Wednesday, May 5, 2021

"We Are Dangerously Close To 'The Tipping Point'”

"We Are Dangerously Close To 'The Tipping Point'”
by Michael Snyder

"Every dollar that the federal government borrows and spends puts us even closer to a day of reckoning. Many Americans (especially those on the left) seem to think that we can endlessly spend trillions upon trillions of dollars without ever suffering any consequences. If that was true, why hasn’t any other society in all of human history ever been able to do such a thing? Unfortunately, the truth is that the United States is not immune to the laws of economics. Wildly creating money and driving up our national debt to absurd heights is inevitably going to crush our economic system. And at this point, our debt-to-GDP ratio is already higher than Greece’s debt-to-GDP ratio was when the economy of that country finally collapsed

But it’s worth noting that the US debt-to-GDP ratio - essentially a country’s debt compared to its annual economic output - was 129 percent at the end of 2020. In other words, the official US debt was nearly a third larger than the entire US economy. That is considerably higher than Greece’s debt-to-GDP ratio in 2010, when it received a bailout from the International Monetary Fund to avoid defaulting on its obligations.

Even though we are already at such a dangerous level, the Biden administration wants Congress to pass another four trillion dollar spending package… "Senate Minority Leader Mitch McConnell, R-Ky., said Monday that he did not expect any Republican senator to support President Biden’s push for a $4 trillion spending package on infrastructure and other projects.

Biden has outlined a two-part tax and spend proposal with funding for physical infrastructure projects as well as initiatives favored by his administration, such jobs training, elderly care and universal preschool. McConnell reiterated that the $4 trillion price tag was a nonstarter for Republicans, as well as some Democrats, who favor a smaller plan directly tied to infrastructure projects such as roads and bridges."

We simply don’t have the money to do what Biden wants. In fact, we didn’t have the money for any of the “stimulus packages” that have been passed since the start of the pandemic. We had to borrow every single dollar that went out in the “stimulus checks”, and now Democratic lawmakers are “clamoring” for a fourth round of those checks… "Democratic lawmakers in both chambers of Congress are clamoring for a fourth round of stimulus checks to help Americans who are still struggling financially during the coronavirus pandemic. Such a move could lift more than 7 million people out of poverty, according to a recent analysis from the Urban-Brookings Tax Policy Center, a nonpartisan think tank."

If more money is the solution, then why don’t we send out five billion dollars to every American citizen? That would certainly fix all of our problems, right? Everyone would be a “billionaire”, and then life in American would be glorious. Or not.

Sadly, the truth is that our “leaders” are systematically destroying the value of our currency and are plunging us into an abyss of debt from which our nation will never recover. I warned that once the government started sending checks directly to the American people that it would never be enough.

At this point, people are begging for more checks even though 34 percent of all U.S. income now comes directly from the federal government… Putting that number in perspective, in the 1950s and 1960s, transfer payment were around 7%. This number rose in the low teens starting in the mid-1970s (right after the Nixon Shock ended Bretton-Woods and closed the gold window). The number then jumped again after the financial crisis, spiking to the high teens. And now, the coronavirus has officially sent this number to a record 34%!

And that’s how creeping banana republic socialism comes at you: first slowly, then fast. We are not on the road to socialism. We are already there. In fact, the U.S. has been a socialist country for quite a while now. We may not use the term “socialist” to describe ourselves, but that is precisely what we have become.

As our system melts down right in front of our eyes, many in the financial community are trying to figure out how to protect themselves. For example, legendary investor Sam Zell has never been very enthusiastic about gold, but now he is suddenly changing his tune… “Obviously one of the natural reactions is to buy gold…It feels very funny because I’ve spent my career talking about why would you want to own gold? It has no income, it costs to store. And yet, when you see the debasement of the currency, you say, what am I going to hold on to?”

Other Americans are preparing for the coming meltdown in other ways. As crime rates in our cities continue to spike, more Americans than ever before are buying guns… "The FBI conducted more than 3.5 million gun-related background checks last month, a 20% year-over-year increase from April 2020, according to the latest FBI figures released Monday. Nearly 1.7 million of those gun background checks were specifically for gun purchases, according to the National Shooting Sports Foundation, a firearms industry trade group that cross references FBI data with actual sales figures provided by gun merchants to determine how many guns are sold monthly. NSSF spokesman Mark Oliva said the firearms industry sold more guns last month than in any April on record."

Deep in their guts, most people can feel that our society is rapidly approaching a “tipping point”. Nobody knows the exact moment when we will have passed the point of no return, but just about everyone can sense that it is coming. Every single day, U.S. consumers go into even more debt. And every single day, U.S. corporations continue to binge on debt as if tomorrow is never going to arrive.

State and local governments continue to pile up record levels of debt, and the federal government is literally stealing more than 100 million dollars from future generations of Americans every single hour of every single day. We should be thankful that this unprecedented debt bubble has been able to persist for as long as it has, but there is no way that this party can go on forever. Soon it will end, and that means that our current way of life will soon come to an end as well."

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