The above got me to thinking. Or at least what passes for thinking for a person my age. It’s very hard for me to keep up at this point so prepare yourself for some obvious stuff in the following:
As I already posted elsewhere to pattyb53, the debt service on our current debt would capsize us at the interest rates she mentioned. But what about the debt itself in the first place, perhaps $30T currently plus over $100T in unfunded future promised obligations. And that does not include state and local government debt.
Given the current political climate, those debts will never be paid off. Why not? Because there is not the political will in America to do so. Instead the political will is further to INCREASE the debt!! So what lies ahead?
I think we’re already getting a dose of our future, and Americans do not like it one bit. Regardless, the only way to deal with such overwhelming red ink is to DEVALUE the dollars in which it is denominated. $30T sounds large, but note that little dollar sign in front of the 30. As those dollars become increasingly worthless, the burden of the debt itself shrinks. Consider:
At present government nominally has as “job one” the reduction of inflation. This is BS at two levels. First, only inflation can deal with our massive debt. Second, inflation reduction does not at all mean return to the status quo ante.
Said another way, inflation reduction targets temporary reduction in the growth of prices. But it does not address return to the price levels of two years ago. To do that would, from where prices are today, would require deflation. And trust me, deflation is anathema at the Fed. They go out of their way to avoid it. So while inflation might be reduced temporarily, especially just in advance of an election, it will continue because it is the only way government can deal with so much debt.
“No tax increases for those making less than $400,000” is obviously a total fraud and complete BS. Inflation, AKA dollar devaluation, is the unkindest and most unfair tax of all, impacting without mercy as it does Americans least able to pay. But it is the only answer to so much debt.
In the face of the above, and on the topic here, I’m not having a lot of luck discovering a way out. You need to be owning things which do not deteriorate and whose prices, expressed in dollars, increase as the value of the dollar collapses. That’s a tough assignment. About the best I’ve been able to do is to stay even, and even accomplishing that takes a lot of effort. I don’t have answers. I wish I did.