It has been my contention, for years now, that America has exactly zero intention of ever paying down or reducing our national deficit. There's simply no will for it, not among our venal, self-serving political leadership, not among the investment class, and...most notably...not among most Americans. We just don't care. Why would we care? It's so boring.
We have been taught, for a generation now, that you don't need to pay for the services government provides. National defense? Roads and rails? Protecting our farmers from the vagaries of the weather and the markets? Insuring the old and the poor aren't starving in the streets? That just all magically happens, paid for by pixie dust and unicorn farts.
Taxes, as our last president so pointedly put it, are for suckers. Or they're theft, as goes the line among goggle-eyed ersatz libertarians. The idea that taxes serve our common purpose is only held by fuddy duddies, fiscal conservatives, and small church pastors. What happens to a church where members don't contribute together to keep things going? The building crumbles, and the community withers away. What happens to a business that only stays open by borrowing from the bank or "investors?" It flies high until the credit runs dry, and then it dies.
Despite the witness of reason and history, we somehow believe that this doesn't apply to America.
So we borrow, and we borrow, and we borrow, and the interest on the debt now stands at over a trillion dollars annually. Dollars aren't worth as much as they were, of course, thanks to the voodoo of Quantitative Easing and our printing nearly forty percent more currency into the economy during the pandemic. Still, we're at real money here, with the total US debt now standing at 128% of our annual GDP. The arc of our debt, seen across the history of the republic, looks like something right out of Weimar Germany. "But that's only because the dollar is worth so much less than it was," you might say, to which I'd refer you back to Weimar Germany. Our charts and their charts look the same.
Long and short of it: we're going to default. When exactly is beyond my ken, but it's where we're headed. A nation that has any intent of paying off the debt wouldn't be seriously considering electing a bankruptcy-addicted drama queen for a second time, eh? We're gonna max out our credit line, then get more credit at worse rates, then max that out, and then lawyer up and refuse to pay.
So why not just default? I mean, we're America. If we say we don't want to pay, who's gonna force us to pony up? You and what army, we might say, pointing to our tanks and aircraft carriers. Good faith and credit? Who needs that when you've got nukes?
What if the folks we've borrowed from want their money back? Wall Street fat cats, Saudi Arabia, and China can get stuffed, right? They'll take pennies on the dollar, and be grateful for 'em.
Only there's a problem. Who holds the largest portion of America's sovereign debt? Who has the most to lose if...no, scratch that, when...we default?
The answer: The Social Security Trust Fund. The single largest holder of American credit is the Social Security Trust Fund. Like all debtors, we've borrowed from our future, but in the case of America, we've done so rather literally.
When we eventually default, it'll bring that whole teetering system down. The disabled and the elderly will be catastrophically impacted, but that's fine, right? I mean, the rest of us have mutual funds and retirement investments that wouldn't be impacted at all. You know that's sarcasm, of course, because the second largest holder of the debt? Mutual funds. Then the government of your state, and the government of your county.
It all falls apart. You'd think we'd be talking about it, but...nah.
This is all so boring. Yawn.
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