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Friday, December 15, 2017
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Is Economic Collapse in the US Inevitable? – Part 1

As of this writing, February, 2016, the national debt of the United States is $18,994,034,667,585.44 and increasing an average of a staggering $2.38 billion a day since September 40, 2012. The estimated population of the United States as of the same date was 322,353,391 and rising. Doing the math; that translates into $58,923.01 for every man, woman, and child in the country; and the debt accumulation starts from birth. The level of debt is such that it is now105% of the Gross Domestic Product (GDP)–and is rising at a rate that will find it over $20 trillion by 2020. By that time, the interest costs of that debt will be greater than defense and nondefense discretionary spending, according to Real Time Economics, Economic Insight and analysis from the Wall Street Journal.

According to Josh Zumbrun, writing in the Wall Street Journal, “currently, the government’s interest costs are around $200 billion a year, a sum that’s low due to the era of low interest rates. Forecasters at the White House and Congressional Budget Office believe interest rates will gradually rise, and when that happens, the interest costs of the U.S. government are set to soar, from just over $200 billion to nearly $800 billion a year by decade’s end…[and at the end of FY 2016 the total government debt in the United States, including federal, state, and local, is expected to be $22.4 trillion with 47% owed to foreign investors.]

The level of U.S. debt may be safely contained or mortally high depending on when, if, and by how much interest rates rise in the future. We neither know the timing or the extent interest rates will rise in the future—not to mention the level of debt that will need to be refinanced. This means that the debt situation is in a sort of limbo—relatively safe for the time being, but rising into the red alert zone. “We simply do not know when, or if, it will explode.” Zumbrun says. But we do know that the Fed raised the rates a full quarter of a percent in January, 2016 and threatens new raises in its next meeting in three months.

And that federal debt does not even include local and state debt, “agency debt”, or unfunded liabilities of entitlement programs like Social Security and Medicare. In addition, there is At the end of FY 2016 the federal agency debt in the United States is estimated to be $8.24 trillion–debt issued by federal agencies and government-sponsored enterprises not included in the total debt of the federal government. At the end of FY 2016 the state government debt in the United States is expected to be $1.17 trillion, and local debt will be $1.88 trillion.

It would seem at once highly likely that the industrial and economic might of the United States will always be sufficient to maintain the American way of life, our freedoms, to pay our collective debts, educate its people, and pass all of this power and affluence on to subsequent generations. On the other hand, it seems almost equally likely—after taking a sobering look at the mounting national and personal debt Americans have—that our current near idyllic condition must be radically changed for the worse or even destroyed by an outright failure to pay even the interest on our colossal debt. There is precedent, and for the remainder of these blogposts, the author will describe national catastrophes based almost solely on the accumulation of unmanageable debt.

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