Why You Should Embrace The Twilight Of The Debt Bubble Age

Authored by MN Gordon via EconomicPrism.com,

People are hard to please these days.  Clients, customers, and cohorts – the whole lot.  They’re quick to point out your faults and flaws, even if they’re guilty of the same derelictions.

The recently retired always seem to have the biggest axe to grind.  Take Jack Lew, for instance.  He started off the New Year by sharpening his axe on the grinding wheel of the GOP tax bill.  On Tuesday, he told Bloomberg Radio that the new tax bill will explode the debt and leave people sick and starving.

“It’s a ticking time bomb in terms of the debt.

“The next shoe to drop is going to be an attack on the most vulnerable in our society.  How are we going to pay for the deficit caused by the tax cut?  We are going to see proposals to cut health insurance for poor people, to take basic food support away from poor people, to attack Medicare and Social Security.  One could not have made up a more cynical strategy.”

The tax bill, without question, is an impractical disaster.  However, that doesn’t mean it’s abnormal.  The Trump administration is merely doing what every other administration has done for the last 40 years or more.  They’re running a deficit as we march onward towards default.

We don’t like it.  We don’t agree with it.  But how we’re going to pay for it shouldn’t be a mystery to Lew.  We’re going to pay for it the same way we’ve paid for every other deficit: with more debt.

A Job Well Done

Of all people, Jack Lew should know this.  If you recall, Lew was the United States Secretary of Treasury during former President Obama’s second term in office.  Four consecutive years of deficits – totaling over $2 trillion – were notched on his watch.

Did he ever mention the debt ticking time bomb when he had the opportunity to do something about it?  We don’t remember ever hearing this debt bomb allusion from Lew while he was Treasury Secretary.  Do you?

We do remember, however, that as part of his job he had to place his autograph on the face of the Federal Reserve’s legal tender notes.  Did it ever occur to Lew that, in so doing, he was publicly endorsing and personally ratifying unconstitutional money with his very signature?

Most likely, it never crossed his mind.  And if it had, the illegality of the paper dollar certainly didn’t bother him enough to prompt his resignation and the pursuit of honest employment.  He did none of these things.

Instead, Lew played his part to perfection.  That is, he rolled over year after year in his quest for the expedient.  He did the job everyone wanted him to do.  He did a job well done.

Likewise, now that he’s off the clock he’s sounding the alarm on the nation’s debt problem.  According to Lew, it’s all Trump’s fault.  Not his.

As an aside, we don’t necessarily take issue with Lew’s assessment of the tax bill and ticking time bomb metaphor.  What we take issue with is the timing of his two faced utterances.

Why You Should Embrace the Twilight of the Debt Bubble Age

In truth, no one really cares about deficits and debt.  Not former Treasury Secretary Jack Lew.  Not current Treasury Secretary Steven Mnuchin.  Not Trump.  Not Obama.  Not your congressional representative.  Not Dick Cheney.

Plain and simple, unless there are political points to score like Lew was aiming for this week, no one gives a doggone hoot about the debt problem.  That’s a problem for tomorrow.  Not today.

Quite frankly, everyone loves government debt – DOW 25,000!  Aging baby boomers know they need massive amounts of government debt to pay their social security, medicare, and disability checks.  On top of that, many employed workers are really on corporate welfare.  They’re dependent upon the benevolence of government contracts to provide their daily bread.

What’s more, in this crazy debt based fiat money system, the debt must perpetually increase or the whole financial system breaks down.  Specifically, more debt is always needed to keep asset prices inflated and the wealth mirage visible.

By providing a quick burst to the rate of debt increase, President Trump expects to get a quick burst to the rate of GDP growth.  We suspect President Trump and his followers will be underwhelmed by what effect, if any, the tax cuts have on the economy.  Time will tell.

In the meantime, don’t fret about government deficits and debt.  The political leaders may say deficits don’t matter.  But they do matter.  In fact, soon they’ll matter a lot.

We’re in the twilight of the debt bubble age.  Embrace it.  Love it.  What choice do you have, really?  There’s nothing Jack Lew – or anyone else – can do about it.


Ramesees sodbuster Fri, 01/05/2018 - 12:26 Permalink

Nobody is ever going to pay the debt off, ever. Just inflate it away.

Buy things that can produce revenue using long term debt (real estate, most likely) and plan to hold them through the term of the debt. Your asset will have appreciated along with the inflation and your debt will have been debased by the inflation.

In reply to by sodbuster

pitz Ramesees Fri, 01/05/2018 - 14:02 Permalink

The problem with real estate is that the prices have been inflated so much worldwide that the use of debt to buy them is basically guaranteeing a loss.  Gold and silver, as well as productive interest rate inversely correlated assets such as railways and mines are a much better proposition to be buying with debt.

Financials, particularly insurers, will be slaughtered with higher interest rates.

In reply to by Ramesees

wmbz Fri, 01/05/2018 - 11:32 Permalink

"On Jan. 8, 1835, all the big political names in Washington gathered to celebrate what President Andrew Jackson had just accomplished. A senator rose to make the big announcement: "Gentlemen ... the national debt ... is PAID."

"That was the one time in U.S. history when the country was debt free. It lasted exactly one year".
~ Source - Planet Money

HopefulCynical wmbz Fri, 01/05/2018 - 12:50 Permalink

Why do you think the original plan, to nix Hamilton in favor of [insert diversity candidate HERE] on a fiat-Ponzi note was responded to with a smearing of Jackson's rep and burnishing of bankster-puppet Hamilton's? Does anyone think the Hamilton musical, coming out when it did and being the subject of such frenzied media fellations, was coincidental?!

Old Hickory killed Rothschild's gibsmedat generator. The (((banksters))) are still assmad about it, too.

In reply to by wmbz

NEOSERF Fri, 01/05/2018 - 11:39 Permalink

SPOT F***ING ON...and this can go on probably until the S&P hits 44 P/E like 1999 so another 33% gain in the markets before totally overheated.

What’s more, in this crazy debt based fiat money system, the debt must perpetually increase or the whole financial system breaks down.  Specifically, more debt is always needed to keep asset prices inflated and the wealth mirage visible.

RougeUnderwriter Fri, 01/05/2018 - 11:41 Permalink

A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.
The average age of the world's greatest civilizations from the beginning of history has been about 200 years. During those 200 years, these nations always progressed through the following sequence:

  • From bondage to spiritual faith;
  • From spiritual faith to great courage;
  • From courage to liberty;
  • From liberty to abundance;
  • From abundance to complacency;
  • From complacency to apathy;
  • From apathy to dependence;
  • From dependence back into bondage.
Non-Corporate Entity Fri, 01/05/2018 - 11:41 Permalink

Dr. Corsi is a proven expert in international finances and banking laws, has known Trump for 40 years, and doesn't seem too worried about the "debt". Don't buy the debt bomb hype...Trump and Corsi are for real.

Mini-Me Fri, 01/05/2018 - 11:43 Permalink

Politicians don't lack the power to end this madness, they lack the will.  Saying no to further debt means a default, an imploding dollar, and a shit load of pissed off free-loaders and bureaucrats who will discover that they have to do something meaningful and productive for the first time in their lives.

aardvarkk Fri, 01/05/2018 - 11:51 Permalink

So if a person buries/stashes a few years' worth of food on a deserted key/cay/whatever in the Caribbean and then just floats around in a sailboat, raiding the caches as needed and fishing...do you think a person could miss out on most of the pain if they time their departure right?

UnKeynes Fri, 01/05/2018 - 12:01 Permalink

Jack Lew is a doctrinaire "Neo-Keynesian", which means that he believes that we have to "pay for" tax cuts by cutting CURRENT spending dollar-for-dollar as much (or more) than the proposed tax cut.  This absolutely IGNORES the 100% PREDICTABLE result in beneficial future economic activity which WILL result from any such tax cut, and the benefits to the entire economy.

Which is the PURPOSE of his objection, to try to marshal obstruction to the idea of ANY tax cut which would further a return to economic HEALTH for which the Trump administration would receive the CREDIT.

HRH of Aquitaine 2.0 Fri, 01/05/2018 - 12:05 Permalink

Saturn moved into Capricorn on December 19/20.  Think of Saturn as the grumpy old man and Capricorn as an accountant that closely scrutinized the books, every single day.  The last time this happened was 1929.  I expect everything will be fine until Uranus moves from Aries into Taurus at the end of May.

FORD_FIESTA Fri, 01/05/2018 - 12:23 Permalink

U.S. Inflation Rate, 1900-2016 ($1)

According to the Bureau of Labor Statistics consumer price index, the dollar experienced an average inflation rate of 2.88% per year. Prices in 2016 are 2603.0% higher than prices in 1900.

In other words, $1 in the year 1900 is equivalent to $27.03 in 2016, a difference of $26.03 over 116 years.

The inflation rate in 2016 was 1.26%.

Consuelo Fri, 01/05/2018 - 12:42 Permalink



So the question remains:

What is the trigger...?

Me thinks nothing from within, but everything from without.

The populace of the United States knows nothing of prolonged, grinding hardship.  Nothing of brutal dictatorship or heavy-handed authoritarian rule (although we're being treated with hors d'oveuvres of same on a regular basis...).  Nothing of human life being valued lower than dirt.

China and Russia on the other hand...?

And dominant U.S. economy-cum strong $dollar bull-shitters think those nations have more to lose than we do in a crisis...?



gm_general Fri, 01/05/2018 - 13:02 Permalink

After the 2008 crisis private debt started balking at adding levels of new debt required to keep a positive GDP (positive that is with super fake muted inflation adjustments). So government had to pick up the slack. It was kind of sensible as government debt is cheaper than private debt, so they can eat more and pay less. Now it requires government debt to double every 8 years or so to get a boost though. Fortunately for them though some new private debt suckers besides companies have started adding lots of new debt, contributing to that 3%+ gain in GDP recently, the total debt went up by $1T in Q3, a massively high number. It can't continue forever though. There is some equation that determines what is the interest cost as a percentage of GDP that the economy can shoulder without pushing it into deep recession, it used to be about 20% of GDP, but I feel some variable changed to lower that level.