- Six distressing facts…
- “Pay up!”…
- The income secret that could literally MAKE your retirement…
Dear Reader,
On this fine June Friday, let us consider certain facts.
Fact 1: The United States government borrowed 46 cents of each dollar it spent last month.
Fact 2: The same United States government ladled out over $92 billion last month to merely service its debt — some 65% of all May personal income taxes it collected.
Fact 3: The federal budget deficit year-to-date nears $1.4 trillion… a $162 billion increase over the prior year… and is projected to scale $1.9 trillion by fiscal year’s end.
Fact 4: The national debt of the United States exceeds $36.9 trillion — some 124% of the gross domestic product.
Fact 5: Facts one through four are not sustainable.
Let us add Fact 6: There is no escape from fact five.
The cost of debt service alone will likely triple within 10 years.
It will one day eclipse Social Security… Medicare… Medicaid… and “defense” expenditures.
And the lovely illusion that debt and deficits do not matter will dash against the killing rocks of actuarial reality.
It is a grim calculus.
Large Numbers
Yet large numbers — such as 36.9 trillion — exert a dulling effect on the sober senses… like large bottles of wine.
They are mere abstractions. They lack all tethering to common experience.
A $1,000 dinner bill, for example, will freeze your blood.
It is extravagant, yes. Yet you can grasp it. You are accustomed to $1,000 expenditures.
But a trillion-dollar dinner bill will stun, gobsmack and stupefy you. It will glaze your eyes.
That is because $1 trillion ranges beyond all fathoming, all imagination.
You would laugh it away… and depart the restaurant instructing the owner precisely what he can place his bill.
Let us therefore attempt to reduce the airy abstract to solid concrete…
How to Imagine $1 Trillion
The nonprofit Employment Policies Institute places 1 trillion into this perspective:
- Let’s say someone told you to wait for something. If you waited 1,000 seconds, it’d only take about 17 minutes. If you waited 1 million seconds, you’d have to wait about 11.5 days… But if you waited 1 trillion seconds, you’d have to wait 31,688 years.
31,688 years!
Let me return to our culinary example. You inform the restaurateur he will have his money in 1 trillion seconds.
He may deem your offer fairly reasonable. It is, after all, expressed in seconds.
Will he deem 31,688 years reasonable?
Let us mix the arrangement some…
Assume for the moment you are gifted command of the printing press. Each bill that comes rolling off is yours to keep.
Yet you can only manufacture $1 bills.
Your energy exceeds even your greed.
You produce — feverishly — one $1 bill each second of each day, 365 days of the 365.
You are not content until you collar $1 trillion.
How much time will you require to print 1 trillion $1 bills? Author Bill Bryson:
- If you initialed $1 per second, you would make $1,000 every 17 minutes. After 12 days of nonstop effort you would acquire your first $1 million. Thus, it would take you 120 days to accumulate $10 million and 1,200 days — something over three years — to reach $100 million. After 31.7 years you would become a billionaire… But not until after 31,709.8 years would you count your trillionth dollar.
Have you Job’s patience? You will require his entire reservoir — and then another.
How Long Would It Take to Retire the National Debt?
Yet you turn from personal ambition. Your sole concern is the national welfare.
You therefore consecrate yourself to retiring today’s $36.9 national debt.
For ease’s sake we will round the thing to $37 trillion… which it will very soon register.
In that case, you multiply the preceding by 37. Here is what you find:
Rinsing away today’s $37 trillion debt would require 1,173,262.6 years of ceaseless toil.
Assume Almighty God grants you your threescore and 10 — 70 years upon Earth.
In 16,760.9 lifetimes, you would complete the business.
Hell, indeed, can wait. Alas… so must heaven.
The Keynesian “Multiplier” Has Taken up Division
The United States required 205 years to post its first $1 trillion debt.
It presently assumes an additional $1 trillion of debt each 100 days.
That is, what was previously the work of two centuries… is presently the work of roughly three months.
Here is progress — of a very peculiar and exotic sort.
Is economic expansion maintaining pace with this galloping debt?
It is not.
The Congressional Budget Office projects average 1.8% annual growth through 2035.
Debt races, growth creeps.
Thus the Keynesian “multiplier” — the miracle of water into wine — is reduced to a sad, sad caricature.
As I have maintained before, the multiplier has taken up division.
It remains a multiplier only in the economics departments of ivied institutions and castles very high in the sky.
Debt-to-GDP
Here the Peterson Institute paints the scene in very dark colors:
- The economic outlook for the next three decades anticipates economic growth, but that growth will not be enough to match the growth of the national debt. Over the next 30 years, real GDP is projected to grow by 66%, about a third as much as the period after [World War II].
These are of course projections.
As I am fond to state, climate is what a fellow can expect. Weather is what he actually gets.
Perhaps we are in for lighter weather than the forecast projects.
Perhaps emerging technologies such as artificial intelligence can vault us into a vastly expanded prosperity.
It is a happy possibility we must consider.
Yet we must also consider the unhappy possibility.
Of course… the spenders maintain the nation’s debt is not a menace because “we owe it to ourselves.”
Yet one anonymous scalawag is out to collect — and I am with him.
“Note to self,” he writes:
“Pay up.”
Brian Maher
for Freedom Financial News
