Debt, even government debt, isnrCOt necessarily bad. It
can actually be positive depending on how it is used. Borrowing to build >>> a productive asset can make sense, if its output is sufficient to repay
the debt and then produce even more.
Like many temptations, debt can be good in moderation but destructive if >>> abused. Some infrastructure spending doesnrCOt have a direct payoff, but >>> clearly helps the overall economy, like the US interstate highway system. >>>
Let me offer a few illustrations. It seems that every congressional
representative gives lip service to the concept of rCLinfrastructure
spending.rCY And they never really get around to doing it in any
sufficient quantity. Airports are necessary infrastructure and are
typically paid for by landing fees. ThatrCOs productive debt.
I have read that much of the US loses up to 20% of the water our water
systems produce due to leaky pipes. To rebuild the national water system >>> would take hundreds of billions if not over $1 trillion. Congress can
easily allow the formation of a public-private partnership and guarantee >>> the bonds so the Federal Reserve could buy them. Cities could access
those bonds and raise the cost of water by 1% or so to pay for the
bonds. Consumer water bills should still drop since we would be saving
the lost water.
Everyone knows this. Congress does nothing. The same could be done with
electric power. A smart grid could pay for itself even with debt costs.
And consumer power prices would likely go down. I could go on and on.
But the debt we are accumulating today is not productive in that way. We >>> use it to finance current expenditures like Medicare and Social
Security. Necessary? Absolutely. But not the economic definition of
productive debt.
Problems arise when debt becomes excessive, relative to the output it
will produce. The cost of repaying it diverts capital from other uses,
leaving less capital available for productive investment. You start
needing more debt to generate the same amount of production. Or, said
another way, each additional dollar of debt produces less benefit.
Debt service comes from taxation and even more borrowing (which is the
definition of a Ponzi scheme), which leaves businesses and families with >>> less money to spend on other things. This results in lower economic
growth, more inflation, and higher interest rates.
Why is it a trap? HererCOs where I have to get political.
Fiscal Futility
To those on the conservative side, the problem is simple. We have
excessively high taxes and debt because the government spends too much.
ThatrCOs easy to say but gets a lot more difficult when you talk specifics >>> rCo particularly if you are a member of Congress who must answer to
voters. Exactly which government spending would you like to cut? What
programs, departments, and agencies would you eliminate? Every dollar
the government spends has a constituency rCo people who benefit from it
and will fight to preserve it.
Large amounts of spending are essentially on autopilot: Social Security, >>> Medicare, assorted social programs, interest on the debt. These
rCLmandatoryrCY expenditures happen automatically, no matter the amounts, >>> without Congress acting at all. The simple fact is that this mandatory
spending plus defense spending is now consuming all tax revenue before
any other government services are paid for on the federal level.
The so-called rCLdiscretionaryrCY budget that Congress votes on (defense and
all the assorted departments and agencies) is relatively minor. You
could cut it all in half and we would still have a serious problem.
When Trump first entered office the US deficit as percentage of GDP was
less than 5%. That pandemic-year deficit peaked at 16% of GDP, or $3.1
trillion. Fast-forward to today: the FY2025 deficit came in at $1.8
trillion rCo 5.9% of GDP, well below the pandemic peak but still about 55% >>> above the 50-year historical average of 3.8% of GDP. And itrCOs headed the >>> wrong way again. The CBOrCOs latest FY2026 estimate is $2.1 trillion, up >>> from $1.9 trillion projected back in February, after the Supreme Court
struck down the IEEPA tariffs in February 2026 and blew a roughly $200
billion hole in expected tariff revenue. Whoever is in the White House,
the deficit keeps landing in roughly the same trap.
Sad to say, government spending just keeps growing no matter which party >>> is in power. We have crossed a form of political Rubicon where past
performance is not indicative of future results. The few serious fiscal
conservatives are now gone after finding the Republican Party under
Trump spends differently than Democrats would, but has no desire to
spend less.
And thatrCOs the real problem: Voters like all this spending. They differ >>> on priorities, but no one really wants to balance the budget. There is
no desire to make the sacrifices and endure the pain it would take to
change the course we are on. So, it wonrCOt change, and debt will keep
piling up.
Jaws of the Trap
Debt, as I have said many times, is future consumption pulled forward in >>> time. It lets us consume more today by consuming less in the future.
There is a school of thought which says this doesnrCOt matter because we >>> can always just keep pushing the due date further out. I disagree, and
Lacy HuntrCOs research explains why.
While debt can be a problem, private debt is also critical to economic
growth. It finances innovation and adds to the economyrCOs productive
capacity. Excessive government debt diverts resources away from
investment, without which growth slows to a crawl. Lacy proves this
mathematically but really, all you have to do is look at GDP growth
around the world since 2008. Europe, Japan, and the US have all
struggled to maintain positive growth. It was only a matter of time
until something pushed us all underwater. The pandemic did it. By 2026
itrCOs a different pressure doing the pushing rCo elevated-for-longer
interest costs and a wall of AI-driven capital spending are testing the
same limit from the other direction.
All that being said, this can continue far longer than most people
think. Japan is now at 248.7% (2025) of debt to GDP. Eurozone debt is
about 87.8% (2025), but that understates the true situation in most
countries. The US, on the same gross-debt basis, was at 122.6% in early
2026. Europe and Japan both have low or nonexistent GDP growth. The
explosion of US debt means the US will soon join them. The answer from
almost every economist of any stripe about how to fix the debt problem
is to rCLgrow our way out of it.rCY The problem is we have passed the point >>> of no return.
We canrCOt stop growing debt. That would bring down the system in a true >>> greater-than-the-Great Depression crash. What do you cut? Social
Security? Medicare? Military pensions? Education? Interest payments on
the debt? The State Department? The only way to maintain that spending
is to keep adding debt, which sends us further into the debt trap.
Anomalies in Paradise
At some point, this will simply stop working. That moment is when the
world will face what I first called The Great Reset over a decade ago. I >>> am often asked exactly when it will happen. I typically demur as taking
a date is tricky. But I think we can narrow it down.
Right now, the Social Security Administration says that Social Security
will have to be cut by roughly 22% at some point in 2033. 10 years ago
they said 2034. Without some major changes in the economy, that will
probably slip to 2032. It will be an election year and that will become
the major topic.
We are now at $39.9 trillion of US [federal] debt. Interest on the debt
is $1.1 trillion, at an interest rate of a little under 3%. That rate is >>> obviously rising. Deficits are climbing over $2 trillion per year. By
2031, the debt will be over $50 trillion. Interest costs will run
anywhere from an optimistically estimated low of $1.5 trillion to over
$2 trillion. ThatrCOs assuming no recession.
We are not going to cut Social Security for the vast majority of
recipients. The compromise will likely be some combination of raising
the age of benefits, means testing and increasing Social Security taxes. >>> But that doesnrCOt solve the rest of the deficit problem. Somewhere around >>> that time the bond markets will finally say, rCLEnough, already!rCY Congress
will be forced
by markets to act.
Spoiler alert: We will need to completely revamp our tax code, with a
greater percentage of GDP going to taxes than any of us want. But werCOll >>> have to collect it differently and not destroy incentives as Europe and
Japan have done. Sadly, I donrCOt expect a willingness to do that, at
least political willingness, until we are already in the middle of a
deep crisis. The bad news is we will get one and maybe change some things. >>>
We built our dreams on excessive debt. Now we canrCOt go on together.
WerCOre caught in a trap. We canrCOt walk out.
https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap
And if you raise taxes, you lose the vote?
I don't understand economics so can't say if this is true or not, but
This was an article in the Globe&Mail
The United States is headed for a fiscal cliff
Andrew Coyne
Published August 12, 2026
In the time it takes you to read this column, the United States will add
another US$20-million to its national debt. By the end of the day, it will be
nearly US$9-billion more than it was yesterday; in a week, US$60-billion, more
than the government of Canada borrows in a year.
The annual U.S. federal budget deficit is now running at close to
US$2-trillion: nearly 6 per cent of GDP, and headed for 9 per cent or more by
2036, assuming current tax and spending policies continue. The total national
debt, at nearly US$40-trillion, now exceeds 120 per cent of GDP.
Of course, some of that includes money the federal government owes itself: >> U.S. Treasury securities purchased by the Social Security Trust Fund out of >> the surpluses it racked up in years past. The Congressional Budget Office
calculates that, net of these holdings, the national debt amounts to rCLonlyrCY
US$32-trillion, or just over 100 per cent of GDP, though that, too, is
projected to grow rCo to nearly 140 per cent by 2036, 175 per cent by 2056. >>
However, Social Security is now rapidly burning through its reserves, the
surpluses having long since turned to deficits. By 2032, they are expected to
run out. At that point, barring major change, the U.S. government will have to
meet its Social Security obligations out of current taxes. And since those >> taxes are already more than claimed by other obligations, that means the
government will have to go even further into debt to cover the difference: >> roughly another 3 per cent of GDP annually, by 2056.
The Social Security Board of Trustees calculates the present value of the
unfunded liability in Social Security over the next 75 years at roughly
US$29-trillion.
Global debt hits record of near US$353-trillion, with signs of investors
moving away from the U.S.
Add it up, and thatrCOs close to US$70-trillion in debt. But thatrCOs not all.
Including the unfunded liabilities in Medicare (what the U.S. calls their
system of public health care for the poor and the elderly) would add about >> US$60-trillion to the total; the pension plan for federal government
employees, civilian and military, roughly US$3-trillion, plus another
US$9-trillion and change in unfunded health benefits for those same employees.
Throw in state and local government debts of about US$3.7-trillion, and the >> net unfunded liabilities in their pension plans, at a measly US$700-billion, >> and you get something approaching the consolidated debt of the U.S. public >> sector: on the order of US$146-trillion, more than four times their GDP.
Of late, the people who buy U.S. debt have begun to notice. The yield on
30-year U.S. Treasuries, which fell through 40 years of disinflation after the
early 1980s, has lately been rising. It now stands at more than 5.2 per cent,
the highest it has been since 2004.
Some of that is real rCo all those government bonds competing for buyers with
other bonds, from other issuers rCo and some of it is a premium for expected >> higher inflation, itself related to all that debt. At some point, market
participants are betting, the U.S. may try to inflate its way out of its
debts, paying back its lenders in devalued dollars. The interest rate they >> require to hold U.S. debt adjusts accordingly, to cover themselves against >> this risk.
Either way, itrCOs all kinds of trouble. The higher the interest rate on its >> debt, the more the U.S. government will have to pay its lenders, and the
greater its debts will grow. Interest costs on U.S. government debt currently
amount to about 3.3 per cent of GDP. They are projected to be nearly three >> times that much, relative to GDP, in 30 years.
But that assumes the average interest rate on U.S. debt, now at 3.4 per cent >> all maturities combined, rises only to 4.2 per cent. Were it to rise instead >> to, say, 5.2 per cent, the interest-to-GDP ratio rises to 15 per cent. At an >> average interest rate of 6.2 per cent rCo a rate more commensurate with the size
of U.S. liabilities rCo it hits 22.4 per cent.
Even at 10 per cent of GDP rCo the rCLrosyrCY scenario rCo interest costs would be
eating up more than half of all federal revenues. (For comparison, at the
height of CanadarCOs debt woes, interest costs consumed 36 per cent of federal
revenues.) At higher interest rates rCo well, itrCOs just too horrible to even
contemplate.
The U.S. is heading straight for a fiscal cliff. And at its helm is President
who proposes to spend even more, and who demands the Federal
Reserve, in the face of rising prices, cut interest rates. It is all going to
end in an ocean of tears.
That's pretty much the same conclusion, which I share.
It's fixable, if we had a congress & president who were tough enough to
deal in reality. But we don't.
That debt is never getting paid back. It will be inflated away as much
as they can get away with, but even that won't be enough to balance the books.
You think that's bad? What will happen when a large portion of the
people who currently believe in the system stop believing?
On 15/08/2026 18:34, Wilson wrote:
We're caught in a traphttps://www.youtube.com/watch?v=yh18YXKMk3g
I can't walk out
Because I love you too much, baby
Why can't you see
What you're doing to me
When you don't believe a word I say?
-Suspicious Minds, Elvis Presley, 1969
Elvis PresleyrCOs rendition of Suspicious Minds topped the record charts
in 1969. The lyrics portray a romance that couldnrCOt work, but was also
impossible to escape. ThatrCOs also a good way to describe our
relationship with government debt. We know it canrCOt last, but we canrCOt >> walk out. We love government spending and its benefits (like Medicare,
Social Security, and unemployment insurance) too much.
In other words, we are in a debt trap. Our political process canrCOt
reduce spending and/or raise taxes enough to balance the budget, so the
debt grows and grows. As it does, paying the interest plus the
accumulated debt load pulls more capital away from more productive uses.
This depresses economic growth, thereby generating even more spending
and debt.
This has to end, and I think it will do so in the event IrCOve called The
Great Reset. When I first started talking about The Great Reset, we
werenrCOt in the debt trap. We were rCLmerelyrCY in a situation with only bad
choices. I didnrCOt think we would make them. Thus the underlying
presumption was that we would end up in a debt trap.
The Great Reset will be our escape from the debt trap. It wonrCOt be fun
for anyone, as taxes will go up and government spending of all types cut.
Diverted Capital
Each additional dollar of debt in 1980 generated a rise in GDP of 60
cents, up from 54 cents in 1940. The 1980s was the last decade for the
productivity of debt to rise. Since then, this ratio has dropped
sharply, from 42 cents in 1989 to 27 cents in 2019.
LetrCOs unpack this. Debt, even government debt, isnrCOt necessarily bad. It >> can actually be positive depending on how it is used. Borrowing to build
a productive asset can make sense, if its output is sufficient to repay
the debt and then produce even more.
Like many temptations, debt can be good in moderation but destructive if
abused. Some infrastructure spending doesnrCOt have a direct payoff, but
clearly helps the overall economy, like the US interstate highway system.
Let me offer a few illustrations. It seems that every congressional
representative gives lip service to the concept of rCLinfrastructure
spending.rCY And they never really get around to doing it in any
sufficient quantity. Airports are necessary infrastructure and are
typically paid for by landing fees. ThatrCOs productive debt.
I have read that much of the US loses up to 20% of the water our water
systems produce due to leaky pipes. To rebuild the national water system
would take hundreds of billions if not over $1 trillion. Congress can
easily allow the formation of a public-private partnership and guarantee
the bonds so the Federal Reserve could buy them. Cities could access
those bonds and raise the cost of water by 1% or so to pay for the
bonds. Consumer water bills should still drop since we would be saving
the lost water.
Everyone knows this. Congress does nothing. The same could be done with
electric power. A smart grid could pay for itself even with debt costs.
And consumer power prices would likely go down. I could go on and on.
But the debt we are accumulating today is not productive in that way. We
use it to finance current expenditures like Medicare and Social
Security. Necessary? Absolutely. But not the economic definition of
productive debt.
Problems arise when debt becomes excessive, relative to the output it
will produce. The cost of repaying it diverts capital from other uses,
leaving less capital available for productive investment. You start
needing more debt to generate the same amount of production. Or, said
another way, each additional dollar of debt produces less benefit.
Debt service comes from taxation and even more borrowing (which is the
definition of a Ponzi scheme), which leaves businesses and families with
less money to spend on other things. This results in lower economic
growth, more inflation, and higher interest rates.
Why is it a trap? HererCOs where I have to get political.
Fiscal Futility
To those on the conservative side, the problem is simple. We have
excessively high taxes and debt because the government spends too much.
ThatrCOs easy to say but gets a lot more difficult when you talk specifics >> rCo particularly if you are a member of Congress who must answer to
voters. Exactly which government spending would you like to cut? What
programs, departments, and agencies would you eliminate? Every dollar
the government spends has a constituency rCo people who benefit from it
and will fight to preserve it.
Large amounts of spending are essentially on autopilot: Social Security,
Medicare, assorted social programs, interest on the debt. These
rCLmandatoryrCY expenditures happen automatically, no matter the amounts,
without Congress acting at all. The simple fact is that this mandatory
spending plus defense spending is now consuming all tax revenue before
any other government services are paid for on the federal level.
The so-called rCLdiscretionaryrCY budget that Congress votes on (defense and >> all the assorted departments and agencies) is relatively minor. You
could cut it all in half and we would still have a serious problem.
When Trump first entered office the US deficit as percentage of GDP was
less than 5%. That pandemic-year deficit peaked at 16% of GDP, or $3.1
trillion. Fast-forward to today: the FY2025 deficit came in at $1.8
trillion rCo 5.9% of GDP, well below the pandemic peak but still about 55% >> above the 50-year historical average of 3.8% of GDP. And itrCOs headed the >> wrong way again. The CBOrCOs latest FY2026 estimate is $2.1 trillion, up
from $1.9 trillion projected back in February, after the Supreme Court
struck down the IEEPA tariffs in February 2026 and blew a roughly $200
billion hole in expected tariff revenue. Whoever is in the White House,
the deficit keeps landing in roughly the same trap.
Sad to say, government spending just keeps growing no matter which party
is in power. We have crossed a form of political Rubicon where past
performance is not indicative of future results. The few serious fiscal
conservatives are now gone after finding the Republican Party under
Trump spends differently than Democrats would, but has no desire to
spend less.
And thatrCOs the real problem: Voters like all this spending. They differ
on priorities, but no one really wants to balance the budget. There is
no desire to make the sacrifices and endure the pain it would take to
change the course we are on. So, it wonrCOt change, and debt will keep
piling up.
Jaws of the Trap
Debt, as I have said many times, is future consumption pulled forward in
time. It lets us consume more today by consuming less in the future.
There is a school of thought which says this doesnrCOt matter because we
can always just keep pushing the due date further out. I disagree, and
Lacy HuntrCOs research explains why.
While debt can be a problem, private debt is also critical to economic
growth. It finances innovation and adds to the economyrCOs productive
capacity. Excessive government debt diverts resources away from
investment, without which growth slows to a crawl. Lacy proves this
mathematically but really, all you have to do is look at GDP growth
around the world since 2008. Europe, Japan, and the US have all
struggled to maintain positive growth. It was only a matter of time
until something pushed us all underwater. The pandemic did it. By 2026
itrCOs a different pressure doing the pushing rCo elevated-for-longer
interest costs and a wall of AI-driven capital spending are testing the
same limit from the other direction.
All that being said, this can continue far longer than most people
think. Japan is now at 248.7% (2025) of debt to GDP. Eurozone debt is
about 87.8% (2025), but that understates the true situation in most
countries. The US, on the same gross-debt basis, was at 122.6% in early
2026. Europe and Japan both have low or nonexistent GDP growth. The
explosion of US debt means the US will soon join them. The answer from
almost every economist of any stripe about how to fix the debt problem
is to rCLgrow our way out of it.rCY The problem is we have passed the point >> of no return.
We canrCOt stop growing debt. That would bring down the system in a true
greater-than-the-Great Depression crash. What do you cut? Social
Security? Medicare? Military pensions? Education? Interest payments on
the debt? The State Department? The only way to maintain that spending
is to keep adding debt, which sends us further into the debt trap.
Anomalies in Paradise
At some point, this will simply stop working. That moment is when the
world will face what I first called The Great Reset over a decade ago. I
am often asked exactly when it will happen. I typically demur as taking
a date is tricky. But I think we can narrow it down.
Right now, the Social Security Administration says that Social Security
will have to be cut by roughly 22% at some point in 2033. 10 years ago
they said 2034. Without some major changes in the economy, that will
probably slip to 2032. It will be an election year and that will become
the major topic.
We are now at $39.9 trillion of US [federal] debt. Interest on the debt
is $1.1 trillion, at an interest rate of a little under 3%. That rate is
obviously rising. Deficits are climbing over $2 trillion per year. By
2031, the debt will be over $50 trillion. Interest costs will run
anywhere from an optimistically estimated low of $1.5 trillion to over
$2 trillion. ThatrCOs assuming no recession.
We are not going to cut Social Security for the vast majority of
recipients. The compromise will likely be some combination of raising
the age of benefits, means testing and increasing Social Security taxes.
But that doesnrCOt solve the rest of the deficit problem. Somewhere around >> that time the bond markets will finally say, rCLEnough, already!rCY Congress >> will be forced by markets to act.
Spoiler alert: We will need to completely revamp our tax code, with a
greater percentage of GDP going to taxes than any of us want. But werCOll
have to collect it differently and not destroy incentives as Europe and
Japan have done. Sadly, I donrCOt expect a willingness to do that, at
least political willingness, until we are already in the middle of a
deep crisis. The bad news is we will get one and maybe change some things. >>
We built our dreams on excessive debt. Now we canrCOt go on together.
WerCOre caught in a trap. We canrCOt walk out.
https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap
On 15/08/2026 18:34, Wilson wrote:
We're caught in a trap
I can't walk out
Because I love you too much, baby
Why can't you see
What you're doing to me
When you don't believe a word I say?
-Suspicious Minds, Elvis Presley, 1969
Elvis PresleyrCOs rendition of Suspicious Minds topped the record charts in 1969. The lyrics portray a romance that couldnrCOt work, but was also impossible to escape. ThatrCOs also a good way to describe our relationship with government debt. We know it canrCOt last, but we canrCOt walk out. We love government spending and its benefits (like Medicare, Social Security, and unemployment insurance) too much.
In other words, we are in a debt trap. Our political process canrCOt reduce spending and/or raise taxes enough to balance the budget, so the debt grows and grows. As it does, paying the interest plus the
accumulated debt load pulls more capital away from more productive uses. This depresses economic growth, thereby generating even more spending
and debt.
This has to end, and I think it will do so in the event IrCOve called The Great Reset. When I first started talking about The Great Reset, we werenrCOt in the debt trap. We were rCLmerelyrCY in a situation with only bad
choices. I didnrCOt think we would make them. Thus the underlying presumption was that we would end up in a debt trap.
The Great Reset will be our escape from the debt trap. It wonrCOt be fun for anyone, as taxes will go up and government spending of all types cut.
Diverted Capital
Each additional dollar of debt in 1980 generated a rise in GDP of 60 cents, up from 54 cents in 1940. The 1980s was the last decade for the productivity of debt to rise. Since then, this ratio has dropped
sharply, from 42 cents in 1989 to 27 cents in 2019.
LetrCOs unpack this. Debt, even government debt, isnrCOt necessarily bad. It
can actually be positive depending on how it is used. Borrowing to build
a productive asset can make sense, if its output is sufficient to repay the debt and then produce even more.
Like many temptations, debt can be good in moderation but destructive if abused. Some infrastructure spending doesnrCOt have a direct payoff, but clearly helps the overall economy, like the US interstate highway system.
Let me offer a few illustrations. It seems that every congressional representative gives lip service to the concept of rCLinfrastructure spending.rCY And they never really get around to doing it in any sufficient quantity. Airports are necessary infrastructure and are typically paid for by landing fees. ThatrCOs productive debt.
I have read that much of the US loses up to 20% of the water our water systems produce due to leaky pipes. To rebuild the national water system would take hundreds of billions if not over $1 trillion. Congress can easily allow the formation of a public-private partnership and guarantee the bonds so the Federal Reserve could buy them. Cities could access
those bonds and raise the cost of water by 1% or so to pay for the
bonds. Consumer water bills should still drop since we would be saving
the lost water.
Everyone knows this. Congress does nothing. The same could be done with electric power. A smart grid could pay for itself even with debt costs. And consumer power prices would likely go down. I could go on and on.
But the debt we are accumulating today is not productive in that way. We use it to finance current expenditures like Medicare and Social
Security. Necessary? Absolutely. But not the economic definition of productive debt.
Problems arise when debt becomes excessive, relative to the output it
will produce. The cost of repaying it diverts capital from other uses, leaving less capital available for productive investment. You start needing more debt to generate the same amount of production. Or, said another way, each additional dollar of debt produces less benefit.
Debt service comes from taxation and even more borrowing (which is the definition of a Ponzi scheme), which leaves businesses and families with less money to spend on other things. This results in lower economic growth, more inflation, and higher interest rates.
Why is it a trap? HererCOs where I have to get political.
Fiscal Futility
To those on the conservative side, the problem is simple. We have excessively high taxes and debt because the government spends too much.
ThatrCOs easy to say but gets a lot more difficult when you talk specifics rCo particularly if you are a member of Congress who must answer to voters. Exactly which government spending would you like to cut? What programs, departments, and agencies would you eliminate? Every dollar
the government spends has a constituency rCo people who benefit from it and will fight to preserve it.
Large amounts of spending are essentially on autopilot: Social Security, Medicare, assorted social programs, interest on the debt. These rCLmandatoryrCY expenditures happen automatically, no matter the amounts, without Congress acting at all. The simple fact is that this mandatory spending plus defense spending is now consuming all tax revenue before
any other government services are paid for on the federal level.
The so-called rCLdiscretionaryrCY budget that Congress votes on (defense and
all the assorted departments and agencies) is relatively minor. You
could cut it all in half and we would still have a serious problem.
When Trump first entered office the US deficit as percentage of GDP was less than 5%. That pandemic-year deficit peaked at 16% of GDP, or $3.1 trillion. Fast-forward to today: the FY2025 deficit came in at $1.8 trillion rCo 5.9% of GDP, well below the pandemic peak but still about 55% above the 50-year historical average of 3.8% of GDP. And itrCOs headed the wrong way again. The CBOrCOs latest FY2026 estimate is $2.1 trillion, up from $1.9 trillion projected back in February, after the Supreme Court struck down the IEEPA tariffs in February 2026 and blew a roughly $200 billion hole in expected tariff revenue. Whoever is in the White House, the deficit keeps landing in roughly the same trap.
Sad to say, government spending just keeps growing no matter which party is in power. We have crossed a form of political Rubicon where past performance is not indicative of future results. The few serious fiscal conservatives are now gone after finding the Republican Party under
Trump spends differently than Democrats would, but has no desire to
spend less.
And thatrCOs the real problem: Voters like all this spending. They differ on priorities, but no one really wants to balance the budget. There is
no desire to make the sacrifices and endure the pain it would take to change the course we are on. So, it wonrCOt change, and debt will keep piling up.
Jaws of the Trap
Debt, as I have said many times, is future consumption pulled forward in time. It lets us consume more today by consuming less in the future.
There is a school of thought which says this doesnrCOt matter because we can always just keep pushing the due date further out. I disagree, and Lacy HuntrCOs research explains why.
While debt can be a problem, private debt is also critical to economic growth. It finances innovation and adds to the economyrCOs productive capacity. Excessive government debt diverts resources away from investment, without which growth slows to a crawl. Lacy proves this mathematically but really, all you have to do is look at GDP growth
around the world since 2008. Europe, Japan, and the US have all
struggled to maintain positive growth. It was only a matter of time
until something pushed us all underwater. The pandemic did it. By 2026 itrCOs a different pressure doing the pushing rCo elevated-for-longer interest costs and a wall of AI-driven capital spending are testing the same limit from the other direction.
All that being said, this can continue far longer than most people
think. Japan is now at 248.7% (2025) of debt to GDP. Eurozone debt is about 87.8% (2025), but that understates the true situation in most countries. The US, on the same gross-debt basis, was at 122.6% in early 2026. Europe and Japan both have low or nonexistent GDP growth. The explosion of US debt means the US will soon join them. The answer from almost every economist of any stripe about how to fix the debt problem
is to rCLgrow our way out of it.rCY The problem is we have passed the point
of no return.
We canrCOt stop growing debt. That would bring down the system in a true greater-than-the-Great Depression crash. What do you cut? Social
Security? Medicare? Military pensions? Education? Interest payments on
the debt? The State Department? The only way to maintain that spending
is to keep adding debt, which sends us further into the debt trap.
Anomalies in Paradise
At some point, this will simply stop working. That moment is when the world will face what I first called The Great Reset over a decade ago. I am often asked exactly when it will happen. I typically demur as taking
a date is tricky. But I think we can narrow it down.
Right now, the Social Security Administration says that Social Security will have to be cut by roughly 22% at some point in 2033. 10 years ago they said 2034. Without some major changes in the economy, that will probably slip to 2032. It will be an election year and that will become the major topic.
We are now at $39.9 trillion of US [federal] debt. Interest on the debt
is $1.1 trillion, at an interest rate of a little under 3%. That rate is obviously rising. Deficits are climbing over $2 trillion per year. By 2031, the debt will be over $50 trillion. Interest costs will run
anywhere from an optimistically estimated low of $1.5 trillion to over
$2 trillion. ThatrCOs assuming no recession.
We are not going to cut Social Security for the vast majority of recipients. The compromise will likely be some combination of raising
the age of benefits, means testing and increasing Social Security taxes. But that doesnrCOt solve the rest of the deficit problem. Somewhere around that time the bond markets will finally say, rCLEnough, already!rCY Congress
will be forced by markets to act.
Spoiler alert: We will need to completely revamp our tax code, with a greater percentage of GDP going to taxes than any of us want. But werCOll have to collect it differently and not destroy incentives as Europe and Japan have done. Sadly, I donrCOt expect a willingness to do that, at least political willingness, until we are already in the middle of a
deep crisis. The bad news is we will get one and maybe change some things.
We built our dreams on excessive debt. Now we canrCOt go on together. WerCOre caught in a trap. We canrCOt walk out.
https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-traphttps://www.youtube.com/watch?v=yh18YXKMk3g
On Aug 15, 2026 at 2:44:21rC>PM EDT, "Julian" <julianlzb87@gmail.com> wrote:
On 15/08/2026 18:34, Wilson wrote:
We're caught in a traphttps://www.youtube.com/watch?v=yh18YXKM
I can't walk out
Because I love you too much, baby
Why can't you see
What you're doing to me
When you don't believe a word I say?
-Suspicious Minds, Elvis Presley, 1969
Elvis PresleyrCOs rendition of Suspicious Minds topped the record charts >>> in 1969. The lyrics portray a romance that couldnrCOt work, but was also >>> impossible to escape. ThatrCOs also a good way to describe our
relationship with government debt. We know it canrCOt last, but we canrCOt >>> walk out. We love government spending and its benefits (like Medicare,
Social Security, and unemployment insurance) too much.
In other words, we are in a debt trap. Our political process canrCOt
reduce spending and/or raise taxes enough to balance the budget, so the
debt grows and grows. As it does, paying the interest plus the
accumulated debt load pulls more capital away from more productive uses. >>> This depresses economic growth, thereby generating even more spending
and debt.
This has to end, and I think it will do so in the event IrCOve called The >>> Great Reset. When I first started talking about The Great Reset, we
werenrCOt in the debt trap. We were rCLmerelyrCY in a situation with only bad
choices. I didnrCOt think we would make them. Thus the underlying
presumption was that we would end up in a debt trap.
The Great Reset will be our escape from the debt trap. It wonrCOt be fun >>> for anyone, as taxes will go up and government spending of all types cut. >>>
Diverted Capital
Each additional dollar of debt in 1980 generated a rise in GDP of 60
cents, up from 54 cents in 1940. The 1980s was the last decade for the
productivity of debt to rise. Since then, this ratio has dropped
sharply, from 42 cents in 1989 to 27 cents in 2019.
LetrCOs unpack this. Debt, even government debt, isnrCOt necessarily bad. It
can actually be positive depending on how it is used. Borrowing to build >>> a productive asset can make sense, if its output is sufficient to repay
the debt and then produce even more.
Like many temptations, debt can be good in moderation but destructive if >>> abused. Some infrastructure spending doesnrCOt have a direct payoff, but >>> clearly helps the overall economy, like the US interstate highway system. >>>
Let me offer a few illustrations. It seems that every congressional
representative gives lip service to the concept of rCLinfrastructure
spending.rCY And they never really get around to doing it in any
sufficient quantity. Airports are necessary infrastructure and are
typically paid for by landing fees. ThatrCOs productive debt.
I have read that much of the US loses up to 20% of the water our water
systems produce due to leaky pipes. To rebuild the national water system >>> would take hundreds of billions if not over $1 trillion. Congress can
easily allow the formation of a public-private partnership and guarantee >>> the bonds so the Federal Reserve could buy them. Cities could access
those bonds and raise the cost of water by 1% or so to pay for the
bonds. Consumer water bills should still drop since we would be saving
the lost water.
Everyone knows this. Congress does nothing. The same could be done with
electric power. A smart grid could pay for itself even with debt costs.
And consumer power prices would likely go down. I could go on and on.
But the debt we are accumulating today is not productive in that way. We >>> use it to finance current expenditures like Medicare and Social
Security. Necessary? Absolutely. But not the economic definition of
productive debt.
Problems arise when debt becomes excessive, relative to the output it
will produce. The cost of repaying it diverts capital from other uses,
leaving less capital available for productive investment. You start
needing more debt to generate the same amount of production. Or, said
another way, each additional dollar of debt produces less benefit.
Debt service comes from taxation and even more borrowing (which is the
definition of a Ponzi scheme), which leaves businesses and families with >>> less money to spend on other things. This results in lower economic
growth, more inflation, and higher interest rates.
Why is it a trap? HererCOs where I have to get political.
Fiscal Futility
To those on the conservative side, the problem is simple. We have
excessively high taxes and debt because the government spends too much.
ThatrCOs easy to say but gets a lot more difficult when you talk specifics >>> rCo particularly if you are a member of Congress who must answer to
voters. Exactly which government spending would you like to cut? What
programs, departments, and agencies would you eliminate? Every dollar
the government spends has a constituency rCo people who benefit from it
and will fight to preserve it.
Large amounts of spending are essentially on autopilot: Social Security, >>> Medicare, assorted social programs, interest on the debt. These
rCLmandatoryrCY expenditures happen automatically, no matter the amounts, >>> without Congress acting at all. The simple fact is that this mandatory
spending plus defense spending is now consuming all tax revenue before
any other government services are paid for on the federal level.
The so-called rCLdiscretionaryrCY budget that Congress votes on (defense and
all the assorted departments and agencies) is relatively minor. You
could cut it all in half and we would still have a serious problem.
When Trump first entered office the US deficit as percentage of GDP was
less than 5%. That pandemic-year deficit peaked at 16% of GDP, or $3.1
trillion. Fast-forward to today: the FY2025 deficit came in at $1.8
trillion rCo 5.9% of GDP, well below the pandemic peak but still about 55% >>> above the 50-year historical average of 3.8% of GDP. And itrCOs headed the >>> wrong way again. The CBOrCOs latest FY2026 estimate is $2.1 trillion, up >>> from $1.9 trillion projected back in February, after the Supreme Court
struck down the IEEPA tariffs in February 2026 and blew a roughly $200
billion hole in expected tariff revenue. Whoever is in the White House,
the deficit keeps landing in roughly the same trap.
Sad to say, government spending just keeps growing no matter which party >>> is in power. We have crossed a form of political Rubicon where past
performance is not indicative of future results. The few serious fiscal
conservatives are now gone after finding the Republican Party under
Trump spends differently than Democrats would, but has no desire to
spend less.
And thatrCOs the real problem: Voters like all this spending. They differ >>> on priorities, but no one really wants to balance the budget. There is
no desire to make the sacrifices and endure the pain it would take to
change the course we are on. So, it wonrCOt change, and debt will keep
piling up.
Jaws of the Trap
Debt, as I have said many times, is future consumption pulled forward in >>> time. It lets us consume more today by consuming less in the future.
There is a school of thought which says this doesnrCOt matter because we >>> can always just keep pushing the due date further out. I disagree, and
Lacy HuntrCOs research explains why.
While debt can be a problem, private debt is also critical to economic
growth. It finances innovation and adds to the economyrCOs productive
capacity. Excessive government debt diverts resources away from
investment, without which growth slows to a crawl. Lacy proves this
mathematically but really, all you have to do is look at GDP growth
around the world since 2008. Europe, Japan, and the US have all
struggled to maintain positive growth. It was only a matter of time
until something pushed us all underwater. The pandemic did it. By 2026
itrCOs a different pressure doing the pushing rCo elevated-for-longer
interest costs and a wall of AI-driven capital spending are testing the
same limit from the other direction.
All that being said, this can continue far longer than most people
think. Japan is now at 248.7% (2025) of debt to GDP. Eurozone debt is
about 87.8% (2025), but that understates the true situation in most
countries. The US, on the same gross-debt basis, was at 122.6% in early
2026. Europe and Japan both have low or nonexistent GDP growth. The
explosion of US debt means the US will soon join them. The answer from
almost every economist of any stripe about how to fix the debt problem
is to rCLgrow our way out of it.rCY The problem is we have passed the point >>> of no return.
We canrCOt stop growing debt. That would bring down the system in a true >>> greater-than-the-Great Depression crash. What do you cut? Social
Security? Medicare? Military pensions? Education? Interest payments on
the debt? The State Department? The only way to maintain that spending
is to keep adding debt, which sends us further into the debt trap.
Anomalies in Paradise
At some point, this will simply stop working. That moment is when the
world will face what I first called The Great Reset over a decade ago. I >>> am often asked exactly when it will happen. I typically demur as taking
a date is tricky. But I think we can narrow it down.
Right now, the Social Security Administration says that Social Security
will have to be cut by roughly 22% at some point in 2033. 10 years ago
they said 2034. Without some major changes in the economy, that will
probably slip to 2032. It will be an election year and that will become
the major topic.
We are now at $39.9 trillion of US [federal] debt. Interest on the debt
is $1.1 trillion, at an interest rate of a little under 3%. That rate is >>> obviously rising. Deficits are climbing over $2 trillion per year. By
2031, the debt will be over $50 trillion. Interest costs will run
anywhere from an optimistically estimated low of $1.5 trillion to over
$2 trillion. ThatrCOs assuming no recession.
We are not going to cut Social Security for the vast majority of
recipients. The compromise will likely be some combination of raising
the age of benefits, means testing and increasing Social Security taxes. >>> But that doesnrCOt solve the rest of the deficit problem. Somewhere around >>> that time the bond markets will finally say, rCLEnough, already!rCY Congress
will be forced by markets to act.
Spoiler alert: We will need to completely revamp our tax code, with a
greater percentage of GDP going to taxes than any of us want. But werCOll >>> have to collect it differently and not destroy incentives as Europe and
Japan have done. Sadly, I donrCOt expect a willingness to do that, at
least political willingness, until we are already in the middle of aThe
deep crisis. The bad news is we will get one and maybe change some things. >>>
We built our dreams on excessive debt. Now we canrCOt go on together.
WerCOre caught in a trap. We canrCOt walk out.
https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap
if nothing else, I now understand how poop gets stuck in the K-bend. (Commercial :)
We're caught in a trap
I can't walk out
Because I love you too much, baby
Why can't you see
What you're doing to me
When you don't believe a word I say?
-Suspicious Minds, Elvis Presley, 1969
Elvis PresleyrCOs rendition of Suspicious Minds topped the record charts
in 1969. The lyrics portray a romance that couldnrCOt work, but was also impossible to escape. ThatrCOs also a good way to describe our
relationship with government debt. We know it canrCOt last, but we canrCOt walk out. We love government spending and its benefits (like Medicare, Social Security, and unemployment insurance) too much.
In other words, we are in a debt trap. Our political process canrCOt
reduce spending and/or raise taxes enough to balance the budget, so the
debt grows and grows. As it does, paying the interest plus the
accumulated debt load pulls more capital away from more productive uses. This depresses economic growth, thereby generating even more spending
and debt.
This has to end, and I think it will do so in the event IrCOve called The Great Reset. When I first started talking about The Great Reset, we werenrCOt in the debt trap. We were rCLmerelyrCY in a situation with only bad
choices. I didnrCOt think we would make them. Thus the underlying presumption was that we would end up in a debt trap.
The Great Reset will be our escape from the debt trap. It wonrCOt be fun
for anyone, as taxes will go up and government spending of all types cut.
Diverted Capital
Each additional dollar of debt in 1980 generated a rise in GDP of 60
cents, up from 54 cents in 1940. The 1980s was the last decade for the productivity of debt to rise. Since then, this ratio has dropped
sharply, from 42 cents in 1989 to 27 cents in 2019.
LetrCOs unpack this. Debt, even government debt, isnrCOt necessarily bad. It can actually be positive depending on how it is used. Borrowing to build
a productive asset can make sense, if its output is sufficient to repay
the debt and then produce even more.
Like many temptations, debt can be good in moderation but destructive if abused. Some infrastructure spending doesnrCOt have a direct payoff, but clearly helps the overall economy, like the US interstate highway system.
Let me offer a few illustrations. It seems that every congressional representative gives lip service to the concept of rCLinfrastructure spending.rCY And they never really get around to doing it in any
sufficient quantity. Airports are necessary infrastructure and are
typically paid for by landing fees. ThatrCOs productive debt.
I have read that much of the US loses up to 20% of the water our water systems produce due to leaky pipes. To rebuild the national water system would take hundreds of billions if not over $1 trillion. Congress can
easily allow the formation of a public-private partnership and guarantee
the bonds so the Federal Reserve could buy them. Cities could access
those bonds and raise the cost of water by 1% or so to pay for the
bonds. Consumer water bills should still drop since we would be saving
the lost water.
Everyone knows this. Congress does nothing. The same could be done with electric power. A smart grid could pay for itself even with debt costs.
And consumer power prices would likely go down. I could go on and on.
But the debt we are accumulating today is not productive in that way. We
use it to finance current expenditures like Medicare and Social
Security. Necessary? Absolutely. But not the economic definition of productive debt.
Problems arise when debt becomes excessive, relative to the output it
will produce. The cost of repaying it diverts capital from other uses, leaving less capital available for productive investment. You start
needing more debt to generate the same amount of production. Or, said another way, each additional dollar of debt produces less benefit.
Debt service comes from taxation and even more borrowing (which is the definition of a Ponzi scheme), which leaves businesses and families with less money to spend on other things. This results in lower economic
growth, more inflation, and higher interest rates.
Why is it a trap? HererCOs where I have to get political.
Fiscal Futility
To those on the conservative side, the problem is simple. We have excessively high taxes and debt because the government spends too much.
ThatrCOs easy to say but gets a lot more difficult when you talk specifics rCo particularly if you are a member of Congress who must answer to
voters. Exactly which government spending would you like to cut? What programs, departments, and agencies would you eliminate? Every dollar
the government spends has a constituency rCo people who benefit from it
and will fight to preserve it.
Large amounts of spending are essentially on autopilot: Social Security, Medicare, assorted social programs, interest on the debt. These rCLmandatoryrCY expenditures happen automatically, no matter the amounts, without Congress acting at all. The simple fact is that this mandatory spending plus defense spending is now consuming all tax revenue before
any other government services are paid for on the federal level.
The so-called rCLdiscretionaryrCY budget that Congress votes on (defense and all the assorted departments and agencies) is relatively minor. You
could cut it all in half and we would still have a serious problem.
When Trump first entered office the US deficit as percentage of GDP was
less than 5%. That pandemic-year deficit peaked at 16% of GDP, or $3.1 trillion. Fast-forward to today: the FY2025 deficit came in at $1.8
trillion rCo 5.9% of GDP, well below the pandemic peak but still about 55% above the 50-year historical average of 3.8% of GDP. And itrCOs headed the wrong way again. The CBOrCOs latest FY2026 estimate is $2.1 trillion, up from $1.9 trillion projected back in February, after the Supreme Court struck down the IEEPA tariffs in February 2026 and blew a roughly $200 billion hole in expected tariff revenue. Whoever is in the White House,
the deficit keeps landing in roughly the same trap.
Sad to say, government spending just keeps growing no matter which party
is in power. We have crossed a form of political Rubicon where past performance is not indicative of future results. The few serious fiscal conservatives are now gone after finding the Republican Party under
Trump spends differently than Democrats would, but has no desire to
spend less.
And thatrCOs the real problem: Voters like all this spending. They differ
on priorities, but no one really wants to balance the budget. There is
no desire to make the sacrifices and endure the pain it would take to
change the course we are on. So, it wonrCOt change, and debt will keep piling up.
Jaws of the Trap
Debt, as I have said many times, is future consumption pulled forward in time. It lets us consume more today by consuming less in the future.
There is a school of thought which says this doesnrCOt matter because we
can always just keep pushing the due date further out. I disagree, and
Lacy HuntrCOs research explains why.
While debt can be a problem, private debt is also critical to economic growth. It finances innovation and adds to the economyrCOs productive capacity. Excessive government debt diverts resources away from
investment, without which growth slows to a crawl. Lacy proves this mathematically but really, all you have to do is look at GDP growth
around the world since 2008. Europe, Japan, and the US have all
struggled to maintain positive growth. It was only a matter of time
until something pushed us all underwater. The pandemic did it. By 2026 itrCOs a different pressure doing the pushing rCo elevated-for-longer interest costs and a wall of AI-driven capital spending are testing the
same limit from the other direction.
All that being said, this can continue far longer than most people
think. Japan is now at 248.7% (2025) of debt to GDP. Eurozone debt is
about 87.8% (2025), but that understates the true situation in most countries. The US, on the same gross-debt basis, was at 122.6% in early 2026. Europe and Japan both have low or nonexistent GDP growth. The explosion of US debt means the US will soon join them. The answer from almost every economist of any stripe about how to fix the debt problem
is to rCLgrow our way out of it.rCY The problem is we have passed the point of no return.
We canrCOt stop growing debt. That would bring down the system in a true greater-than-the-Great Depression crash. What do you cut? Social
Security? Medicare? Military pensions? Education? Interest payments on
the debt? The State Department? The only way to maintain that spending
is to keep adding debt, which sends us further into the debt trap.
Anomalies in Paradise
At some point, this will simply stop working. That moment is when the
world will face what I first called The Great Reset over a decade ago. I
am often asked exactly when it will happen. I typically demur as taking
a date is tricky. But I think we can narrow it down.
Right now, the Social Security Administration says that Social Security
will have to be cut by roughly 22% at some point in 2033. 10 years ago
they said 2034. Without some major changes in the economy, that will probably slip to 2032. It will be an election year and that will become
the major topic.
We are now at $39.9 trillion of US [federal] debt. Interest on the debt
is $1.1 trillion, at an interest rate of a little under 3%. That rate is obviously rising. Deficits are climbing over $2 trillion per year. By
2031, the debt will be over $50 trillion. Interest costs will run
anywhere from an optimistically estimated low of $1.5 trillion to over
$2 trillion. ThatrCOs assuming no recession.
We are not going to cut Social Security for the vast majority of
recipients. The compromise will likely be some combination of raising
the age of benefits, means testing and increasing Social Security taxes.
But that doesnrCOt solve the rest of the deficit problem. Somewhere around that time the bond markets will finally say, rCLEnough, already!rCY Congress will be forced by markets to act.
Spoiler alert: We will need to completely revamp our tax code, with a greater percentage of GDP going to taxes than any of us want. But werCOll have to collect it differently and not destroy incentives as Europe and Japan have done. Sadly, I donrCOt expect a willingness to do that, at
least political willingness, until we are already in the middle of a
deep crisis. The bad news is we will get one and maybe change some things.
We built our dreams on excessive debt. Now we canrCOt go on together. WerCOre caught in a trap. We canrCOt walk out.
https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap
On 8/15/26 10:34 AM, Wilson wrote:
We're caught in a trap
I can't walk out
Because I love you too much, baby
Why can't you see
What you're doing to me
When you don't believe a word I say?
-Suspicious Minds, Elvis Presley, 1969
Elvis PresleyrCOs rendition of Suspicious Minds topped the record charts in 1969. The lyrics portray a romance that couldnrCOt work, but was also impossible to escape. ThatrCOs also a good way to describe our relationship with government debt. We know it canrCOt last, but we canrCOt walk out. We love government spending and its benefits (like Medicare, Social Security, and unemployment insurance) too much.
In other words, we are in a debt trap. Our political process canrCOt reduce spending and/or raise taxes enough to balance the budget, so the debt grows and grows. As it does, paying the interest plus the
accumulated debt load pulls more capital away from more productive uses. This depresses economic growth, thereby generating even more spending
and debt.
This has to end, and I think it will do so in the event IrCOve called The Great Reset. When I first started talking about The Great Reset, we werenrCOt in the debt trap. We were rCLmerelyrCY in a situation with only bad
choices. I didnrCOt think we would make them. Thus the underlying presumption was that we would end up in a debt trap.
The Great Reset will be our escape from the debt trap. It wonrCOt be fun for anyone, as taxes will go up and government spending of all types cut.
Diverted Capital
Each additional dollar of debt in 1980 generated a rise in GDP of 60 cents, up from 54 cents in 1940. The 1980s was the last decade for the productivity of debt to rise. Since then, this ratio has dropped
sharply, from 42 cents in 1989 to 27 cents in 2019.
LetrCOs unpack this. Debt, even government debt, isnrCOt necessarily bad. It
can actually be positive depending on how it is used. Borrowing to build
a productive asset can make sense, if its output is sufficient to repay the debt and then produce even more.
Like many temptations, debt can be good in moderation but destructive if abused. Some infrastructure spending doesnrCOt have a direct payoff, but clearly helps the overall economy, like the US interstate highway system.
Let me offer a few illustrations. It seems that every congressional representative gives lip service to the concept of rCLinfrastructure spending.rCY And they never really get around to doing it in any sufficient quantity. Airports are necessary infrastructure and are typically paid for by landing fees. ThatrCOs productive debt.
I have read that much of the US loses up to 20% of the water our water systems produce due to leaky pipes. To rebuild the national water system would take hundreds of billions if not over $1 trillion. Congress can easily allow the formation of a public-private partnership and guarantee the bonds so the Federal Reserve could buy them. Cities could access
those bonds and raise the cost of water by 1% or so to pay for the
bonds. Consumer water bills should still drop since we would be saving
the lost water.
Everyone knows this. Congress does nothing. The same could be done with electric power. A smart grid could pay for itself even with debt costs. And consumer power prices would likely go down. I could go on and on.
But the debt we are accumulating today is not productive in that way. We use it to finance current expenditures like Medicare and Social
Security. Necessary? Absolutely. But not the economic definition of productive debt.
Problems arise when debt becomes excessive, relative to the output it
will produce. The cost of repaying it diverts capital from other uses, leaving less capital available for productive investment. You start needing more debt to generate the same amount of production. Or, said another way, each additional dollar of debt produces less benefit.
Debt service comes from taxation and even more borrowing (which is the definition of a Ponzi scheme), which leaves businesses and families with less money to spend on other things. This results in lower economic growth, more inflation, and higher interest rates.
Why is it a trap? HererCOs where I have to get political.
Fiscal Futility
To those on the conservative side, the problem is simple. We have excessively high taxes and debt because the government spends too much.
ThatrCOs easy to say but gets a lot more difficult when you talk specifics rCo particularly if you are a member of Congress who must answer to voters. Exactly which government spending would you like to cut? What programs, departments, and agencies would you eliminate? Every dollar
the government spends has a constituency rCo people who benefit from it and will fight to preserve it.
Large amounts of spending are essentially on autopilot: Social Security, Medicare, assorted social programs, interest on the debt. These rCLmandatoryrCY expenditures happen automatically, no matter the amounts, without Congress acting at all. The simple fact is that this mandatory spending plus defense spending is now consuming all tax revenue before
any other government services are paid for on the federal level.
The so-called rCLdiscretionaryrCY budget that Congress votes on (defense and
all the assorted departments and agencies) is relatively minor. You
could cut it all in half and we would still have a serious problem.
When Trump first entered office the US deficit as percentage of GDP was less than 5%. That pandemic-year deficit peaked at 16% of GDP, or $3.1 trillion. Fast-forward to today: the FY2025 deficit came in at $1.8 trillion rCo 5.9% of GDP, well below the pandemic peak but still about 55% above the 50-year historical average of 3.8% of GDP. And itrCOs headed the wrong way again. The CBOrCOs latest FY2026 estimate is $2.1 trillion, up from $1.9 trillion projected back in February, after the Supreme Court struck down the IEEPA tariffs in February 2026 and blew a roughly $200 billion hole in expected tariff revenue. Whoever is in the White House, the deficit keeps landing in roughly the same trap.
Sad to say, government spending just keeps growing no matter which party is in power. We have crossed a form of political Rubicon where past performance is not indicative of future results. The few serious fiscal conservatives are now gone after finding the Republican Party under
Trump spends differently than Democrats would, but has no desire to
spend less.
And thatrCOs the real problem: Voters like all this spending. They differ on priorities, but no one really wants to balance the budget. There is
no desire to make the sacrifices and endure the pain it would take to change the course we are on. So, it wonrCOt change, and debt will keep piling up.
Jaws of the Trap
Debt, as I have said many times, is future consumption pulled forward in time. It lets us consume more today by consuming less in the future.
There is a school of thought which says this doesnrCOt matter because we can always just keep pushing the due date further out. I disagree, and Lacy HuntrCOs research explains why.
While debt can be a problem, private debt is also critical to economic growth. It finances innovation and adds to the economyrCOs productive capacity. Excessive government debt diverts resources away from investment, without which growth slows to a crawl. Lacy proves this mathematically but really, all you have to do is look at GDP growth
around the world since 2008. Europe, Japan, and the US have all
struggled to maintain positive growth. It was only a matter of time
until something pushed us all underwater. The pandemic did it. By 2026 itrCOs a different pressure doing the pushing rCo elevated-for-longer interest costs and a wall of AI-driven capital spending are testing the same limit from the other direction.
All that being said, this can continue far longer than most people
think. Japan is now at 248.7% (2025) of debt to GDP. Eurozone debt is about 87.8% (2025), but that understates the true situation in most countries. The US, on the same gross-debt basis, was at 122.6% in early 2026. Europe and Japan both have low or nonexistent GDP growth. The explosion of US debt means the US will soon join them. The answer from almost every economist of any stripe about how to fix the debt problem
is to rCLgrow our way out of it.rCY The problem is we have passed the point
of no return.
We canrCOt stop growing debt. That would bring down the system in a true greater-than-the-Great Depression crash. What do you cut? Social
Security? Medicare? Military pensions? Education? Interest payments on
the debt? The State Department? The only way to maintain that spending
is to keep adding debt, which sends us further into the debt trap.
Anomalies in Paradise
At some point, this will simply stop working. That moment is when the world will face what I first called The Great Reset over a decade ago. I am often asked exactly when it will happen. I typically demur as taking
a date is tricky. But I think we can narrow it down.
Right now, the Social Security Administration says that Social Security will have to be cut by roughly 22% at some point in 2033. 10 years ago they said 2034. Without some major changes in the economy, that will probably slip to 2032. It will be an election year and that will become the major topic.
We are now at $39.9 trillion of US [federal] debt. Interest on the debt
is $1.1 trillion, at an interest rate of a little under 3%. That rate is obviously rising. Deficits are climbing over $2 trillion per year. By 2031, the debt will be over $50 trillion. Interest costs will run
anywhere from an optimistically estimated low of $1.5 trillion to over
$2 trillion. ThatrCOs assuming no recession.
We are not going to cut Social Security for the vast majority of recipients. The compromise will likely be some combination of raising
the age of benefits, means testing and increasing Social Security taxes. But that doesnrCOt solve the rest of the deficit problem. Somewhere around that time the bond markets will finally say, rCLEnough, already!rCY Congress
will be forced by markets to act.
Spoiler alert: We will need to completely revamp our tax code, with a greater percentage of GDP going to taxes than any of us want. But werCOll have to collect it differently and not destroy incentives as Europe and Japan have done. Sadly, I donrCOt expect a willingness to do that, at least political willingness, until we are already in the middle of a
deep crisis. The bad news is we will get one and maybe change some things.
We built our dreams on excessive debt. Now we canrCOt go on together. WerCOre caught in a trap. We canrCOt walk out.
https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap
rich people could just forgive it if they wanted ...
and all that would change is the perception of wealth,
> not actual wealth
> #god
On Aug 15, 2026 at 3:36:22rC>PM EDT, "Tara" <tsm@fastmail.ca> wrote:
On Aug 15, 2026 at 2:44:21rC>PM EDT, "Julian" <julianlzb87@gmail.com> wrote: >>
On 15/08/2026 18:34, Wilson wrote:
We're caught in a trap
I can't walk out
Because I love you too much, baby
Why can't you see
What you're doing to me
When you don't believe a word I say?
-Suspicious Minds, Elvis Presley, 1969
Elvis PresleyrCOs rendition of Suspicious Minds topped the record charts >>>> in 1969. The lyrics portray a romance that couldnrCOt work, but was also >>>> impossible to escape. ThatrCOs also a good way to describe our
relationship with government debt. We know it canrCOt last, but we canrCOt >>>> walk out. We love government spending and its benefits (like Medicare, >>>> Social Security, and unemployment insurance) too much.
In other words, we are in a debt trap. Our political process canrCOt
reduce spending and/or raise taxes enough to balance the budget, so the >>>> debt grows and grows. As it does, paying the interest plus the
accumulated debt load pulls more capital away from more productive uses. >>>> This depresses economic growth, thereby generating even more spending
and debt.
This has to end, and I think it will do so in the event IrCOve called The >>>> Great Reset. When I first started talking about The Great Reset, we
werenrCOt in the debt trap. We were rCLmerelyrCY in a situation with only bad
choices. I didnrCOt think we would make them. Thus the underlying
presumption was that we would end up in a debt trap.
The Great Reset will be our escape from the debt trap. It wonrCOt be fun >>>> for anyone, as taxes will go up and government spending of all types cut. >>>>
Diverted Capital
Each additional dollar of debt in 1980 generated a rise in GDP of 60
cents, up from 54 cents in 1940. The 1980s was the last decade for the >>>> productivity of debt to rise. Since then, this ratio has dropped
sharply, from 42 cents in 1989 to 27 cents in 2019.
LetrCOs unpack this. Debt, even government debt, isnrCOt necessarily bad. It
can actually be positive depending on how it is used. Borrowing to build >>>> a productive asset can make sense, if its output is sufficient to repay >>>> the debt and then produce even more.
Like many temptations, debt can be good in moderation but destructive if >>>> abused. Some infrastructure spending doesnrCOt have a direct payoff, but >>>> clearly helps the overall economy, like the US interstate highway system. >>>>
Let me offer a few illustrations. It seems that every congressional
representative gives lip service to the concept of rCLinfrastructure
spending.rCY And they never really get around to doing it in any
sufficient quantity. Airports are necessary infrastructure and are
typically paid for by landing fees. ThatrCOs productive debt.
I have read that much of the US loses up to 20% of the water our water >>>> systems produce due to leaky pipes. To rebuild the national water system >>>> would take hundreds of billions if not over $1 trillion. Congress can
easily allow the formation of a public-private partnership and guarantee >>>> the bonds so the Federal Reserve could buy them. Cities could access
those bonds and raise the cost of water by 1% or so to pay for the
bonds. Consumer water bills should still drop since we would be saving >>>> the lost water.
Everyone knows this. Congress does nothing. The same could be done with >>>> electric power. A smart grid could pay for itself even with debt costs. >>>> And consumer power prices would likely go down. I could go on and on.
But the debt we are accumulating today is not productive in that way. We >>>> use it to finance current expenditures like Medicare and Social
Security. Necessary? Absolutely. But not the economic definition of
productive debt.
Problems arise when debt becomes excessive, relative to the output it
will produce. The cost of repaying it diverts capital from other uses, >>>> leaving less capital available for productive investment. You start
needing more debt to generate the same amount of production. Or, said
another way, each additional dollar of debt produces less benefit.
Debt service comes from taxation and even more borrowing (which is the >>>> definition of a Ponzi scheme), which leaves businesses and families with >>>> less money to spend on other things. This results in lower economic
growth, more inflation, and higher interest rates.
Why is it a trap? HererCOs where I have to get political.
Fiscal Futility
To those on the conservative side, the problem is simple. We have
excessively high taxes and debt because the government spends too much. >>>>
ThatrCOs easy to say but gets a lot more difficult when you talk specifics >>>> rCo particularly if you are a member of Congress who must answer to
voters. Exactly which government spending would you like to cut? What
programs, departments, and agencies would you eliminate? Every dollar
the government spends has a constituency rCo people who benefit from it >>>> and will fight to preserve it.
Large amounts of spending are essentially on autopilot: Social Security, >>>> Medicare, assorted social programs, interest on the debt. These
rCLmandatoryrCY expenditures happen automatically, no matter the amounts, >>>> without Congress acting at all. The simple fact is that this mandatory >>>> spending plus defense spending is now consuming all tax revenue before >>>> any other government services are paid for on the federal level.
The so-called rCLdiscretionaryrCY budget that Congress votes on (defense and
all the assorted departments and agencies) is relatively minor. You
could cut it all in half and we would still have a serious problem.
When Trump first entered office the US deficit as percentage of GDP was >>>> less than 5%. That pandemic-year deficit peaked at 16% of GDP, or $3.1 >>>> trillion. Fast-forward to today: the FY2025 deficit came in at $1.8
trillion rCo 5.9% of GDP, well below the pandemic peak but still about 55% >>>> above the 50-year historical average of 3.8% of GDP. And itrCOs headed the >>>> wrong way again. The CBOrCOs latest FY2026 estimate is $2.1 trillion, up >>>> from $1.9 trillion projected back in February, after the Supreme Court >>>> struck down the IEEPA tariffs in February 2026 and blew a roughly $200 >>>> billion hole in expected tariff revenue. Whoever is in the White House, >>>> the deficit keeps landing in roughly the same trap.
Sad to say, government spending just keeps growing no matter which party >>>> is in power. We have crossed a form of political Rubicon where past
performance is not indicative of future results. The few serious fiscal >>>> conservatives are now gone after finding the Republican Party under
Trump spends differently than Democrats would, but has no desire to
spend less.
And thatrCOs the real problem: Voters like all this spending. They differ >>>> on priorities, but no one really wants to balance the budget. There is >>>> no desire to make the sacrifices and endure the pain it would take to
change the course we are on. So, it wonrCOt change, and debt will keep >>>> piling up.
Jaws of the Trap
Debt, as I have said many times, is future consumption pulled forward in >>>> time. It lets us consume more today by consuming less in the future.
There is a school of thought which says this doesnrCOt matter because we >>>> can always just keep pushing the due date further out. I disagree, and >>>> Lacy HuntrCOs research explains why.
While debt can be a problem, private debt is also critical to economic >>>> growth. It finances innovation and adds to the economyrCOs productive
capacity. Excessive government debt diverts resources away from
investment, without which growth slows to a crawl. Lacy proves this
mathematically but really, all you have to do is look at GDP growth
around the world since 2008. Europe, Japan, and the US have all
struggled to maintain positive growth. It was only a matter of time
until something pushed us all underwater. The pandemic did it. By 2026 >>>> itrCOs a different pressure doing the pushing rCo elevated-for-longer
interest costs and a wall of AI-driven capital spending are testing the >>>> same limit from the other direction.
All that being said, this can continue far longer than most people
think. Japan is now at 248.7% (2025) of debt to GDP. Eurozone debt is
about 87.8% (2025), but that understates the true situation in most
countries. The US, on the same gross-debt basis, was at 122.6% in early >>>> 2026. Europe and Japan both have low or nonexistent GDP growth. The
explosion of US debt means the US will soon join them. The answer from >>>> almost every economist of any stripe about how to fix the debt problem >>>> is to rCLgrow our way out of it.rCY The problem is we have passed the point
of no return.
We canrCOt stop growing debt. That would bring down the system in a true >>>> greater-than-the-Great Depression crash. What do you cut? Social
Security? Medicare? Military pensions? Education? Interest payments on >>>> the debt? The State Department? The only way to maintain that spending >>>> is to keep adding debt, which sends us further into the debt trap.
Anomalies in Paradise
At some point, this will simply stop working. That moment is when the
world will face what I first called The Great Reset over a decade ago. I >>>> am often asked exactly when it will happen. I typically demur as taking >>>> a date is tricky. But I think we can narrow it down.
Right now, the Social Security Administration says that Social Security >>>> will have to be cut by roughly 22% at some point in 2033. 10 years ago >>>> they said 2034. Without some major changes in the economy, that will
probably slip to 2032. It will be an election year and that will become >>>> the major topic.
We are now at $39.9 trillion of US [federal] debt. Interest on the debt >>>> is $1.1 trillion, at an interest rate of a little under 3%. That rate is >>>> obviously rising. Deficits are climbing over $2 trillion per year. By
2031, the debt will be over $50 trillion. Interest costs will run
anywhere from an optimistically estimated low of $1.5 trillion to over >>>> $2 trillion. ThatrCOs assuming no recession.
We are not going to cut Social Security for the vast majority of
recipients. The compromise will likely be some combination of raising
the age of benefits, means testing and increasing Social Security taxes. >>>> But that doesnrCOt solve the rest of the deficit problem. Somewhere around >>>> that time the bond markets will finally say, rCLEnough, already!rCY Congress
will be forced by markets to act.
Spoiler alert: We will need to completely revamp our tax code, with a
greater percentage of GDP going to taxes than any of us want. But werCOll >>>> have to collect it differently and not destroy incentives as Europe and >>>> Japan have done. Sadly, I donrCOt expect a willingness to do that, at
least political willingness, until we are already in the middle of aThe >>>> deep crisis. The bad news is we will get one and maybe change some things. >>>>
We built our dreams on excessive debt. Now we canrCOt go on together.
WerCOre caught in a trap. We canrCOt walk out.
https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap >>> https://www.youtube.com/watch?v=yh18YXKM
if nothing else, I now understand how poop gets stuck in the K-bend.
(Commercial :)
The video is good. Not that I understand a lot of it, but there
is something about how a brit tells it that makes it entertaining.
On 15/08/2026 21:06, Tara wrote:
On Aug 15, 2026 at 3:36:22rC>PM EDT, "Tara" <tsm@fastmail.ca> wrote:
On Aug 15, 2026 at 2:44:21rC>PM EDT, "Julian" <julianlzb87@gmail.com> wrote:
On 15/08/2026 18:34, Wilson wrote:
We're caught in a trap
I can't walk out
Because I love you too much, baby
Why can't you see
What you're doing to me
When you don't believe a word I say?
-Suspicious Minds, Elvis Presley, 1969
Elvis PresleyrCOs rendition of Suspicious Minds topped the record charts >>>>> in 1969. The lyrics portray a romance that couldnrCOt work, but was also >>>>> impossible to escape. ThatrCOs also a good way to describe our
relationship with government debt. We know it canrCOt last, but we canrCOt
walk out. We love government spending and its benefits (like Medicare, >>>>> Social Security, and unemployment insurance) too much.
In other words, we are in a debt trap. Our political process canrCOt >>>>> reduce spending and/or raise taxes enough to balance the budget, so the >>>>> debt grows and grows. As it does, paying the interest plus the
accumulated debt load pulls more capital away from more productive uses. >>>>> This depresses economic growth, thereby generating even more spending >>>>> and debt.
This has to end, and I think it will do so in the event IrCOve called The >>>>> Great Reset. When I first started talking about The Great Reset, we
werenrCOt in the debt trap. We were rCLmerelyrCY in a situation with only bad
choices. I didnrCOt think we would make them. Thus the underlying
presumption was that we would end up in a debt trap.
The Great Reset will be our escape from the debt trap. It wonrCOt be fun >>>>> for anyone, as taxes will go up and government spending of all types cut. >>>>>
Diverted Capital
Each additional dollar of debt in 1980 generated a rise in GDP of 60 >>>>> cents, up from 54 cents in 1940. The 1980s was the last decade for the >>>>> productivity of debt to rise. Since then, this ratio has dropped
sharply, from 42 cents in 1989 to 27 cents in 2019.
LetrCOs unpack this. Debt, even government debt, isnrCOt necessarily bad. It
can actually be positive depending on how it is used. Borrowing to build >>>>> a productive asset can make sense, if its output is sufficient to repay >>>>> the debt and then produce even more.
Like many temptations, debt can be good in moderation but destructive if >>>>> abused. Some infrastructure spending doesnrCOt have a direct payoff, but >>>>> clearly helps the overall economy, like the US interstate highway system. >>>>>
Let me offer a few illustrations. It seems that every congressional
representative gives lip service to the concept of rCLinfrastructure >>>>> spending.rCY And they never really get around to doing it in any
sufficient quantity. Airports are necessary infrastructure and are
typically paid for by landing fees. ThatrCOs productive debt.
I have read that much of the US loses up to 20% of the water our water >>>>> systems produce due to leaky pipes. To rebuild the national water system >>>>> would take hundreds of billions if not over $1 trillion. Congress can >>>>> easily allow the formation of a public-private partnership and guarantee >>>>> the bonds so the Federal Reserve could buy them. Cities could access >>>>> those bonds and raise the cost of water by 1% or so to pay for the
bonds. Consumer water bills should still drop since we would be saving >>>>> the lost water.
Everyone knows this. Congress does nothing. The same could be done with >>>>> electric power. A smart grid could pay for itself even with debt costs. >>>>> And consumer power prices would likely go down. I could go on and on. >>>>>
But the debt we are accumulating today is not productive in that way. We >>>>> use it to finance current expenditures like Medicare and Social
Security. Necessary? Absolutely. But not the economic definition of
productive debt.
Problems arise when debt becomes excessive, relative to the output it >>>>> will produce. The cost of repaying it diverts capital from other uses, >>>>> leaving less capital available for productive investment. You start
needing more debt to generate the same amount of production. Or, said >>>>> another way, each additional dollar of debt produces less benefit.
Debt service comes from taxation and even more borrowing (which is the >>>>> definition of a Ponzi scheme), which leaves businesses and families with >>>>> less money to spend on other things. This results in lower economic
growth, more inflation, and higher interest rates.
Why is it a trap? HererCOs where I have to get political.
Fiscal Futility
To those on the conservative side, the problem is simple. We have
excessively high taxes and debt because the government spends too much. >>>>>
ThatrCOs easy to say but gets a lot more difficult when you talk specifics
rCo particularly if you are a member of Congress who must answer to
voters. Exactly which government spending would you like to cut? What >>>>> programs, departments, and agencies would you eliminate? Every dollar >>>>> the government spends has a constituency rCo people who benefit from it >>>>> and will fight to preserve it.
Large amounts of spending are essentially on autopilot: Social Security, >>>>> Medicare, assorted social programs, interest on the debt. These
rCLmandatoryrCY expenditures happen automatically, no matter the amounts, >>>>> without Congress acting at all. The simple fact is that this mandatory >>>>> spending plus defense spending is now consuming all tax revenue before >>>>> any other government services are paid for on the federal level.
The so-called rCLdiscretionaryrCY budget that Congress votes on (defense and
all the assorted departments and agencies) is relatively minor. You
could cut it all in half and we would still have a serious problem.
When Trump first entered office the US deficit as percentage of GDP was >>>>> less than 5%. That pandemic-year deficit peaked at 16% of GDP, or $3.1 >>>>> trillion. Fast-forward to today: the FY2025 deficit came in at $1.8
trillion rCo 5.9% of GDP, well below the pandemic peak but still about 55%
above the 50-year historical average of 3.8% of GDP. And itrCOs headed the
wrong way again. The CBOrCOs latest FY2026 estimate is $2.1 trillion, up >>>>> from $1.9 trillion projected back in February, after the Supreme Court >>>>> struck down the IEEPA tariffs in February 2026 and blew a roughly $200 >>>>> billion hole in expected tariff revenue. Whoever is in the White House, >>>>> the deficit keeps landing in roughly the same trap.
Sad to say, government spending just keeps growing no matter which party >>>>> is in power. We have crossed a form of political Rubicon where past
performance is not indicative of future results. The few serious fiscal >>>>> conservatives are now gone after finding the Republican Party under
Trump spends differently than Democrats would, but has no desire to
spend less.
And thatrCOs the real problem: Voters like all this spending. They differ >>>>> on priorities, but no one really wants to balance the budget. There is >>>>> no desire to make the sacrifices and endure the pain it would take to >>>>> change the course we are on. So, it wonrCOt change, and debt will keep >>>>> piling up.
Jaws of the Trap
Debt, as I have said many times, is future consumption pulled forward in >>>>> time. It lets us consume more today by consuming less in the future. >>>>> There is a school of thought which says this doesnrCOt matter because we >>>>> can always just keep pushing the due date further out. I disagree, and >>>>> Lacy HuntrCOs research explains why.
While debt can be a problem, private debt is also critical to economic >>>>> growth. It finances innovation and adds to the economyrCOs productive >>>>> capacity. Excessive government debt diverts resources away from
investment, without which growth slows to a crawl. Lacy proves this
mathematically but really, all you have to do is look at GDP growth
around the world since 2008. Europe, Japan, and the US have all
struggled to maintain positive growth. It was only a matter of time
until something pushed us all underwater. The pandemic did it. By 2026 >>>>> itrCOs a different pressure doing the pushing rCo elevated-for-longer >>>>> interest costs and a wall of AI-driven capital spending are testing the >>>>> same limit from the other direction.
All that being said, this can continue far longer than most people
think. Japan is now at 248.7% (2025) of debt to GDP. Eurozone debt is >>>>> about 87.8% (2025), but that understates the true situation in most
countries. The US, on the same gross-debt basis, was at 122.6% in early >>>>> 2026. Europe and Japan both have low or nonexistent GDP growth. The
explosion of US debt means the US will soon join them. The answer from >>>>> almost every economist of any stripe about how to fix the debt problem >>>>> is to rCLgrow our way out of it.rCY The problem is we have passed the point
of no return.
We canrCOt stop growing debt. That would bring down the system in a true >>>>> greater-than-the-Great Depression crash. What do you cut? Social
Security? Medicare? Military pensions? Education? Interest payments on >>>>> the debt? The State Department? The only way to maintain that spending >>>>> is to keep adding debt, which sends us further into the debt trap.
Anomalies in Paradise
At some point, this will simply stop working. That moment is when the >>>>> world will face what I first called The Great Reset over a decade ago. I >>>>> am often asked exactly when it will happen. I typically demur as taking >>>>> a date is tricky. But I think we can narrow it down.
Right now, the Social Security Administration says that Social Security >>>>> will have to be cut by roughly 22% at some point in 2033. 10 years ago >>>>> they said 2034. Without some major changes in the economy, that will >>>>> probably slip to 2032. It will be an election year and that will become >>>>> the major topic.
We are now at $39.9 trillion of US [federal] debt. Interest on the debt >>>>> is $1.1 trillion, at an interest rate of a little under 3%. That rate is >>>>> obviously rising. Deficits are climbing over $2 trillion per year. By >>>>> 2031, the debt will be over $50 trillion. Interest costs will run
anywhere from an optimistically estimated low of $1.5 trillion to over >>>>> $2 trillion. ThatrCOs assuming no recession.
We are not going to cut Social Security for the vast majority of
recipients. The compromise will likely be some combination of raising >>>>> the age of benefits, means testing and increasing Social Security taxes. >>>>> But that doesnrCOt solve the rest of the deficit problem. Somewhere around
that time the bond markets will finally say, rCLEnough, already!rCY Congress
will be forced by markets to act.
Spoiler alert: We will need to completely revamp our tax code, with a >>>>> greater percentage of GDP going to taxes than any of us want. But werCOll >>>>> have to collect it differently and not destroy incentives as Europe and >>>>> Japan have done. Sadly, I donrCOt expect a willingness to do that, at >>>>> least political willingness, until we are already in the middle of aThe >>>>> deep crisis. The bad news is we will get one and maybe change some things.
We built our dreams on excessive debt. Now we canrCOt go on together. >>>>> WerCOre caught in a trap. We canrCOt walk out.
https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap >>>> https://www.youtube.com/watch?v=yh18YXKM
if nothing else, I now understand how poop gets stuck in the K-bend.
(Commercial :)
The video is good. Not that I understand a lot of it, but there
is something about how a brit tells it that makes it entertaining.
Patrick is Irish. :) He's a great story teller.
dart200 <user7160@newsgrouper.org.invalid> posted:
On 8/15/26 10:34 AM, Wilson wrote:Rich people are not in debt - why would they want to pay off your debt?
We're caught in a trap
I can't walk out
Because I love you too much, baby
Why can't you see
What you're doing to me
When you don't believe a word I say?
-Suspicious Minds, Elvis Presley, 1969
Elvis PresleyrCOs rendition of Suspicious Minds topped the record charts >>> in 1969. The lyrics portray a romance that couldnrCOt work, but was also >>> impossible to escape. ThatrCOs also a good way to describe our
relationship with government debt. We know it canrCOt last, but we canrCOt >>> walk out. We love government spending and its benefits (like Medicare,
Social Security, and unemployment insurance) too much.
In other words, we are in a debt trap. Our political process canrCOt
reduce spending and/or raise taxes enough to balance the budget, so the
debt grows and grows. As it does, paying the interest plus the
accumulated debt load pulls more capital away from more productive uses. >>> This depresses economic growth, thereby generating even more spending
and debt.
This has to end, and I think it will do so in the event IrCOve called The >>> Great Reset. When I first started talking about The Great Reset, we
werenrCOt in the debt trap. We were rCLmerelyrCY in a situation with only bad
choices. I didnrCOt think we would make them. Thus the underlying
presumption was that we would end up in a debt trap.
The Great Reset will be our escape from the debt trap. It wonrCOt be fun >>> for anyone, as taxes will go up and government spending of all types cut. >>>
Diverted Capital
Each additional dollar of debt in 1980 generated a rise in GDP of 60
cents, up from 54 cents in 1940. The 1980s was the last decade for the
productivity of debt to rise. Since then, this ratio has dropped
sharply, from 42 cents in 1989 to 27 cents in 2019.
LetrCOs unpack this. Debt, even government debt, isnrCOt necessarily bad. It
can actually be positive depending on how it is used. Borrowing to build >>> a productive asset can make sense, if its output is sufficient to repay
the debt and then produce even more.
Like many temptations, debt can be good in moderation but destructive if >>> abused. Some infrastructure spending doesnrCOt have a direct payoff, but >>> clearly helps the overall economy, like the US interstate highway system. >>>
Let me offer a few illustrations. It seems that every congressional
representative gives lip service to the concept of rCLinfrastructure
spending.rCY And they never really get around to doing it in any
sufficient quantity. Airports are necessary infrastructure and are
typically paid for by landing fees. ThatrCOs productive debt.
I have read that much of the US loses up to 20% of the water our water
systems produce due to leaky pipes. To rebuild the national water system >>> would take hundreds of billions if not over $1 trillion. Congress can
easily allow the formation of a public-private partnership and guarantee >>> the bonds so the Federal Reserve could buy them. Cities could access
those bonds and raise the cost of water by 1% or so to pay for the
bonds. Consumer water bills should still drop since we would be saving
the lost water.
Everyone knows this. Congress does nothing. The same could be done with
electric power. A smart grid could pay for itself even with debt costs.
And consumer power prices would likely go down. I could go on and on.
But the debt we are accumulating today is not productive in that way. We >>> use it to finance current expenditures like Medicare and Social
Security. Necessary? Absolutely. But not the economic definition of
productive debt.
Problems arise when debt becomes excessive, relative to the output it
will produce. The cost of repaying it diverts capital from other uses,
leaving less capital available for productive investment. You start
needing more debt to generate the same amount of production. Or, said
another way, each additional dollar of debt produces less benefit.
Debt service comes from taxation and even more borrowing (which is the
definition of a Ponzi scheme), which leaves businesses and families with >>> less money to spend on other things. This results in lower economic
growth, more inflation, and higher interest rates.
Why is it a trap? HererCOs where I have to get political.
Fiscal Futility
To those on the conservative side, the problem is simple. We have
excessively high taxes and debt because the government spends too much.
ThatrCOs easy to say but gets a lot more difficult when you talk specifics >>> rCo particularly if you are a member of Congress who must answer to
voters. Exactly which government spending would you like to cut? What
programs, departments, and agencies would you eliminate? Every dollar
the government spends has a constituency rCo people who benefit from it
and will fight to preserve it.
Large amounts of spending are essentially on autopilot: Social Security, >>> Medicare, assorted social programs, interest on the debt. These
rCLmandatoryrCY expenditures happen automatically, no matter the amounts, >>> without Congress acting at all. The simple fact is that this mandatory
spending plus defense spending is now consuming all tax revenue before
any other government services are paid for on the federal level.
The so-called rCLdiscretionaryrCY budget that Congress votes on (defense and
all the assorted departments and agencies) is relatively minor. You
could cut it all in half and we would still have a serious problem.
When Trump first entered office the US deficit as percentage of GDP was
less than 5%. That pandemic-year deficit peaked at 16% of GDP, or $3.1
trillion. Fast-forward to today: the FY2025 deficit came in at $1.8
trillion rCo 5.9% of GDP, well below the pandemic peak but still about 55% >>> above the 50-year historical average of 3.8% of GDP. And itrCOs headed the >>> wrong way again. The CBOrCOs latest FY2026 estimate is $2.1 trillion, up >>> from $1.9 trillion projected back in February, after the Supreme Court
struck down the IEEPA tariffs in February 2026 and blew a roughly $200
billion hole in expected tariff revenue. Whoever is in the White House,
the deficit keeps landing in roughly the same trap.
Sad to say, government spending just keeps growing no matter which party >>> is in power. We have crossed a form of political Rubicon where past
performance is not indicative of future results. The few serious fiscal
conservatives are now gone after finding the Republican Party under
Trump spends differently than Democrats would, but has no desire to
spend less.
And thatrCOs the real problem: Voters like all this spending. They differ >>> on priorities, but no one really wants to balance the budget. There is
no desire to make the sacrifices and endure the pain it would take to
change the course we are on. So, it wonrCOt change, and debt will keep
piling up.
Jaws of the Trap
Debt, as I have said many times, is future consumption pulled forward in >>> time. It lets us consume more today by consuming less in the future.
There is a school of thought which says this doesnrCOt matter because we >>> can always just keep pushing the due date further out. I disagree, and
Lacy HuntrCOs research explains why.
While debt can be a problem, private debt is also critical to economic
growth. It finances innovation and adds to the economyrCOs productive
capacity. Excessive government debt diverts resources away from
investment, without which growth slows to a crawl. Lacy proves this
mathematically but really, all you have to do is look at GDP growth
around the world since 2008. Europe, Japan, and the US have all
struggled to maintain positive growth. It was only a matter of time
until something pushed us all underwater. The pandemic did it. By 2026
itrCOs a different pressure doing the pushing rCo elevated-for-longer
interest costs and a wall of AI-driven capital spending are testing the
same limit from the other direction.
All that being said, this can continue far longer than most people
think. Japan is now at 248.7% (2025) of debt to GDP. Eurozone debt is
about 87.8% (2025), but that understates the true situation in most
countries. The US, on the same gross-debt basis, was at 122.6% in early
2026. Europe and Japan both have low or nonexistent GDP growth. The
explosion of US debt means the US will soon join them. The answer from
almost every economist of any stripe about how to fix the debt problem
is to rCLgrow our way out of it.rCY The problem is we have passed the point >>> of no return.
We canrCOt stop growing debt. That would bring down the system in a true >>> greater-than-the-Great Depression crash. What do you cut? Social
Security? Medicare? Military pensions? Education? Interest payments on
the debt? The State Department? The only way to maintain that spending
is to keep adding debt, which sends us further into the debt trap.
Anomalies in Paradise
At some point, this will simply stop working. That moment is when the
world will face what I first called The Great Reset over a decade ago. I >>> am often asked exactly when it will happen. I typically demur as taking
a date is tricky. But I think we can narrow it down.
Right now, the Social Security Administration says that Social Security
will have to be cut by roughly 22% at some point in 2033. 10 years ago
they said 2034. Without some major changes in the economy, that will
probably slip to 2032. It will be an election year and that will become
the major topic.
We are now at $39.9 trillion of US [federal] debt. Interest on the debt
is $1.1 trillion, at an interest rate of a little under 3%. That rate is >>> obviously rising. Deficits are climbing over $2 trillion per year. By
2031, the debt will be over $50 trillion. Interest costs will run
anywhere from an optimistically estimated low of $1.5 trillion to over
$2 trillion. ThatrCOs assuming no recession.
We are not going to cut Social Security for the vast majority of
recipients. The compromise will likely be some combination of raising
the age of benefits, means testing and increasing Social Security taxes. >>> But that doesnrCOt solve the rest of the deficit problem. Somewhere around >>> that time the bond markets will finally say, rCLEnough, already!rCY Congress
will be forced by markets to act.
Spoiler alert: We will need to completely revamp our tax code, with a
greater percentage of GDP going to taxes than any of us want. But werCOll >>> have to collect it differently and not destroy incentives as Europe and
Japan have done. Sadly, I donrCOt expect a willingness to do that, at
least political willingness, until we are already in the middle of a
deep crisis. The bad news is we will get one and maybe change some things. >>>
We built our dreams on excessive debt. Now we canrCOt go on together.
WerCOre caught in a trap. We canrCOt walk out.
https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap
rich people could just forgive it if they wanted ...
You are projecting - you're the rich kid in debt.
and all that would change is the perception of wealth,
"Your health is your greatest wealth." - Adelle Davis
> not actual wealth
The obvious solution to the debt crises is to accelerate economic growth.
> #god
We studied this in school - 5th grade.
We're caught in a trap
I can't walk out
Because I love you too much, baby
Why can't you see
What you're doing to me
When you don't believe a word I say?
-Suspicious Minds, Elvis Presley, 1969
Elvis PresleyAs rendition of Suspicious Minds topped the record charts
in 1969. The lyrics portray a romance that couldnAt work, but was also >impossible to escape. ThatAs also a good way to describe our
relationship with government debt. We know it canAt last, but we canAt
walk out. We love government spending and its benefits (like Medicare, >Social Security, and unemployment insurance) too much.
In other words, we are in a debt trap. Our political process canAt--
reduce spending and/or raise taxes enough to balance the budget, so the
debt grows and grows. As it does, paying the interest plus the
accumulated debt load pulls more capital away from more productive uses. >This depresses economic growth, thereby generating even more spending
and debt.
This has to end, and I think it will do so in the event IAve called The >Great Reset. When I first started talking about The Great Reset, we
werenAt in the debt trap. We were omerelyo in a situation with only bad >choices. I didnAt think we would make them. Thus the underlying
presumption was that we would end up in a debt trap.
The Great Reset will be our escape from the debt trap. It wonAt be fun
for anyone, as taxes will go up and government spending of all types cut.
Diverted Capital
Each additional dollar of debt in 1980 generated a rise in GDP of 60
cents, up from 54 cents in 1940. The 1980s was the last decade for the >productivity of debt to rise. Since then, this ratio has dropped
sharply, from 42 cents in 1989 to 27 cents in 2019.
LetAs unpack this. Debt, even government debt, isnAt necessarily bad. It
can actually be positive depending on how it is used. Borrowing to build
a productive asset can make sense, if its output is sufficient to repay
the debt and then produce even more.
Like many temptations, debt can be good in moderation but destructive if >abused. Some infrastructure spending doesnAt have a direct payoff, but >clearly helps the overall economy, like the US interstate highway system.
Let me offer a few illustrations. It seems that every congressional >representative gives lip service to the concept of oinfrastructure >spending.o And they never really get around to doing it in any
sufficient quantity. Airports are necessary infrastructure and are
typically paid for by landing fees. ThatAs productive debt.
I have read that much of the US loses up to 20% of the water our water >systems produce due to leaky pipes. To rebuild the national water system >would take hundreds of billions if not over $1 trillion. Congress can
easily allow the formation of a public-private partnership and guarantee
the bonds so the Federal Reserve could buy them. Cities could access
those bonds and raise the cost of water by 1% or so to pay for the
bonds. Consumer water bills should still drop since we would be saving
the lost water.
Everyone knows this. Congress does nothing. The same could be done with >electric power. A smart grid could pay for itself even with debt costs.
And consumer power prices would likely go down. I could go on and on.
But the debt we are accumulating today is not productive in that way. We
use it to finance current expenditures like Medicare and Social
Security. Necessary? Absolutely. But not the economic definition of >productive debt.
Problems arise when debt becomes excessive, relative to the output it
will produce. The cost of repaying it diverts capital from other uses, >leaving less capital available for productive investment. You start
needing more debt to generate the same amount of production. Or, said >another way, each additional dollar of debt produces less benefit.
Debt service comes from taxation and even more borrowing (which is the >definition of a Ponzi scheme), which leaves businesses and families with >less money to spend on other things. This results in lower economic
growth, more inflation, and higher interest rates.
Why is it a trap? HereAs where I have to get political.
Fiscal Futility
To those on the conservative side, the problem is simple. We have >excessively high taxes and debt because the government spends too much.
ThatAs easy to say but gets a lot more difficult when you talk specifics
u particularly if you are a member of Congress who must answer to
voters. Exactly which government spending would you like to cut? What >programs, departments, and agencies would you eliminate? Every dollar
the government spends has a constituency u people who benefit from it
and will fight to preserve it.
Large amounts of spending are essentially on autopilot: Social Security, >Medicare, assorted social programs, interest on the debt. These
omandatoryo expenditures happen automatically, no matter the amounts, >without Congress acting at all. The simple fact is that this mandatory >spending plus defense spending is now consuming all tax revenue before
any other government services are paid for on the federal level.
The so-called odiscretionaryo budget that Congress votes on (defense and
all the assorted departments and agencies) is relatively minor. You
could cut it all in half and we would still have a serious problem.
When Trump first entered office the US deficit as percentage of GDP was
less than 5%. That pandemic-year deficit peaked at 16% of GDP, or $3.1 >trillion. Fast-forward to today: the FY2025 deficit came in at $1.8
trillion u 5.9% of GDP, well below the pandemic peak but still about 55% >above the 50-year historical average of 3.8% of GDP. And itAs headed the >wrong way again. The CBOAs latest FY2026 estimate is $2.1 trillion, up
from $1.9 trillion projected back in February, after the Supreme Court >struck down the IEEPA tariffs in February 2026 and blew a roughly $200 >billion hole in expected tariff revenue. Whoever is in the White House,
the deficit keeps landing in roughly the same trap.
Sad to say, government spending just keeps growing no matter which party
is in power. We have crossed a form of political Rubicon where past >performance is not indicative of future results. The few serious fiscal >conservatives are now gone after finding the Republican Party under
Trump spends differently than Democrats would, but has no desire to
spend less.
And thatAs the real problem: Voters like all this spending. They differ
on priorities, but no one really wants to balance the budget. There is
no desire to make the sacrifices and endure the pain it would take to
change the course we are on. So, it wonAt change, and debt will keep
piling up.
Jaws of the Trap
Debt, as I have said many times, is future consumption pulled forward in >time. It lets us consume more today by consuming less in the future.
There is a school of thought which says this doesnAt matter because we
can always just keep pushing the due date further out. I disagree, and
Lacy HuntAs research explains why.
While debt can be a problem, private debt is also critical to economic >growth. It finances innovation and adds to the economyAs productive >capacity. Excessive government debt diverts resources away from
investment, without which growth slows to a crawl. Lacy proves this >mathematically but really, all you have to do is look at GDP growth
around the world since 2008. Europe, Japan, and the US have all
struggled to maintain positive growth. It was only a matter of time
until something pushed us all underwater. The pandemic did it. By 2026
itAs a different pressure doing the pushing u elevated-for-longer
interest costs and a wall of AI-driven capital spending are testing the
same limit from the other direction.
All that being said, this can continue far longer than most people
think. Japan is now at 248.7% (2025) of debt to GDP. Eurozone debt is
about 87.8% (2025), but that understates the true situation in most >countries. The US, on the same gross-debt basis, was at 122.6% in early >2026. Europe and Japan both have low or nonexistent GDP growth. The >explosion of US debt means the US will soon join them. The answer from >almost every economist of any stripe about how to fix the debt problem
is to ogrow our way out of it.o The problem is we have passed the point
of no return.
We canAt stop growing debt. That would bring down the system in a true >greater-than-the-Great Depression crash. What do you cut? Social
Security? Medicare? Military pensions? Education? Interest payments on
the debt? The State Department? The only way to maintain that spending
is to keep adding debt, which sends us further into the debt trap.
Anomalies in Paradise
At some point, this will simply stop working. That moment is when the
world will face what I first called The Great Reset over a decade ago. I
am often asked exactly when it will happen. I typically demur as taking
a date is tricky. But I think we can narrow it down.
Right now, the Social Security Administration says that Social Security
will have to be cut by roughly 22% at some point in 2033. 10 years ago
they said 2034. Without some major changes in the economy, that will >probably slip to 2032. It will be an election year and that will become
the major topic.
We are now at $39.9 trillion of US [federal] debt. Interest on the debt
is $1.1 trillion, at an interest rate of a little under 3%. That rate is >obviously rising. Deficits are climbing over $2 trillion per year. By
2031, the debt will be over $50 trillion. Interest costs will run
anywhere from an optimistically estimated low of $1.5 trillion to over
$2 trillion. ThatAs assuming no recession.
We are not going to cut Social Security for the vast majority of
recipients. The compromise will likely be some combination of raising
the age of benefits, means testing and increasing Social Security taxes.
But that doesnAt solve the rest of the deficit problem. Somewhere around >that time the bond markets will finally say, oEnough, already!o Congress >will be forced by markets to act.
Spoiler alert: We will need to completely revamp our tax code, with a >greater percentage of GDP going to taxes than any of us want. But weAll
have to collect it differently and not destroy incentives as Europe and >Japan have done. Sadly, I donAt expect a willingness to do that, at
least political willingness, until we are already in the middle of a
deep crisis. The bad news is we will get one and maybe change some things.
We built our dreams on excessive debt. Now we canAt go on together.
WeAre caught in a trap. We canAt walk out.
https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap
On 8/15/2026 10:34 AM, Wilson wrote:
We're caught in a trap
I can't walk out
Because I love you too much, baby
Why can't you see
What you're doing to me
When you don't believe a word I say?
-Suspicious Minds, Elvis Presley, 1969
Elvis PresleyAs rendition of Suspicious Minds topped the record charts
in 1969. The lyrics portray a romance that couldnAt work, but was also
impossible to escape. ThatAs also a good way to describe our
relationship with government debt. We know it canAt last, but we canAt
walk out. We love government spending and its benefits (like Medicare,
Social Security, and unemployment insurance) too much.
In other words, we are in a debt trap. Our political process canAt
reduce spending and/or raise taxes enough to balance the budget, so the
debt grows and grows. As it does, paying the interest plus the
accumulated debt load pulls more capital away from more productive uses.
This depresses economic growth, thereby generating even more spending
and debt.
This has to end, and I think it will do so in the event IAve called The
Great Reset. When I first started talking about The Great Reset, we
werenAt in the debt trap. We were omerelyo in a situation with only bad
choices. I didnAt think we would make them. Thus the underlying
presumption was that we would end up in a debt trap.
The Great Reset will be our escape from the debt trap. It wonAt be fun
for anyone, as taxes will go up and government spending of all types cut.
Diverted Capital
Each additional dollar of debt in 1980 generated a rise in GDP of 60
cents, up from 54 cents in 1940. The 1980s was the last decade for the
productivity of debt to rise. Since then, this ratio has dropped
sharply, from 42 cents in 1989 to 27 cents in 2019.
LetAs unpack this. Debt, even government debt, isnAt necessarily bad. It
can actually be positive depending on how it is used. Borrowing to build
a productive asset can make sense, if its output is sufficient to repay
the debt and then produce even more.
Like many temptations, debt can be good in moderation but destructive if
abused. Some infrastructure spending doesnAt have a direct payoff, but
clearly helps the overall economy, like the US interstate highway system.
Let me offer a few illustrations. It seems that every congressional
representative gives lip service to the concept of oinfrastructure
spending.o And they never really get around to doing it in any
sufficient quantity. Airports are necessary infrastructure and are
typically paid for by landing fees. ThatAs productive debt.
I have read that much of the US loses up to 20% of the water our water
systems produce due to leaky pipes. To rebuild the national water system
would take hundreds of billions if not over $1 trillion. Congress can
easily allow the formation of a public-private partnership and guarantee
the bonds so the Federal Reserve could buy them. Cities could access
those bonds and raise the cost of water by 1% or so to pay for the
bonds. Consumer water bills should still drop since we would be saving
the lost water.
Everyone knows this. Congress does nothing. The same could be done with
electric power. A smart grid could pay for itself even with debt costs.
And consumer power prices would likely go down. I could go on and on.
But the debt we are accumulating today is not productive in that way. We
use it to finance current expenditures like Medicare and Social
Security. Necessary? Absolutely. But not the economic definition of
productive debt.
Problems arise when debt becomes excessive, relative to the output it
will produce. The cost of repaying it diverts capital from other uses,
leaving less capital available for productive investment. You start
needing more debt to generate the same amount of production. Or, said
another way, each additional dollar of debt produces less benefit.
Debt service comes from taxation and even more borrowing (which is the
definition of a Ponzi scheme), which leaves businesses and families with
less money to spend on other things. This results in lower economic
growth, more inflation, and higher interest rates.
Why is it a trap? HereAs where I have to get political.
Fiscal Futility
To those on the conservative side, the problem is simple. We have
excessively high taxes and debt because the government spends too much.
ThatAs easy to say but gets a lot more difficult when you talk specifics
u particularly if you are a member of Congress who must answer to
voters. Exactly which government spending would you like to cut? What
programs, departments, and agencies would you eliminate? Every dollar
the government spends has a constituency u people who benefit from it
and will fight to preserve it.
Large amounts of spending are essentially on autopilot: Social Security,
Medicare, assorted social programs, interest on the debt. These
omandatoryo expenditures happen automatically, no matter the amounts,
without Congress acting at all. The simple fact is that this mandatory
spending plus defense spending is now consuming all tax revenue before
any other government services are paid for on the federal level.
The so-called odiscretionaryo budget that Congress votes on (defense and
all the assorted departments and agencies) is relatively minor. You
could cut it all in half and we would still have a serious problem.
When Trump first entered office the US deficit as percentage of GDP was
less than 5%. That pandemic-year deficit peaked at 16% of GDP, or $3.1
trillion. Fast-forward to today: the FY2025 deficit came in at $1.8
trillion u 5.9% of GDP, well below the pandemic peak but still about 55%
above the 50-year historical average of 3.8% of GDP. And itAs headed the
wrong way again. The CBOAs latest FY2026 estimate is $2.1 trillion, up
from $1.9 trillion projected back in February, after the Supreme Court
struck down the IEEPA tariffs in February 2026 and blew a roughly $200
billion hole in expected tariff revenue. Whoever is in the White House,
the deficit keeps landing in roughly the same trap.
Sad to say, government spending just keeps growing no matter which party
is in power. We have crossed a form of political Rubicon where past
performance is not indicative of future results. The few serious fiscal
conservatives are now gone after finding the Republican Party under
Trump spends differently than Democrats would, but has no desire to
spend less.
And thatAs the real problem: Voters like all this spending. They differ
on priorities, but no one really wants to balance the budget. There is
no desire to make the sacrifices and endure the pain it would take to
change the course we are on. So, it wonAt change, and debt will keep
piling up.
Jaws of the Trap
Debt, as I have said many times, is future consumption pulled forward in
time. It lets us consume more today by consuming less in the future.
There is a school of thought which says this doesnAt matter because we
can always just keep pushing the due date further out. I disagree, and
Lacy HuntAs research explains why.
While debt can be a problem, private debt is also critical to economic
growth. It finances innovation and adds to the economyAs productive
capacity. Excessive government debt diverts resources away from
investment, without which growth slows to a crawl. Lacy proves this
mathematically but really, all you have to do is look at GDP growth
around the world since 2008. Europe, Japan, and the US have all
struggled to maintain positive growth. It was only a matter of time
until something pushed us all underwater. The pandemic did it. By 2026
itAs a different pressure doing the pushing u elevated-for-longer
interest costs and a wall of AI-driven capital spending are testing the
same limit from the other direction.
All that being said, this can continue far longer than most people
think. Japan is now at 248.7% (2025) of debt to GDP. Eurozone debt is
about 87.8% (2025), but that understates the true situation in most
countries. The US, on the same gross-debt basis, was at 122.6% in early
2026. Europe and Japan both have low or nonexistent GDP growth. The
explosion of US debt means the US will soon join them. The answer from
almost every economist of any stripe about how to fix the debt problem
is to ogrow our way out of it.o The problem is we have passed the point
of no return.
We canAt stop growing debt. That would bring down the system in a true
greater-than-the-Great Depression crash. What do you cut? Social
Security? Medicare? Military pensions? Education? Interest payments on
the debt? The State Department? The only way to maintain that spending
is to keep adding debt, which sends us further into the debt trap.
Anomalies in Paradise
At some point, this will simply stop working. That moment is when the
world will face what I first called The Great Reset over a decade ago. I
am often asked exactly when it will happen. I typically demur as taking
a date is tricky. But I think we can narrow it down.
Right now, the Social Security Administration says that Social Security
will have to be cut by roughly 22% at some point in 2033. 10 years ago
they said 2034. Without some major changes in the economy, that will
probably slip to 2032. It will be an election year and that will become
the major topic.
We are now at $39.9 trillion of US [federal] debt. Interest on the debt
is $1.1 trillion, at an interest rate of a little under 3%. That rate is
obviously rising. Deficits are climbing over $2 trillion per year. By
2031, the debt will be over $50 trillion. Interest costs will run
anywhere from an optimistically estimated low of $1.5 trillion to over
$2 trillion. ThatAs assuming no recession.
We are not going to cut Social Security for the vast majority of
recipients. The compromise will likely be some combination of raising
the age of benefits, means testing and increasing Social Security taxes.
But that doesnAt solve the rest of the deficit problem. Somewhere around
that time the bond markets will finally say, oEnough, already!o Congress
will be forced by markets to act.
Spoiler alert: We will need to completely revamp our tax code, with a
greater percentage of GDP going to taxes than any of us want. But weAll
have to collect it differently and not destroy incentives as Europe and
Japan have done. Sadly, I donAt expect a willingness to do that, at
least political willingness, until we are already in the middle of a
deep crisis. The bad news is we will get one and maybe change some things. >>
We built our dreams on excessive debt. Now we canAt go on together.
WeAre caught in a trap. We canAt walk out.
https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap
The obvious solution to debt is to charge more, and/or print more fiat
money and just wipe it off the books. However, when I was a child, I
spoke like a child, now that I've finished school I can no longer think
like a child (1 Corinthians 13:11).
The Truth:
The U.S. can pay down its national debt today only by running a federal >budget surplusutaking in more tax revenue than it spends.
On 8/15/26 1:53 PM, Dude wrote:
dart200 <user7160@newsgrouper.org.invalid> posted:
On 8/15/26 10:34 AM, Wilson wrote:Rich people are not in debt - why would they want to pay off your debt?
We're caught in a traprich people could just forgive it if they wanted ...
I can't walk out
Because I love you too much, baby
Why can't you see
What you're doing to me
When you don't believe a word I say?
-Suspicious Minds, Elvis Presley, 1969
Elvis PresleyrCOs rendition of Suspicious Minds topped the record charts >>> in 1969. The lyrics portray a romance that couldnrCOt work, but was also >>> impossible to escape. ThatrCOs also a good way to describe our
relationship with government debt. We know it canrCOt last, but we canrCOt
walk out. We love government spending and its benefits (like Medicare, >>> Social Security, and unemployment insurance) too much.
In other words, we are in a debt trap. Our political process canrCOt
reduce spending and/or raise taxes enough to balance the budget, so the >>> debt grows and grows. As it does, paying the interest plus the
accumulated debt load pulls more capital away from more productive uses. >>> This depresses economic growth, thereby generating even more spending
and debt.
This has to end, and I think it will do so in the event IrCOve called The >>> Great Reset. When I first started talking about The Great Reset, we
werenrCOt in the debt trap. We were rCLmerelyrCY in a situation with only bad
choices. I didnrCOt think we would make them. Thus the underlying
presumption was that we would end up in a debt trap.
The Great Reset will be our escape from the debt trap. It wonrCOt be fun >>> for anyone, as taxes will go up and government spending of all types cut. >>>
Diverted Capital
Each additional dollar of debt in 1980 generated a rise in GDP of 60
cents, up from 54 cents in 1940. The 1980s was the last decade for the >>> productivity of debt to rise. Since then, this ratio has dropped
sharply, from 42 cents in 1989 to 27 cents in 2019.
LetrCOs unpack this. Debt, even government debt, isnrCOt necessarily bad. It
can actually be positive depending on how it is used. Borrowing to build >>> a productive asset can make sense, if its output is sufficient to repay >>> the debt and then produce even more.
Like many temptations, debt can be good in moderation but destructive if >>> abused. Some infrastructure spending doesnrCOt have a direct payoff, but >>> clearly helps the overall economy, like the US interstate highway system. >>>
Let me offer a few illustrations. It seems that every congressional
representative gives lip service to the concept of rCLinfrastructure
spending.rCY And they never really get around to doing it in any
sufficient quantity. Airports are necessary infrastructure and are
typically paid for by landing fees. ThatrCOs productive debt.
I have read that much of the US loses up to 20% of the water our water >>> systems produce due to leaky pipes. To rebuild the national water system >>> would take hundreds of billions if not over $1 trillion. Congress can
easily allow the formation of a public-private partnership and guarantee >>> the bonds so the Federal Reserve could buy them. Cities could access
those bonds and raise the cost of water by 1% or so to pay for the
bonds. Consumer water bills should still drop since we would be saving >>> the lost water.
Everyone knows this. Congress does nothing. The same could be done with >>> electric power. A smart grid could pay for itself even with debt costs. >>> And consumer power prices would likely go down. I could go on and on.
But the debt we are accumulating today is not productive in that way. We >>> use it to finance current expenditures like Medicare and Social
Security. Necessary? Absolutely. But not the economic definition of
productive debt.
Problems arise when debt becomes excessive, relative to the output it
will produce. The cost of repaying it diverts capital from other uses, >>> leaving less capital available for productive investment. You start
needing more debt to generate the same amount of production. Or, said
another way, each additional dollar of debt produces less benefit.
Debt service comes from taxation and even more borrowing (which is the >>> definition of a Ponzi scheme), which leaves businesses and families with >>> less money to spend on other things. This results in lower economic
growth, more inflation, and higher interest rates.
Why is it a trap? HererCOs where I have to get political.
Fiscal Futility
To those on the conservative side, the problem is simple. We have
excessively high taxes and debt because the government spends too much. >>>
ThatrCOs easy to say but gets a lot more difficult when you talk specifics
rCo particularly if you are a member of Congress who must answer to
voters. Exactly which government spending would you like to cut? What
programs, departments, and agencies would you eliminate? Every dollar
the government spends has a constituency rCo people who benefit from it >>> and will fight to preserve it.
Large amounts of spending are essentially on autopilot: Social Security, >>> Medicare, assorted social programs, interest on the debt. These
rCLmandatoryrCY expenditures happen automatically, no matter the amounts, >>> without Congress acting at all. The simple fact is that this mandatory >>> spending plus defense spending is now consuming all tax revenue before >>> any other government services are paid for on the federal level.
The so-called rCLdiscretionaryrCY budget that Congress votes on (defense and
all the assorted departments and agencies) is relatively minor. You
could cut it all in half and we would still have a serious problem.
When Trump first entered office the US deficit as percentage of GDP was >>> less than 5%. That pandemic-year deficit peaked at 16% of GDP, or $3.1 >>> trillion. Fast-forward to today: the FY2025 deficit came in at $1.8
trillion rCo 5.9% of GDP, well below the pandemic peak but still about 55%
above the 50-year historical average of 3.8% of GDP. And itrCOs headed the
wrong way again. The CBOrCOs latest FY2026 estimate is $2.1 trillion, up >>> from $1.9 trillion projected back in February, after the Supreme Court >>> struck down the IEEPA tariffs in February 2026 and blew a roughly $200 >>> billion hole in expected tariff revenue. Whoever is in the White House, >>> the deficit keeps landing in roughly the same trap.
Sad to say, government spending just keeps growing no matter which party >>> is in power. We have crossed a form of political Rubicon where past
performance is not indicative of future results. The few serious fiscal >>> conservatives are now gone after finding the Republican Party under
Trump spends differently than Democrats would, but has no desire to
spend less.
And thatrCOs the real problem: Voters like all this spending. They differ >>> on priorities, but no one really wants to balance the budget. There is >>> no desire to make the sacrifices and endure the pain it would take to
change the course we are on. So, it wonrCOt change, and debt will keep >>> piling up.
Jaws of the Trap
Debt, as I have said many times, is future consumption pulled forward in >>> time. It lets us consume more today by consuming less in the future.
There is a school of thought which says this doesnrCOt matter because we >>> can always just keep pushing the due date further out. I disagree, and >>> Lacy HuntrCOs research explains why.
While debt can be a problem, private debt is also critical to economic >>> growth. It finances innovation and adds to the economyrCOs productive
capacity. Excessive government debt diverts resources away from
investment, without which growth slows to a crawl. Lacy proves this
mathematically but really, all you have to do is look at GDP growth
around the world since 2008. Europe, Japan, and the US have all
struggled to maintain positive growth. It was only a matter of time
until something pushed us all underwater. The pandemic did it. By 2026 >>> itrCOs a different pressure doing the pushing rCo elevated-for-longer
interest costs and a wall of AI-driven capital spending are testing the >>> same limit from the other direction.
All that being said, this can continue far longer than most people
think. Japan is now at 248.7% (2025) of debt to GDP. Eurozone debt is
about 87.8% (2025), but that understates the true situation in most
countries. The US, on the same gross-debt basis, was at 122.6% in early >>> 2026. Europe and Japan both have low or nonexistent GDP growth. The
explosion of US debt means the US will soon join them. The answer from >>> almost every economist of any stripe about how to fix the debt problem >>> is to rCLgrow our way out of it.rCY The problem is we have passed the point
of no return.
We canrCOt stop growing debt. That would bring down the system in a true >>> greater-than-the-Great Depression crash. What do you cut? Social
Security? Medicare? Military pensions? Education? Interest payments on >>> the debt? The State Department? The only way to maintain that spending >>> is to keep adding debt, which sends us further into the debt trap.
Anomalies in Paradise
At some point, this will simply stop working. That moment is when the
world will face what I first called The Great Reset over a decade ago. I >>> am often asked exactly when it will happen. I typically demur as taking >>> a date is tricky. But I think we can narrow it down.
Right now, the Social Security Administration says that Social Security >>> will have to be cut by roughly 22% at some point in 2033. 10 years ago >>> they said 2034. Without some major changes in the economy, that will
probably slip to 2032. It will be an election year and that will become >>> the major topic.
We are now at $39.9 trillion of US [federal] debt. Interest on the debt >>> is $1.1 trillion, at an interest rate of a little under 3%. That rate is >>> obviously rising. Deficits are climbing over $2 trillion per year. By
2031, the debt will be over $50 trillion. Interest costs will run
anywhere from an optimistically estimated low of $1.5 trillion to over >>> $2 trillion. ThatrCOs assuming no recession.
We are not going to cut Social Security for the vast majority of
recipients. The compromise will likely be some combination of raising
the age of benefits, means testing and increasing Social Security taxes. >>> But that doesnrCOt solve the rest of the deficit problem. Somewhere around
that time the bond markets will finally say, rCLEnough, already!rCY Congress
will be forced by markets to act.
Spoiler alert: We will need to completely revamp our tax code, with a
greater percentage of GDP going to taxes than any of us want. But werCOll >>> have to collect it differently and not destroy incentives as Europe and >>> Japan have done. Sadly, I donrCOt expect a willingness to do that, at
least political willingness, until we are already in the middle of a
deep crisis. The bad news is we will get one and maybe change some things.
We built our dreams on excessive debt. Now we canrCOt go on together.
WerCOre caught in a trap. We canrCOt walk out.
https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap >>
those in debt do not forgive the debt moron...
and it's the rich people who hold the debt, so ofc they can forgive it
not that u know what forgiveness is dud
You are projecting - you're the rich kid in debt.
and all that would change is the perception of wealth,
"Your health is your greatest wealth." - Adelle Davis
> not actual wealth
The obvious solution to the debt crises is to accelerate economic growth. We studied this in school - 5th grade.
> #god
unfortunately deciding to "just accelerate growth" is far easier said
than done
and we if we grow in an unsustainable manner (which we've been doing) it will obviously not be sustainable, leading to many cans getting kicked
down the road - something duds like u are fantastic at doing if i don't
say ...
dart200 <user7160@newsgrouper.org.invalid> posted:
On 8/15/26 1:53 PM, Dude wrote:It works in Scandinavia.
dart200 <user7160@newsgrouper.org.invalid> posted:
On 8/15/26 10:34 AM, Wilson wrote:Rich people are not in debt - why would they want to pay off your debt?
We're caught in a traprich people could just forgive it if they wanted ...
I can't walk out
Because I love you too much, baby
Why can't you see
What you're doing to me
When you don't believe a word I say?
-Suspicious Minds, Elvis Presley, 1969
Elvis PresleyrCOs rendition of Suspicious Minds topped the record charts >>>>> in 1969. The lyrics portray a romance that couldnrCOt work, but was also >>>>> impossible to escape. ThatrCOs also a good way to describe our
relationship with government debt. We know it canrCOt last, but we canrCOt
walk out. We love government spending and its benefits (like Medicare, >>>>> Social Security, and unemployment insurance) too much.
In other words, we are in a debt trap. Our political process canrCOt >>>>> reduce spending and/or raise taxes enough to balance the budget, so the >>>>> debt grows and grows. As it does, paying the interest plus the
accumulated debt load pulls more capital away from more productive uses. >>>>> This depresses economic growth, thereby generating even more spending >>>>> and debt.
This has to end, and I think it will do so in the event IrCOve called The >>>>> Great Reset. When I first started talking about The Great Reset, we
werenrCOt in the debt trap. We were rCLmerelyrCY in a situation with only bad
choices. I didnrCOt think we would make them. Thus the underlying
presumption was that we would end up in a debt trap.
The Great Reset will be our escape from the debt trap. It wonrCOt be fun >>>>> for anyone, as taxes will go up and government spending of all types cut. >>>>>
Diverted Capital
Each additional dollar of debt in 1980 generated a rise in GDP of 60 >>>>> cents, up from 54 cents in 1940. The 1980s was the last decade for the >>>>> productivity of debt to rise. Since then, this ratio has dropped
sharply, from 42 cents in 1989 to 27 cents in 2019.
LetrCOs unpack this. Debt, even government debt, isnrCOt necessarily bad. It
can actually be positive depending on how it is used. Borrowing to build >>>>> a productive asset can make sense, if its output is sufficient to repay >>>>> the debt and then produce even more.
Like many temptations, debt can be good in moderation but destructive if >>>>> abused. Some infrastructure spending doesnrCOt have a direct payoff, but >>>>> clearly helps the overall economy, like the US interstate highway system. >>>>>
Let me offer a few illustrations. It seems that every congressional
representative gives lip service to the concept of rCLinfrastructure >>>>> spending.rCY And they never really get around to doing it in any
sufficient quantity. Airports are necessary infrastructure and are
typically paid for by landing fees. ThatrCOs productive debt.
I have read that much of the US loses up to 20% of the water our water >>>>> systems produce due to leaky pipes. To rebuild the national water system >>>>> would take hundreds of billions if not over $1 trillion. Congress can >>>>> easily allow the formation of a public-private partnership and guarantee >>>>> the bonds so the Federal Reserve could buy them. Cities could access >>>>> those bonds and raise the cost of water by 1% or so to pay for the
bonds. Consumer water bills should still drop since we would be saving >>>>> the lost water.
Everyone knows this. Congress does nothing. The same could be done with >>>>> electric power. A smart grid could pay for itself even with debt costs. >>>>> And consumer power prices would likely go down. I could go on and on. >>>>>
But the debt we are accumulating today is not productive in that way. We >>>>> use it to finance current expenditures like Medicare and Social
Security. Necessary? Absolutely. But not the economic definition of
productive debt.
Problems arise when debt becomes excessive, relative to the output it >>>>> will produce. The cost of repaying it diverts capital from other uses, >>>>> leaving less capital available for productive investment. You start
needing more debt to generate the same amount of production. Or, said >>>>> another way, each additional dollar of debt produces less benefit.
Debt service comes from taxation and even more borrowing (which is the >>>>> definition of a Ponzi scheme), which leaves businesses and families with >>>>> less money to spend on other things. This results in lower economic
growth, more inflation, and higher interest rates.
Why is it a trap? HererCOs where I have to get political.
Fiscal Futility
To those on the conservative side, the problem is simple. We have
excessively high taxes and debt because the government spends too much. >>>>>
ThatrCOs easy to say but gets a lot more difficult when you talk specifics
rCo particularly if you are a member of Congress who must answer to
voters. Exactly which government spending would you like to cut? What >>>>> programs, departments, and agencies would you eliminate? Every dollar >>>>> the government spends has a constituency rCo people who benefit from it >>>>> and will fight to preserve it.
Large amounts of spending are essentially on autopilot: Social Security, >>>>> Medicare, assorted social programs, interest on the debt. These
rCLmandatoryrCY expenditures happen automatically, no matter the amounts, >>>>> without Congress acting at all. The simple fact is that this mandatory >>>>> spending plus defense spending is now consuming all tax revenue before >>>>> any other government services are paid for on the federal level.
The so-called rCLdiscretionaryrCY budget that Congress votes on (defense and
all the assorted departments and agencies) is relatively minor. You
could cut it all in half and we would still have a serious problem.
When Trump first entered office the US deficit as percentage of GDP was >>>>> less than 5%. That pandemic-year deficit peaked at 16% of GDP, or $3.1 >>>>> trillion. Fast-forward to today: the FY2025 deficit came in at $1.8
trillion rCo 5.9% of GDP, well below the pandemic peak but still about 55%
above the 50-year historical average of 3.8% of GDP. And itrCOs headed the
wrong way again. The CBOrCOs latest FY2026 estimate is $2.1 trillion, up >>>>> from $1.9 trillion projected back in February, after the Supreme Court >>>>> struck down the IEEPA tariffs in February 2026 and blew a roughly $200 >>>>> billion hole in expected tariff revenue. Whoever is in the White House, >>>>> the deficit keeps landing in roughly the same trap.
Sad to say, government spending just keeps growing no matter which party >>>>> is in power. We have crossed a form of political Rubicon where past
performance is not indicative of future results. The few serious fiscal >>>>> conservatives are now gone after finding the Republican Party under
Trump spends differently than Democrats would, but has no desire to
spend less.
And thatrCOs the real problem: Voters like all this spending. They differ >>>>> on priorities, but no one really wants to balance the budget. There is >>>>> no desire to make the sacrifices and endure the pain it would take to >>>>> change the course we are on. So, it wonrCOt change, and debt will keep >>>>> piling up.
Jaws of the Trap
Debt, as I have said many times, is future consumption pulled forward in >>>>> time. It lets us consume more today by consuming less in the future. >>>>> There is a school of thought which says this doesnrCOt matter because we >>>>> can always just keep pushing the due date further out. I disagree, and >>>>> Lacy HuntrCOs research explains why.
While debt can be a problem, private debt is also critical to economic >>>>> growth. It finances innovation and adds to the economyrCOs productive >>>>> capacity. Excessive government debt diverts resources away from
investment, without which growth slows to a crawl. Lacy proves this
mathematically but really, all you have to do is look at GDP growth
around the world since 2008. Europe, Japan, and the US have all
struggled to maintain positive growth. It was only a matter of time
until something pushed us all underwater. The pandemic did it. By 2026 >>>>> itrCOs a different pressure doing the pushing rCo elevated-for-longer >>>>> interest costs and a wall of AI-driven capital spending are testing the >>>>> same limit from the other direction.
All that being said, this can continue far longer than most people
think. Japan is now at 248.7% (2025) of debt to GDP. Eurozone debt is >>>>> about 87.8% (2025), but that understates the true situation in most
countries. The US, on the same gross-debt basis, was at 122.6% in early >>>>> 2026. Europe and Japan both have low or nonexistent GDP growth. The
explosion of US debt means the US will soon join them. The answer from >>>>> almost every economist of any stripe about how to fix the debt problem >>>>> is to rCLgrow our way out of it.rCY The problem is we have passed the point
of no return.
We canrCOt stop growing debt. That would bring down the system in a true >>>>> greater-than-the-Great Depression crash. What do you cut? Social
Security? Medicare? Military pensions? Education? Interest payments on >>>>> the debt? The State Department? The only way to maintain that spending >>>>> is to keep adding debt, which sends us further into the debt trap.
Anomalies in Paradise
At some point, this will simply stop working. That moment is when the >>>>> world will face what I first called The Great Reset over a decade ago. I >>>>> am often asked exactly when it will happen. I typically demur as taking >>>>> a date is tricky. But I think we can narrow it down.
Right now, the Social Security Administration says that Social Security >>>>> will have to be cut by roughly 22% at some point in 2033. 10 years ago >>>>> they said 2034. Without some major changes in the economy, that will >>>>> probably slip to 2032. It will be an election year and that will become >>>>> the major topic.
We are now at $39.9 trillion of US [federal] debt. Interest on the debt >>>>> is $1.1 trillion, at an interest rate of a little under 3%. That rate is >>>>> obviously rising. Deficits are climbing over $2 trillion per year. By >>>>> 2031, the debt will be over $50 trillion. Interest costs will run
anywhere from an optimistically estimated low of $1.5 trillion to over >>>>> $2 trillion. ThatrCOs assuming no recession.
We are not going to cut Social Security for the vast majority of
recipients. The compromise will likely be some combination of raising >>>>> the age of benefits, means testing and increasing Social Security taxes. >>>>> But that doesnrCOt solve the rest of the deficit problem. Somewhere around
that time the bond markets will finally say, rCLEnough, already!rCY Congress
will be forced by markets to act.
Spoiler alert: We will need to completely revamp our tax code, with a >>>>> greater percentage of GDP going to taxes than any of us want. But werCOll >>>>> have to collect it differently and not destroy incentives as Europe and >>>>> Japan have done. Sadly, I donrCOt expect a willingness to do that, at >>>>> least political willingness, until we are already in the middle of a >>>>> deep crisis. The bad news is we will get one and maybe change some things.
We built our dreams on excessive debt. Now we canrCOt go on together. >>>>> WerCOre caught in a trap. We canrCOt walk out.
https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap >>>>
those in debt do not forgive the debt moron...
and it's the rich people who hold the debt, so ofc they can forgive it
not that u know what forgiveness is dud
You are projecting - you're the rich kid in debt.
and all that would change is the perception of wealth,
"Your health is your greatest wealth." - Adelle Davis
> not actual wealth
The obvious solution to the debt crises is to accelerate economic growth. >>> We studied this in school - 5th grade.
> #god
unfortunately deciding to "just accelerate growth" is far easier said
than done
and we if we grow in an unsustainable manner (which we've been doing) it
will obviously not be sustainable, leading to many cans getting kicked
down the road - something duds like u are fantastic at doing if i don't
say ...
The U.S. can pay down its national debt today only by running a federal budget surplusrCotaking in more tax revenue than it spends.
All Scandinavian and Nordic countries (Norway, Denmark, Sweden, and Finland) are doing very well economically. They rank among the wealthiest nations globally by GDP per capita, combining free-market capitalism with strong social safety netsrCoa system known as the Nordic Model. YMMV.
On Aug 15, 2026 at 3:03:08rC>PM EDT, "Wilson" <Wilson@nowhere.invalid> wrote:
On 8/15/2026 2:17 PM, Tara wrote:
On Aug 15, 2026 at 1:34:32rC>PM EDT, "Wilson" <Wilson@nowhere.invalid> wrote:
We're caught in a trapAnd if you raise taxes, you lose the vote?
I can't walk out
Because I love you too much, baby
Why can't you see
What you're doing to me
When you don't believe a word I say?
-Suspicious Minds, Elvis Presley, 1969
Elvis PresleyrCOs rendition of Suspicious Minds topped the record charts >>>> in 1969. The lyrics portray a romance that couldnrCOt work, but was also >>>> impossible to escape. ThatrCOs also a good way to describe our
relationship with government debt. We know it canrCOt last, but we canrCOt >>>> walk out. We love government spending and its benefits (like Medicare, >>>> Social Security, and unemployment insurance) too much.
In other words, we are in a debt trap. Our political process canrCOt
reduce spending and/or raise taxes enough to balance the budget, so the >>>> debt grows and grows. As it does, paying the interest plus the
accumulated debt load pulls more capital away from more productive uses. >>>> This depresses economic growth, thereby generating even more spending
and debt.
This has to end, and I think it will do so in the event IrCOve called The >>>> Great Reset. When I first started talking about The Great Reset, we
werenrCOt in the debt trap. We were rCLmerelyrCY in a situation with only bad
choices. I didnrCOt think we would make them. Thus the underlying
presumption was that we would end up in a debt trap.
The Great Reset will be our escape from the debt trap. It wonrCOt be fun >>>> for anyone, as taxes will go up and government spending of all types cut. >>>>
Diverted Capital
Each additional dollar of debt in 1980 generated a rise in GDP of 60
cents, up from 54 cents in 1940. The 1980s was the last decade for the >>>> productivity of debt to rise. Since then, this ratio has dropped
sharply, from 42 cents in 1989 to 27 cents in 2019.
LetrCOs unpack this. Debt, even government debt, isnrCOt necessarily bad. It
can actually be positive depending on how it is used. Borrowing to build >>>> a productive asset can make sense, if its output is sufficient to repay >>>> the debt and then produce even more.
Like many temptations, debt can be good in moderation but destructive if >>>> abused. Some infrastructure spending doesnrCOt have a direct payoff, but >>>> clearly helps the overall economy, like the US interstate highway system. >>>>
Let me offer a few illustrations. It seems that every congressional
representative gives lip service to the concept of rCLinfrastructure
spending.rCY And they never really get around to doing it in any
sufficient quantity. Airports are necessary infrastructure and are
typically paid for by landing fees. ThatrCOs productive debt.
I have read that much of the US loses up to 20% of the water our water >>>> systems produce due to leaky pipes. To rebuild the national water system >>>> would take hundreds of billions if not over $1 trillion. Congress can
easily allow the formation of a public-private partnership and guarantee >>>> the bonds so the Federal Reserve could buy them. Cities could access
those bonds and raise the cost of water by 1% or so to pay for the
bonds. Consumer water bills should still drop since we would be saving >>>> the lost water.
Everyone knows this. Congress does nothing. The same could be done with >>>> electric power. A smart grid could pay for itself even with debt costs. >>>> And consumer power prices would likely go down. I could go on and on.
But the debt we are accumulating today is not productive in that way. We >>>> use it to finance current expenditures like Medicare and Social
Security. Necessary? Absolutely. But not the economic definition of
productive debt.
Problems arise when debt becomes excessive, relative to the output it
will produce. The cost of repaying it diverts capital from other uses, >>>> leaving less capital available for productive investment. You start
needing more debt to generate the same amount of production. Or, said
another way, each additional dollar of debt produces less benefit.
Debt service comes from taxation and even more borrowing (which is the >>>> definition of a Ponzi scheme), which leaves businesses and families with >>>> less money to spend on other things. This results in lower economic
growth, more inflation, and higher interest rates.
Why is it a trap? HererCOs where I have to get political.
Fiscal Futility
To those on the conservative side, the problem is simple. We have
excessively high taxes and debt because the government spends too much. >>>>
ThatrCOs easy to say but gets a lot more difficult when you talk specifics >>>> rCo particularly if you are a member of Congress who must answer to
voters. Exactly which government spending would you like to cut? What
programs, departments, and agencies would you eliminate? Every dollar
the government spends has a constituency rCo people who benefit from it >>>> and will fight to preserve it.
Large amounts of spending are essentially on autopilot: Social Security, >>>> Medicare, assorted social programs, interest on the debt. These
rCLmandatoryrCY expenditures happen automatically, no matter the amounts, >>>> without Congress acting at all. The simple fact is that this mandatory >>>> spending plus defense spending is now consuming all tax revenue before >>>> any other government services are paid for on the federal level.
The so-called rCLdiscretionaryrCY budget that Congress votes on (defense and
all the assorted departments and agencies) is relatively minor. You
could cut it all in half and we would still have a serious problem.
When Trump first entered office the US deficit as percentage of GDP was >>>> less than 5%. That pandemic-year deficit peaked at 16% of GDP, or $3.1 >>>> trillion. Fast-forward to today: the FY2025 deficit came in at $1.8
trillion rCo 5.9% of GDP, well below the pandemic peak but still about 55% >>>> above the 50-year historical average of 3.8% of GDP. And itrCOs headed the >>>> wrong way again. The CBOrCOs latest FY2026 estimate is $2.1 trillion, up >>>> from $1.9 trillion projected back in February, after the Supreme Court >>>> struck down the IEEPA tariffs in February 2026 and blew a roughly $200 >>>> billion hole in expected tariff revenue. Whoever is in the White House, >>>> the deficit keeps landing in roughly the same trap.
Sad to say, government spending just keeps growing no matter which party >>>> is in power. We have crossed a form of political Rubicon where past
performance is not indicative of future results. The few serious fiscal >>>> conservatives are now gone after finding the Republican Party under
Trump spends differently than Democrats would, but has no desire to
spend less.
And thatrCOs the real problem: Voters like all this spending. They differ >>>> on priorities, but no one really wants to balance the budget. There is >>>> no desire to make the sacrifices and endure the pain it would take to
change the course we are on. So, it wonrCOt change, and debt will keep >>>> piling up.
Jaws of the Trap
Debt, as I have said many times, is future consumption pulled forward in >>>> time. It lets us consume more today by consuming less in the future.
There is a school of thought which says this doesnrCOt matter because we >>>> can always just keep pushing the due date further out. I disagree, and >>>> Lacy HuntrCOs research explains why.
While debt can be a problem, private debt is also critical to economic >>>> growth. It finances innovation and adds to the economyrCOs productive
capacity. Excessive government debt diverts resources away from
investment, without which growth slows to a crawl. Lacy proves this
mathematically but really, all you have to do is look at GDP growth
around the world since 2008. Europe, Japan, and the US have all
struggled to maintain positive growth. It was only a matter of time
until something pushed us all underwater. The pandemic did it. By 2026 >>>> itrCOs a different pressure doing the pushing rCo elevated-for-longer
interest costs and a wall of AI-driven capital spending are testing the >>>> same limit from the other direction.
All that being said, this can continue far longer than most people
think. Japan is now at 248.7% (2025) of debt to GDP. Eurozone debt is
about 87.8% (2025), but that understates the true situation in most
countries. The US, on the same gross-debt basis, was at 122.6% in early >>>> 2026. Europe and Japan both have low or nonexistent GDP growth. The
explosion of US debt means the US will soon join them. The answer from >>>> almost every economist of any stripe about how to fix the debt problem >>>> is to rCLgrow our way out of it.rCY The problem is we have passed the point
of no return.
We canrCOt stop growing debt. That would bring down the system in a true >>>> greater-than-the-Great Depression crash. What do you cut? Social
Security? Medicare? Military pensions? Education? Interest payments on >>>> the debt? The State Department? The only way to maintain that spending >>>> is to keep adding debt, which sends us further into the debt trap.
Anomalies in Paradise
At some point, this will simply stop working. That moment is when the
world will face what I first called The Great Reset over a decade ago. I >>>> am often asked exactly when it will happen. I typically demur as taking >>>> a date is tricky. But I think we can narrow it down.
Right now, the Social Security Administration says that Social Security >>>> will have to be cut by roughly 22% at some point in 2033. 10 years ago >>>> they said 2034. Without some major changes in the economy, that will
probably slip to 2032. It will be an election year and that will become >>>> the major topic.
We are now at $39.9 trillion of US [federal] debt. Interest on the debt >>>> is $1.1 trillion, at an interest rate of a little under 3%. That rate is >>>> obviously rising. Deficits are climbing over $2 trillion per year. By
2031, the debt will be over $50 trillion. Interest costs will run
anywhere from an optimistically estimated low of $1.5 trillion to over >>>> $2 trillion. ThatrCOs assuming no recession.
We are not going to cut Social Security for the vast majority of
recipients. The compromise will likely be some combination of raising
the age of benefits, means testing and increasing Social Security taxes. >>>> But that doesnrCOt solve the rest of the deficit problem. Somewhere around >>>> that time the bond markets will finally say, rCLEnough, already!rCY Congress
will be forced
by markets to act.
Spoiler alert: We will need to completely revamp our tax code, with a
greater percentage of GDP going to taxes than any of us want. But werCOll >>>> have to collect it differently and not destroy incentives as Europe and >>>> Japan have done. Sadly, I donrCOt expect a willingness to do that, at
least political willingness, until we are already in the middle of a
deep crisis. The bad news is we will get one and maybe change some things. >>>>
We built our dreams on excessive debt. Now we canrCOt go on together.
WerCOre caught in a trap. We canrCOt walk out.
https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap >>>
I don't understand economics so can't say if this is true or not, but
This was an article in the Globe&Mail
The United States is headed for a fiscal cliff
Andrew Coyne
Published August 12, 2026
In the time it takes you to read this column, the United States will add >>> another US$20-million to its national debt. By the end of the day, it will be
nearly US$9-billion more than it was yesterday; in a week, US$60-billion, more
than the government of Canada borrows in a year.
The annual U.S. federal budget deficit is now running at close to
US$2-trillion: nearly 6 per cent of GDP, and headed for 9 per cent or more by
2036, assuming current tax and spending policies continue. The total national
debt, at nearly US$40-trillion, now exceeds 120 per cent of GDP.
Of course, some of that includes money the federal government owes itself: >>> U.S. Treasury securities purchased by the Social Security Trust Fund out of >>> the surpluses it racked up in years past. The Congressional Budget Office >>> calculates that, net of these holdings, the national debt amounts to rCLonlyrCY
US$32-trillion, or just over 100 per cent of GDP, though that, too, is
projected to grow rCo to nearly 140 per cent by 2036, 175 per cent by 2056. >>>
However, Social Security is now rapidly burning through its reserves, the >>> surpluses having long since turned to deficits. By 2032, they are expected to
run out. At that point, barring major change, the U.S. government will have to
meet its Social Security obligations out of current taxes. And since those >>> taxes are already more than claimed by other obligations, that means the >>> government will have to go even further into debt to cover the difference: >>> roughly another 3 per cent of GDP annually, by 2056.
The Social Security Board of Trustees calculates the present value of the >>> unfunded liability in Social Security over the next 75 years at roughly
US$29-trillion.
Global debt hits record of near US$353-trillion, with signs of investors >>> moving away from the U.S.
Add it up, and thatrCOs close to US$70-trillion in debt. But thatrCOs not all.
Including the unfunded liabilities in Medicare (what the U.S. calls their >>> system of public health care for the poor and the elderly) would add about >>> US$60-trillion to the total; the pension plan for federal government
employees, civilian and military, roughly US$3-trillion, plus another
US$9-trillion and change in unfunded health benefits for those same employees.
Throw in state and local government debts of about US$3.7-trillion, and the >>> net unfunded liabilities in their pension plans, at a measly US$700-billion,
and you get something approaching the consolidated debt of the U.S. public >>> sector: on the order of US$146-trillion, more than four times their GDP. >>>
Of late, the people who buy U.S. debt have begun to notice. The yield on >>> 30-year U.S. Treasuries, which fell through 40 years of disinflation after the
early 1980s, has lately been rising. It now stands at more than 5.2 per cent,
the highest it has been since 2004.
Some of that is real rCo all those government bonds competing for buyers with
other bonds, from other issuers rCo and some of it is a premium for expected
higher inflation, itself related to all that debt. At some point, market >>> participants are betting, the U.S. may try to inflate its way out of its >>> debts, paying back its lenders in devalued dollars. The interest rate they >>> require to hold U.S. debt adjusts accordingly, to cover themselves against >>> this risk.
Either way, itrCOs all kinds of trouble. The higher the interest rate on its
debt, the more the U.S. government will have to pay its lenders, and the >>> greater its debts will grow. Interest costs on U.S. government debt currently
amount to about 3.3 per cent of GDP. They are projected to be nearly three >>> times that much, relative to GDP, in 30 years.
But that assumes the average interest rate on U.S. debt, now at 3.4 per cent
all maturities combined, rises only to 4.2 per cent. Were it to rise instead
to, say, 5.2 per cent, the interest-to-GDP ratio rises to 15 per cent. At an
average interest rate of 6.2 per cent rCo a rate more commensurate with the size
of U.S. liabilities rCo it hits 22.4 per cent.
Even at 10 per cent of GDP rCo the rCLrosyrCY scenario rCo interest costs would be
eating up more than half of all federal revenues. (For comparison, at the >>> height of CanadarCOs debt woes, interest costs consumed 36 per cent of federal
revenues.) At higher interest rates rCo well, itrCOs just too horrible to even
contemplate.
The U.S. is heading straight for a fiscal cliff. And at its helm is President
who proposes to spend even more, and who demands the Federal
Reserve, in the face of rising prices, cut interest rates. It is all going to
end in an ocean of tears.
That's pretty much the same conclusion, which I share.
It's fixable, if we had a congress & president who were tough enough to
deal in reality. But we don't.
That debt is never getting paid back. It will be inflated away as much
as they can get away with, but even that won't be enough to balance the
books.
You think that's bad? What will happen when a large portion of the
people who currently believe in the system stop believing?
Coyne says all this doom is predicted - "baring major change"
Revolution?
Julian <julianlzb87@gmail.com> posted:
On 15/08/2026 18:34, Wilson wrote:The U.S. can pay down its national debt today only by running a federal budget surplusrCotaking in more tax revenue than it spends.
https://www.youtube.com/watch?v=yh18YXKMk3g
https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap
The obvious solution is to accelerate economic growth to increase the tax base.
On 8/15/26 3:45 PM, Dude wrote:
dart200 <user7160@newsgrouper.org.invalid> posted:
It works in Scandinavia.those in debt do not forgive the debt moron...Rich people are not in debt - why would they want to pay off your debt? >>https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap
rich people could just forgive it if they wanted ...
and it's the rich people who hold the debt, so ofc they can forgive it
not that u know what forgiveness is dud
You are projecting - you're the rich kid in debt.
and all that would change is the perception of wealth,
"Your health is your greatest wealth." - Adelle Davis
> not actual wealth
The obvious solution to the debt crises is to accelerate economic growth. >>> We studied this in school - 5th grade.
> #god
unfortunately deciding to "just accelerate growth" is far easier said
than done
and we if we grow in an unsustainable manner (which we've been doing) it >> will obviously not be sustainable, leading to many cans getting kicked
down the road - something duds like u are fantastic at doing if i don't
say ...
The U.S. can pay down its national debt today only by running a federal budget surplusrCotaking in more tax revenue than it spends.
All Scandinavian and Nordic countries (Norway, Denmark, Sweden, and Finland)
are doing very well economically. They rank among the wealthiest nations globally by GDP per capita, combining free-market capitalism with strong social safety netsrCoa system known as the Nordic Model. YMMV.
bruh those countries are basically communist with their govt healthcare
and what-have-you... what are you suggesting here dud?
dart200 <user7160@newsgrouper.org.invalid> posted:
On 8/15/26 3:45 PM, Dude wrote:<snip>
dart200 <user7160@newsgrouper.org.invalid> posted:
We studied this in school:It works in Scandinavia.those in debt do not forgive the debt moron...Rich people are not in debt - why would they want to pay off your debt? >>>>https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap
rich people could just forgive it if they wanted ...
and it's the rich people who hold the debt, so ofc they can forgive it >>>>
not that u know what forgiveness is dud
You are projecting - you're the rich kid in debt.
and all that would change is the perception of wealth,
"Your health is your greatest wealth." - Adelle Davis
not actual wealth
The obvious solution to the debt crises is to accelerate economic growth. >>>>> We studied this in school - 5th grade.
#god
unfortunately deciding to "just accelerate growth" is far easier said
than done
and we if we grow in an unsustainable manner (which we've been doing) it >>>> will obviously not be sustainable, leading to many cans getting kicked >>>> down the road - something duds like u are fantastic at doing if i don't >>>> say ...
The U.S. can pay down its national debt today only by running a federal
budget surplusrCotaking in more tax revenue than it spends.
All Scandinavian and Nordic countries (Norway, Denmark, Sweden, and Finland)
are doing very well economically. They rank among the wealthiest nations >>> globally by GDP per capita, combining free-market capitalism with strong >>> social safety netsrCoa system known as the Nordic Model. YMMV.
bruh those countries are basically communist with their govt healthcare
and what-have-you... what are you suggesting here dud?
The Nordic system is a mixed economy, combining capitalism and socialism.
The Nordic countries (Denmark, Finland, Iceland, Norway, and Sweden) are capitalist economies that combine free-market capitalism with high levels
of private ownership and robust, tax-funded welfare states.
Why that system works.
A free market is an economic system based on voluntary exchange, where prices, wages, and the distribution of goods are determined by supply
and demand.
In a pure free market, private individuals and businesses interact without government intervention, regulation, or subsidies.
Prices serve as signals that determine production and consumption, aiming
for an efficient allocation of resources.
Ownership of private property is respected and essential for market function. Businesses compete on a level playing field, which encourages innovation
and efficiency.
Hope this helps.
dart200 <user7160@newsgrouper.org.invalid> posted:
On 8/15/26 3:45 PM, Dude wrote:<snip>
dart200 <user7160@newsgrouper.org.invalid> posted:
We studied this in school:It works in Scandinavia.those in debt do not forgive the debt moron...Rich people are not in debt - why would they want to pay off your debt? >>>>https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap
rich people could just forgive it if they wanted ...
and it's the rich people who hold the debt, so ofc they can forgive it >>>>
not that u know what forgiveness is dud
You are projecting - you're the rich kid in debt.
and all that would change is the perception of wealth,
"Your health is your greatest wealth." - Adelle Davis
> not actual wealth
The obvious solution to the debt crises is to accelerate economic growth. >>>>> We studied this in school - 5th grade.
> #god
unfortunately deciding to "just accelerate growth" is far easier said
than done
and we if we grow in an unsustainable manner (which we've been doing) it >>>> will obviously not be sustainable, leading to many cans getting kicked >>>> down the road - something duds like u are fantastic at doing if i don't >>>> say ...
The U.S. can pay down its national debt today only by running a federal
budget surplusrCotaking in more tax revenue than it spends.
All Scandinavian and Nordic countries (Norway, Denmark, Sweden, and Finland)
are doing very well economically. They rank among the wealthiest nations >>> globally by GDP per capita, combining free-market capitalism with strong >>> social safety netsrCoa system known as the Nordic Model. YMMV.
bruh those countries are basically communist with their govt healthcare
and what-have-you... what are you suggesting here dud?
The Nordic system is a mixed economy, combining capitalism and socialism.
The Nordic countries (Denmark, Finland, Iceland, Norway, and Sweden) are capitalist economies that combine free-market capitalism with high levels
of private ownership and robust, tax-funded welfare states.
Why that system works.
A free market is an economic system based on voluntary exchange, where prices, wages, and the distribution of goods are determined by supply
and demand.
In a pure free market, private individuals and businesses interact without government intervention, regulation, or subsidies.
Prices serve as signals that determine production and consumption, aiming
for an efficient allocation of resources.
Ownership of private property is respected and essential for market function. Businesses compete on a level playing field, which encourages innovation
and efficiency.
Hope this helps.
On 8/16/26 10:17 AM, Dude wrote:
dart200 <user7160@newsgrouper.org.invalid> posted:
On 8/15/26 3:45 PM, Dude wrote:<snip>
dart200 <user7160@newsgrouper.org.invalid> posted:
We studied this in school:It works in Scandinavia.Rich people are not in debt - why would they want to pay offhttps://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap
rich people could just forgive it if they wanted ...
your debt?
those in debt do not forgive the debt moron...
and it's the rich people who hold the debt, so ofc they can
forgive it
not that u know what forgiveness is dud
You are projecting - you're the rich kid in debt.
and all that would change is the perception of wealth,
"Your health is your greatest wealth." - Adelle Davis
> not actual wealth
The obvious solution to the debt crises is to accelerate
> #god
economic growth. We studied this in school - 5th grade.
unfortunately deciding to "just accelerate growth" is far easier
said than done
and we if we grow in an unsustainable manner (which we've been
doing) it will obviously not be sustainable, leading to many
cans getting kicked down the road - something duds like u are
fantastic at doing if i don't say ...
The U.S. can pay down its national debt today only by running a
federal budget surplusrCotaking in more tax revenue than it spends.
All Scandinavian and Nordic countries (Norway, Denmark, Sweden,
and Finland) are doing very well economically. They rank among
the wealthiest nations globally by GDP per capita, combining
free-market capitalism with strong social safety netsrCoa system
known as the Nordic Model. YMMV.
bruh those countries are basically communist with their govt
healthcare and what-have-you... what are you suggesting here dud?
The Nordic system is a mixed economy, combining capitalism and
socialism.
The Nordic countries (Denmark, Finland, Iceland, Norway, and
Sweden) are capitalist economies that combine free-market
capitalism with high levels of private ownership and robust,
tax-funded welfare states.
Why that system works.
A free market is an economic system based on voluntary exchange,
where prices, wages, and the distribution of goods are determined
by supply and demand.
In a pure free market, private individuals and businesses interact
without government intervention, regulation, or subsidies.
Prices serve as signals that determine production and consumption,
aiming for an efficient allocation of resources.
Ownership of private property is respected and essential for market function. Businesses compete on a level playing field, which
encourages innovation and efficiency.
Hope this helps.
well i learned from the cons around here that this is actually
communism because the state owns the means of healthcare production,
no idea why ur deciding to change ur story now
At Sun, 16 Aug 2026 10:43:01 -0700, dart200 <user7160@newsgrouper.org.invalid> wrote:
On 8/16/26 10:17 AM, Dude wrote:
dart200 <user7160@newsgrouper.org.invalid> posted:
On 8/15/26 3:45 PM, Dude wrote:<snip>
dart200 <user7160@newsgrouper.org.invalid> posted:
We studied this in school:It works in Scandinavia.Rich people are not in debt - why would they want to pay offhttps://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap
rich people could just forgive it if they wanted ...
your debt?
those in debt do not forgive the debt moron...
and it's the rich people who hold the debt, so ofc they can
forgive it
not that u know what forgiveness is dud
You are projecting - you're the rich kid in debt.
and all that would change is the perception of wealth,
"Your health is your greatest wealth." - Adelle Davis
> not actual wealth
The obvious solution to the debt crises is to accelerate
> #god
economic growth. We studied this in school - 5th grade.
unfortunately deciding to "just accelerate growth" is far easier
said than done
and we if we grow in an unsustainable manner (which we've been
doing) it will obviously not be sustainable, leading to many
cans getting kicked down the road - something duds like u are
fantastic at doing if i don't say ...
The U.S. can pay down its national debt today only by running a
federal budget surplusrCotaking in more tax revenue than it spends.
All Scandinavian and Nordic countries (Norway, Denmark, Sweden,
and Finland) are doing very well economically. They rank among
the wealthiest nations globally by GDP per capita, combining
free-market capitalism with strong social safety netsrCoa system
known as the Nordic Model. YMMV.
bruh those countries are basically communist with their govt
healthcare and what-have-you... what are you suggesting here dud?
The Nordic system is a mixed economy, combining capitalism and
socialism.
The Nordic countries (Denmark, Finland, Iceland, Norway, and
Sweden) are capitalist economies that combine free-market
capitalism with high levels of private ownership and robust,
tax-funded welfare states.
Why that system works.
A free market is an economic system based on voluntary exchange,
where prices, wages, and the distribution of goods are determined
by supply and demand.
In a pure free market, private individuals and businesses interact
without government intervention, regulation, or subsidies.
Prices serve as signals that determine production and consumption,
aiming for an efficient allocation of resources.
Ownership of private property is respected and essential for market
function. Businesses compete on a level playing field, which
encourages innovation and efficiency.
Hope this helps.
well i learned from the cons around here that this is actually
communism because the state owns the means of healthcare production,
no idea why ur deciding to change ur story now
That is a necessity, similar to the fire dept. and the police dept.
Two things you apparently don't know about: social necessities
and natural monopolies.
Reap it, mofo.
On 8/16/26 11:29 AM, Creon wrote:
At Sun, 16 Aug 2026 10:43:01 -0700, dart200 <user7160@newsgrouper.org.invalid> wrote:
On 8/16/26 10:17 AM, Dude wrote:
dart200 <user7160@newsgrouper.org.invalid> posted:
On 8/15/26 3:45 PM, Dude wrote:<snip>
dart200 <user7160@newsgrouper.org.invalid> posted:
We studied this in school:It works in Scandinavia.Rich people are not in debt - why would they want to pay offhttps://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap
rich people could just forgive it if they wanted ...
your debt?
those in debt do not forgive the debt moron...
and it's the rich people who hold the debt, so ofc they can
forgive it
not that u know what forgiveness is dud
You are projecting - you're the rich kid in debt.
and all that would change is the perception of wealth,
"Your health is your greatest wealth." - Adelle Davis
> not actual wealth
The obvious solution to the debt crises is to accelerate
> #god
economic growth. We studied this in school - 5th grade.
unfortunately deciding to "just accelerate growth" is far easier >>>>>> said than done
and we if we grow in an unsustainable manner (which we've been
doing) it will obviously not be sustainable, leading to many
cans getting kicked down the road - something duds like u are
fantastic at doing if i don't say ...
The U.S. can pay down its national debt today only by running a
federal budget surplusrCotaking in more tax revenue than it spends. >>>>>
All Scandinavian and Nordic countries (Norway, Denmark, Sweden,
and Finland) are doing very well economically. They rank among
the wealthiest nations globally by GDP per capita, combining
free-market capitalism with strong social safety netsrCoa system
known as the Nordic Model. YMMV.
bruh those countries are basically communist with their govt
healthcare and what-have-you... what are you suggesting here dud?
The Nordic system is a mixed economy, combining capitalism and
socialism.
The Nordic countries (Denmark, Finland, Iceland, Norway, and
Sweden) are capitalist economies that combine free-market
capitalism with high levels of private ownership and robust,
tax-funded welfare states.
Why that system works.
A free market is an economic system based on voluntary exchange,
where prices, wages, and the distribution of goods are determined
by supply and demand.
In a pure free market, private individuals and businesses interact
without government intervention, regulation, or subsidies.
Prices serve as signals that determine production and consumption,
aiming for an efficient allocation of resources.
Ownership of private property is respected and essential for market
function. Businesses compete on a level playing field, which
encourages innovation and efficiency.
Hope this helps.
well i learned from the cons around here that this is actually
communism because the state owns the means of healthcare production,
no idea why ur deciding to change ur story now
That is a necessity, similar to the fire dept. and the police dept.
Two things you apparently don't know about: social necessities
and natural monopolies.
Reap it, mofo.
wow creon's a faggot and a commie??? name a more iconic duo!
At Sun, 16 Aug 2026 11:33:09 -0700, dart200 <user7160@newsgrouper.org.invalid> wrote:
On 8/16/26 11:29 AM, Creon wrote:
At Sun, 16 Aug 2026 10:43:01 -0700, dart200
<user7160@newsgrouper.org.invalid> wrote:
On 8/16/26 10:17 AM, Dude wrote:
dart200 <user7160@newsgrouper.org.invalid> posted:
On 8/15/26 3:45 PM, Dude wrote:<snip>
dart200 <user7160@newsgrouper.org.invalid> posted:
We studied this in school:It works in Scandinavia.Rich people are not in debt - why would they want to pay off >>>>>>>>> your debt?https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap
rich people could just forgive it if they wanted ...
those in debt do not forgive the debt moron...
and it's the rich people who hold the debt, so ofc they can
forgive it
not that u know what forgiveness is dud
You are projecting - you're the rich kid in debt.
and all that would change is the perception of wealth,
"Your health is your greatest wealth." - Adelle Davis
> not actual wealth
The obvious solution to the debt crises is to accelerate
> #god
economic growth. We studied this in school - 5th grade.
unfortunately deciding to "just accelerate growth" is far easier >>>>>>>> said than done
and we if we grow in an unsustainable manner (which we've been >>>>>>>> doing) it will obviously not be sustainable, leading to many
cans getting kicked down the road - something duds like u are
fantastic at doing if i don't say ...
The U.S. can pay down its national debt today only by running a
federal budget surplusrCotaking in more tax revenue than it spends. >>>>>>>
All Scandinavian and Nordic countries (Norway, Denmark, Sweden,
and Finland) are doing very well economically. They rank among
the wealthiest nations globally by GDP per capita, combining
free-market capitalism with strong social safety netsrCoa system >>>>>>> known as the Nordic Model. YMMV.
bruh those countries are basically communist with their govt
healthcare and what-have-you... what are you suggesting here dud?
The Nordic system is a mixed economy, combining capitalism and
socialism.
The Nordic countries (Denmark, Finland, Iceland, Norway, and
Sweden) are capitalist economies that combine free-market
capitalism with high levels of private ownership and robust,
tax-funded welfare states.
Why that system works.
A free market is an economic system based on voluntary exchange,
where prices, wages, and the distribution of goods are determined
by supply and demand.
In a pure free market, private individuals and businesses interact
without government intervention, regulation, or subsidies.
Prices serve as signals that determine production and consumption,
aiming for an efficient allocation of resources.
Ownership of private property is respected and essential for market
function. Businesses compete on a level playing field, which
encourages innovation and efficiency.
Hope this helps.
well i learned from the cons around here that this is actually
communism because the state owns the means of healthcare production,
no idea why ur deciding to change ur story now
That is a necessity, similar to the fire dept. and the police dept.
Two things you apparently don't know about: social necessities
and natural monopolies.
Reap it, mofo.
wow creon's a faggot and a commie??? name a more iconic duo!
Okay, I'll bite:
What, in your estimation, is the meaning of your term
"healthcare production", and how is it different than police or fire services?
I have more to say, but I would really like to know how you answer
that question.
On 8/16/26 11:48 AM, Creon wrote:
At Sun, 16 Aug 2026 11:33:09 -0700, dart200
<user7160@newsgrouper.org.invalid> wrote:
On 8/16/26 11:29 AM, Creon wrote:
At Sun, 16 Aug 2026 10:43:01 -0700, dart200
<user7160@newsgrouper.org.invalid> wrote:
On 8/16/26 10:17 AM, Dude wrote:
The Nordic system is a mixed economy, combining capitalism and
socialism.
The Nordic countries (Denmark, Finland, Iceland, Norway, and
Sweden) are capitalist economies that combine free-market
capitalism with high levels of private ownership and robust,
tax-funded welfare states.
Why that system works.
A free market is an economic system based on voluntary exchange,
where prices, wages, and the distribution of goods are determined
by supply and demand.
In a pure free market, private individuals and businesses interact >>>>>> without government intervention, regulation, or subsidies.
Prices serve as signals that determine production and consumption, >>>>>> aiming for an efficient allocation of resources.
Ownership of private property is respected and essential for market >>>>>> function. Businesses compete on a level playing field, which
encourages innovation and efficiency.
Hope this helps.
well i learned from the cons around here that this is actually
communism because the state owns the means of healthcare production, >>>>> no idea why ur deciding to change ur story now
That is a necessity, similar to the fire dept. and the police dept.
Two things you apparently don't know about:-a social necessities
and natural monopolies.
Reap it, mofo.
wow creon's a faggot and a commie??? name a more iconic duo!
Okay, I'll bite:
What, in your estimation, is the meaning of your term
"healthcare production", and how is it different than police or fire
services?
as an anarcho-anarchist i don't consider being called a commie an
insult, but i'm not a marxist
and yes i consider the state to own the means of production for most emergency services, as they certainly aren't privately controlled
I have more to say, but I would really like to know how you answer
that question.
bro u act like ur part of this sub, but u somehow don't know that
wilson's the megatard who wants to replace all govt with privatized
services without public accountability, not me EfOa
On 8/16/2026 3:08 PM, dart200 wrote:
On 8/16/26 11:48 AM, Creon wrote:
At Sun, 16 Aug 2026 11:33:09 -0700, dart200
<user7160@newsgrouper.org.invalid> wrote:
On 8/16/26 11:29 AM, Creon wrote:
At Sun, 16 Aug 2026 10:43:01 -0700, dart200
<user7160@newsgrouper.org.invalid> wrote:
On 8/16/26 10:17 AM, Dude wrote:
The Nordic system is a mixed economy, combining capitalism and
socialism.
The Nordic countries (Denmark, Finland, Iceland, Norway, and
Sweden) are capitalist economies that combine free-market
capitalism with high levels of private ownership and robust,
tax-funded welfare states.
Why that system works.
A free market is an economic system based on voluntary exchange, >>>>>> where prices, wages, and the distribution of goods are determined >>>>>> by supply and demand.
In a pure free market, private individuals and businesses interact >>>>>> without government intervention, regulation, or subsidies.
Prices serve as signals that determine production and consumption, >>>>>> aiming for an efficient allocation of resources.
Ownership of private property is respected and essential for market >>>>>> function. Businesses compete on a level playing field, which
encourages innovation and efficiency.
Hope this helps.
well i learned from the cons around here that this is actually
communism because the state owns the means of healthcare production, >>>>> no idea why ur deciding to change ur story now
That is a necessity, similar to the fire dept. and the police dept.
Two things you apparently don't know about:-a social necessities
and natural monopolies.
Reap it, mofo.
wow creon's a faggot and a commie??? name a more iconic duo!
Okay, I'll bite:
What, in your estimation, is the meaning of your term
"healthcare production", and how is it different than police or fire
services?
as an anarcho-anarchist i don't consider being called a commie an
insult, but i'm not a marxist
and yes i consider the state to own the means of production for most emergency services, as they certainly aren't privately controlled
I have more to say, but I would really like to know how you answer
that question.
bro u act like ur part of this sub, but u somehow don't know that
wilson's the megatard who wants to replace all govt with privatized services without public accountability, not me EfOa
I'm open to the idea of private service providers doing most of the work
the government does not, but not dogmatic about it. Public
accountability would be critical and a genuinely open market with free speech might do that. Imagine orgs like Underwriters Laboratories to
verify performance and public forums to rate them.
On 8/16/26 11:29 AM, Creon wrote:
At Sun, 16 Aug 2026 10:43:01 -0700, dart200 <user7160@newsgrouper.org.invalid> wrote:
On 8/16/26 10:17 AM, Dude wrote:
dart200 <user7160@newsgrouper.org.invalid> posted:
On 8/15/26 3:45 PM, Dude wrote:<snip>
dart200 <user7160@newsgrouper.org.invalid> posted:
We studied this in school:It works in Scandinavia.Rich people are not in debt - why would they want to pay offhttps://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap
rich people could just forgive it if they wanted ...
your debt?
those in debt do not forgive the debt moron...
and it's the rich people who hold the debt, so ofc they can
forgive it
not that u know what forgiveness is dud
You are projecting - you're the rich kid in debt.
and all that would change is the perception of wealth,
"Your health is your greatest wealth." - Adelle Davis
> not actual wealth
The obvious solution to the debt crises is to accelerate
> #god
economic growth. We studied this in school - 5th grade.
unfortunately deciding to "just accelerate growth" is far easier >>>>>> said than done
and we if we grow in an unsustainable manner (which we've been
doing) it will obviously not be sustainable, leading to many
cans getting kicked down the road - something duds like u are
fantastic at doing if i don't say ...
The U.S. can pay down its national debt today only by running a
federal budget surplusrCotaking in more tax revenue than it spends. >>>>>
All Scandinavian and Nordic countries (Norway, Denmark, Sweden,
and Finland) are doing very well economically. They rank among
the wealthiest nations globally by GDP per capita, combining
free-market capitalism with strong social safety netsrCoa system
known as the Nordic Model. YMMV.
bruh those countries are basically communist with their govt
healthcare and what-have-you... what are you suggesting here dud?
The Nordic system is a mixed economy, combining capitalism and
socialism.
The Nordic countries (Denmark, Finland, Iceland, Norway, and
Sweden) are capitalist economies that combine free-market
capitalism with high levels of private ownership and robust,
tax-funded welfare states.
Why that system works.
A free market is an economic system based on voluntary exchange,
where prices, wages, and the distribution of goods are determined
by supply and demand.
In a pure free market, private individuals and businesses interact
without government intervention, regulation, or subsidies.
Prices serve as signals that determine production and consumption,
aiming for an efficient allocation of resources.
Ownership of private property is respected and essential for market
function. Businesses compete on a level playing field, which
encourages innovation and efficiency.
Hope this helps.
well i learned from the cons around here that this is actually
communism because the state owns the means of healthcare production,
no idea why ur deciding to change ur story now
That is a necessity, similar to the fire dept. and the police dept.
Two things you apparently don't know about: social necessities
and natural monopolies.
Reap it, mofo.
wow creon's a faggot and a commie??? name a more iconic duo!
On 8/16/2026 3:08 PM, dart200 wrote:
On 8/16/26 11:48 AM, Creon wrote:
At Sun, 16 Aug 2026 11:33:09 -0700, dart200
<user7160@newsgrouper.org.invalid> wrote:
On 8/16/26 11:29 AM, Creon wrote:
At Sun, 16 Aug 2026 10:43:01 -0700, dart200
<user7160@newsgrouper.org.invalid> wrote:
On 8/16/26 10:17 AM, Dude wrote:
The Nordic system is a mixed economy, combining capitalism and
socialism.
The Nordic countries (Denmark, Finland, Iceland, Norway, and
Sweden) are capitalist economies that combine free-market
capitalism with high levels of private ownership and robust,
tax-funded welfare states.
Why that system works.
A free market is an economic system based on voluntary exchange, >>>>>>> where prices, wages, and the distribution of goods are determined >>>>>>> by supply and demand.
In a pure free market, private individuals and businesses interact >>>>>>> without government intervention, regulation, or subsidies.
Prices serve as signals that determine production and consumption, >>>>>>> aiming for an efficient allocation of resources.
Ownership of private property is respected and essential for market >>>>>>> function. Businesses compete on a level playing field, which
encourages innovation and efficiency.
Hope this helps.
well i learned from the cons around here that this is actually
communism because the state owns the means of healthcare production, >>>>>> no idea why ur deciding to change ur story now
That is a necessity, similar to the fire dept. and the police dept.
Two things you apparently don't know about:-a social necessities
and natural monopolies.
Reap it, mofo.
wow creon's a faggot and a commie??? name a more iconic duo!
Okay, I'll bite:
What, in your estimation, is the meaning of your term
"healthcare production", and how is it different than police or fire
services?
as an anarcho-anarchist i don't consider being called a commie an
insult, but i'm not a marxist
and yes i consider the state to own the means of production for most
emergency services, as they certainly aren't privately controlled
I have more to say, but I would really like to know how you answer
that question.
bro u act like ur part of this sub, but u somehow don't know that
wilson's the megatard who wants to replace all govt with privatized
services without public accountability, not me EfOa
I'm open to the idea of private service providers doing most of the work
the government does not, but not dogmatic about it. Public
accountability would be critical and a genuinely open market with free
speech might do that. Imagine orgs like Underwriters Laboratories to
verify performance and public forums to rate them.
On 8/15/2026 3:40 PM, Dude wrote:
Julian <julianlzb87@gmail.com> posted:
On 15/08/2026 18:34, Wilson wrote:The U.S. can pay down its national debt today only by running a federal budget surplusrCotaking in more tax revenue than it spends.
https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap >> https://www.youtube.com/watch?v=yh18YXKMk3g
The obvious solution is to accelerate economic growth to increase the
tax base.
As your car is sliding off the road because you took the turn too fast,
the obvious solution is to accelerate as you turn the wheel into the
skid. The problem arises when you run out of road.
Wilson <Wilson@nowhere.invalid> posted:
On 8/15/2026 3:40 PM, Dude wrote:The US needs to broaden the tax base by eliminating or scaling back popular itemized tax deductions, exclusions, and loopholes. Plus, implement a broad-based value-added sales tax (VAT).
Julian <julianlzb87@gmail.com> posted:
On 15/08/2026 18:34, Wilson wrote:The U.S. can pay down its national debt today only by running a federal
https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap >>>> https://www.youtube.com/watch?v=yh18YXKMk3g
budget surplusrCotaking in more tax revenue than it spends.
The obvious solution is to accelerate economic growth to increase the
tax base.
As your car is sliding off the road because you took the turn too fast,
the obvious solution is to accelerate as you turn the wheel into the
skid. The problem arises when you run out of road.
On 8/16/2026 3:08 PM, dart200 wrote:
On 8/16/26 11:48 AM, Creon wrote:
At Sun, 16 Aug 2026 11:33:09 -0700, dart200
<user7160@newsgrouper.org.invalid> wrote:
On 8/16/26 11:29 AM, Creon wrote:
At Sun, 16 Aug 2026 10:43:01 -0700, dart200
<user7160@newsgrouper.org.invalid> wrote:
On 8/16/26 10:17 AM, Dude wrote:
The Nordic system is a mixed economy, combining capitalism and
socialism.
The Nordic countries (Denmark, Finland, Iceland, Norway, and
Sweden) are capitalist economies that combine free-market
capitalism with high levels of private ownership and robust,
tax-funded welfare states.
Why that system works.
A free market is an economic system based on voluntary exchange, >>>>>>> where prices, wages, and the distribution of goods are determined >>>>>>> by supply and demand.
In a pure free market, private individuals and businesses interact >>>>>>> without government intervention, regulation, or subsidies.
Prices serve as signals that determine production and consumption, >>>>>>> aiming for an efficient allocation of resources.
Ownership of private property is respected and essential for market >>>>>>> function. Businesses compete on a level playing field, which
encourages innovation and efficiency.
Hope this helps.
well i learned from the cons around here that this is actually
communism because the state owns the means of healthcare production, >>>>>> no idea why ur deciding to change ur story now
That is a necessity, similar to the fire dept. and the police dept.
Two things you apparently don't know about:-a social necessities
and natural monopolies.
Reap it, mofo.
wow creon's a faggot and a commie??? name a more iconic duo!
Okay, I'll bite:
What, in your estimation, is the meaning of your term
"healthcare production", and how is it different than police or fire
services?
as an anarcho-anarchist i don't consider being called a commie an
insult, but i'm not a marxist
and yes i consider the state to own the means of production for most
emergency services, as they certainly aren't privately controlled
I have more to say, but I would really like to know how you answer
that question.
bro u act like ur part of this sub, but u somehow don't know that
wilson's the megatard who wants to replace all govt with privatized
services without public accountability, not me EfOa
I'm open to the idea of private service providers doing most of the work
the government does not, but not dogmatic about it. Public
accountability would be critical and a genuinely open market with free
speech might do that. Imagine orgs like Underwriters Laboratories to
verify performance and public forums to rate them.
On 16/08/2026 23:43, Dude wrote:
Wilson <Wilson@nowhere.invalid> posted:
On 8/15/2026 3:40 PM, Dude wrote:The US needs to broaden the tax base by eliminating or scaling back
Julian <julianlzb87@gmail.com> posted:
On 15/08/2026 18:34, Wilson wrote:The U.S. can pay down its national debt today only by running a federal >>>> budget surplusrCotaking in more tax revenue than it spends.
https://www.youtube.com/watch?v=yh18YXKMk3g
https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-
debt-trap
The obvious solution is to accelerate economic growth to increase the
tax base.
As your car is sliding off the road because you took the turn too fast,
the obvious solution is to accelerate as you turn the wheel into the
skid. The problem arises when you run out of road.
popular
itemized tax deductions, exclusions, and loopholes. Plus, implement a
broad-based value-added sales tax (VAT).
Ireland massively increased its tax receipts by lowering the tax rates. https://www.bbc.co.uk/news/world-europe-65343497
On 8/16/2026 6:53 PM, Julian wrote:
On 16/08/2026 23:43, Dude wrote:
Wilson <Wilson@nowhere.invalid> posted:
On 8/15/2026 3:40 PM, Dude wrote:The US needs to broaden the tax base by eliminating or scaling back
Julian <julianlzb87@gmail.com> posted:
On 15/08/2026 18:34, Wilson wrote:The U.S. can pay down its national debt today only by running a
https://www.youtube.com/watch?v=yh18YXKMk3g
https://www.mauldineconomics.com/frontlinethoughts/caught-in-a- >>>>>>> debt-trap
federal
budget surplusrCotaking in more tax revenue than it spends.
The obvious solution is to accelerate economic growth to increase the >>>>> tax base.
As your car is sliding off the road because you took the turn too fast, >>>> the obvious solution is to accelerate as you turn the wheel into the
skid. The problem arises when you run out of road.
popular
itemized tax deductions, exclusions, and loopholes. Plus, implement a
broad-based value-added sales tax (VAT).
Ireland massively increased its tax receipts by lowering the tax rates.
https://www.bbc.co.uk/news/world-europe-65343497
But that's impossible!
dart200 <user7160@newsgrouper.org.invalid> posted:
On 8/16/26 11:29 AM, Creon wrote:
At Sun, 16 Aug 2026 10:43:01 -0700, dart200 <user7160@newsgrouper.org.invalid> wrote:
On 8/16/26 10:17 AM, Dude wrote:
dart200 <user7160@newsgrouper.org.invalid> posted:
On 8/15/26 3:45 PM, Dude wrote:<snip>
dart200 <user7160@newsgrouper.org.invalid> posted:
We studied this in school:It works in Scandinavia.Rich people are not in debt - why would they want to pay off >>>>>>> your debt?https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap
rich people could just forgive it if they wanted ...
those in debt do not forgive the debt moron...
and it's the rich people who hold the debt, so ofc they can
forgive it
not that u know what forgiveness is dud
You are projecting - you're the rich kid in debt.
and all that would change is the perception of wealth,
"Your health is your greatest wealth." - Adelle Davis
> not actual wealth
The obvious solution to the debt crises is to accelerate
> #god
economic growth. We studied this in school - 5th grade.
unfortunately deciding to "just accelerate growth" is far easier >>>>>> said than done
and we if we grow in an unsustainable manner (which we've been >>>>>> doing) it will obviously not be sustainable, leading to many
cans getting kicked down the road - something duds like u are
fantastic at doing if i don't say ...
The U.S. can pay down its national debt today only by running a
federal budget surplusrCotaking in more tax revenue than it spends. >>>>>
All Scandinavian and Nordic countries (Norway, Denmark, Sweden,
and Finland) are doing very well economically. They rank among
the wealthiest nations globally by GDP per capita, combining
free-market capitalism with strong social safety netsrCoa system >>>>> known as the Nordic Model. YMMV.
bruh those countries are basically communist with their govt
healthcare and what-have-you... what are you suggesting here dud?
The Nordic system is a mixed economy, combining capitalism and
socialism.
The Nordic countries (Denmark, Finland, Iceland, Norway, and
Sweden) are capitalist economies that combine free-market
capitalism with high levels of private ownership and robust,
tax-funded welfare states.
Why that system works.
A free market is an economic system based on voluntary exchange,
where prices, wages, and the distribution of goods are determined
by supply and demand.
In a pure free market, private individuals and businesses interact
without government intervention, regulation, or subsidies.
Prices serve as signals that determine production and consumption,
aiming for an efficient allocation of resources.
Ownership of private property is respected and essential for market
function. Businesses compete on a level playing field, which
encourages innovation and efficiency.
Hope this helps.
well i learned from the cons around here that this is actually
communism because the state owns the means of healthcare production,
no idea why ur deciding to change ur story now
That is a necessity, similar to the fire dept. and the police dept.
Two things you apparently don't know about: social necessities
and natural monopolies.
Reap it, mofo.
wow creon's a faggot and a commie??? name a more iconic duo!
That should wrap up the the discussion about the national debt!
Good work, Nick!
At Sun, 16 Aug 2026 21:58:33 GMT, Dude <user2891@newsgrouper.org.invalid> wrote:
dart200 <user7160@newsgrouper.org.invalid> posted:
On 8/16/26 11:29 AM, Creon wrote:That should wrap up the the discussion about the national debt!
At Sun, 16 Aug 2026 10:43:01 -0700, dart200
<user7160@newsgrouper.org.invalid> wrote:
On 8/16/26 10:17 AM, Dude wrote:
dart200 <user7160@newsgrouper.org.invalid> posted:
On 8/15/26 3:45 PM, Dude wrote:<snip>
dart200 <user7160@newsgrouper.org.invalid> posted:
We studied this in school:It works in Scandinavia.Rich people are not in debt - why would they want to pay off >>>>>>>>>> your debt?https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap
rich people could just forgive it if they wanted ...
those in debt do not forgive the debt moron...
and it's the rich people who hold the debt, so ofc they can
forgive it
not that u know what forgiveness is dud
You are projecting - you're the rich kid in debt.
and all that would change is the perception of wealth,
"Your health is your greatest wealth." - Adelle Davis
> not actual wealth
The obvious solution to the debt crises is to accelerate
> #god
economic growth. We studied this in school - 5th grade.
unfortunately deciding to "just accelerate growth" is far easier >>>>>>>>> said than done
and we if we grow in an unsustainable manner (which we've been >>>>>>>>> doing) it will obviously not be sustainable, leading to many >>>>>>>>> cans getting kicked down the road - something duds like u are >>>>>>>>> fantastic at doing if i don't say ...
The U.S. can pay down its national debt today only by running a >>>>>>>> federal budget surplusrCotaking in more tax revenue than it spends. >>>>>>>>
All Scandinavian and Nordic countries (Norway, Denmark, Sweden, >>>>>>>> and Finland) are doing very well economically. They rank among >>>>>>>> the wealthiest nations globally by GDP per capita, combining
free-market capitalism with strong social safety netsrCoa system >>>>>>>> known as the Nordic Model. YMMV.
bruh those countries are basically communist with their govt
healthcare and what-have-you... what are you suggesting here dud? >>>>>>>
The Nordic system is a mixed economy, combining capitalism and
socialism.
The Nordic countries (Denmark, Finland, Iceland, Norway, and
Sweden) are capitalist economies that combine free-market
capitalism with high levels of private ownership and robust,
tax-funded welfare states.
Why that system works.
A free market is an economic system based on voluntary exchange,
where prices, wages, and the distribution of goods are determined
by supply and demand.
In a pure free market, private individuals and businesses interact >>>>>> without government intervention, regulation, or subsidies.
Prices serve as signals that determine production and consumption, >>>>>> aiming for an efficient allocation of resources.
Ownership of private property is respected and essential for market >>>>>> function. Businesses compete on a level playing field, which
encourages innovation and efficiency.
Hope this helps.
well i learned from the cons around here that this is actually
communism because the state owns the means of healthcare production, >>>>> no idea why ur deciding to change ur story now
That is a necessity, similar to the fire dept. and the police dept.
Two things you apparently don't know about: social necessities
and natural monopolies.
Reap it, mofo.
wow creon's a faggot and a commie??? name a more iconic duo!
Good work, Nick!
I didn't know he's a red-baiting phobe, to boot!
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