note: the title of this post comes from a headline, it is not my feeling.

Last week a very well known and respected money guy talked about the national debt, now approaching $37trillion. He made a good point…people have predicted economic doomsday for decades…and it hasn’t materialized.

While he acknowledges that the debt is a serious concern, he doesn’t believe it’s about to cause the economy to crash. “Is it concerning? Yeah, it’s concerning. But is it going to cause a crash? Apparently not,” he said. And he is right…so far. And he will be right, until he’s not.

What?

Back in July 2021 I explained what Modern Monetary Theory (MMT) is. A part of MMT is never-ending national debt. Essentially, MMT is where a sovereign country like the U.S. can spend, tax, and borrow in a fiat currency that they fully control; and that country is not fiscally constrained by revenues when it comes to federal government spending. Yes, it means the government can borrow ad infinitum…without end or limits.

So was this economic guru and genius right? Well, sort of, kinda, but not really…almost.

He is right in that as the US federal government wants to spend more money, it simply borrows it (known as Treasury Notes). So what happens if there are no more buyers of Treasury Notes? That’s no longer a problem. Now, the Federal Reserve, simply buys the notes if there are no other buyers. Ah, how do they pay for those notes? They have the US Treasury print money. Well, technically the US Treasury creates it digitally. The Treasury then transfers the digital money to the Federal Reserve who then buys the Treasury Notes with that digital money.

If it were anyone other than the Federal Reserve and the US Treasury…they would all be spending life in prison for fraud. The point is…the government can borrow an unlimited amount of money to pay for goods and services.

So what are the problems, if any?

Oh, wow:

#1 – The annual “debt service” cost. The amount of money now required to pay the interest on all of those Treasury Notes exceeds $1trillion. Yeah, more than $1,000,000,000,000 (about 15 – 20% of the entire US government budget). Well, theoretically that isn’t too much of an issue…the country can just borrow the money to pay the interest on the money it borrowed. Yes, you read that right.

Who gets those interest dollars? 27% goes to the Federal Reserve, 24% goes to foreign countries and investors.

Yeah, imagine that…over 50% of the interest on US Treasury Notes goes to private bankers (Federal Reserve) or to line the pockets of foreigners (think “global elites”). No wonder that the US government loves to borrow money so freely to spend money so freely!

The way I see it…it is a problem that so much of US taxpayer dollars go to feed the greed of private bankers and foreigners.

#2 – The bigger problem is inflation. One way inflation is caused is when too many dollars chase to few goods and services. As the US federal governments spends trillions of dollars each year, much of which it has to borrow, it floods the economy with ‘too many dollars’ it drives up the cost of everything for the average citizen.

#3 – Speaking of average citizen…since federal workers make about 2.5 times more than the average American worker it creates an ‘elite class’ with government workers. Yup, the federal government simply borrows more and more money to fund the ruling class (a.k.a. elite class – government employees) and the average Americans pay the interest on that borrowed money…in addition to all the taxes the average American pays!

#4 – Diverting money from the private sector. Since the federal budget comes from taxpayers, or is borrowed, it takes money out of the private sector and diverts it to the government who then spends it on what they prioritize. Think if there was no government borrowing, no government interest being paid, and all that money stayed in the hands of US citizens who actually earned it. Yeah, $2trillion borrowed in 2024. Think of this way…if the US government didn’t borrow any money in 2024 that would have put over $6,000 in the hands of every man, woman, and child in the United States. Yeah, imagine the average family of 4 having $25,000 extra to spend on what they want/need to spend it on!!

#5 – The US military spends just at a $1trillion per year to fund America’s endless wars and military adventurism. And they can do that because once again…the US simply will borrow the money to fund those wars. Just imagine for a minute if the US only funded the military for defensive purposes…your know, actually protecting the homeland. That would put another $1,500 in the hands of every man, woman, and child in the United States.

So where does all this interest paid and borrowed money go? Here is a great list:

• The huge military-industrial complex (includes global foreign companies).
• Private bankers (via the Federal Reserve).
• Foreign governments and investors.
• A bloated ruling class of federal government workers.

So yeah, there are problems with the federal government borrowing money to fund its operations. But there is a bigger issue here. Remember I mentioned Modern Monetary Theory (MMT) earlier?

A little tidbit of information, an historically proven fact…any government and/or empire that has ever adopted MMT has failed and crashed. Ooooppppssss!

And then there is the vulnerability issue. What do you think happens if one day the 24% of US debt owned by foreign governments gets flooded out onto the bond market? Yup…crash! Or what if those country’s leaders just threaten the US to dump the notes on the open market? Yo think that gets them a bit of influence in Washington?

And then there is the Treasury Note holdings by the Federal Reserve. What happens if the private bankers who run the Federal Reserve decide one day they don’t like the way a President is calling the shots? Do you think they might pick up the phone and share with the President what happens if the Federal Reserve dumps its holdings on the market?

Bottom line…all this national debt, government spending/borrowing, and interest on the national debt is just fine…till it’s not. But when it hits the “it’s not” part…the pain is real, the crash is severe, and people suffer and die. Why? Because the dollar becomes worthless and no one is left with any money that’s worth a damn.

So take a minute a decide for yourself if the national debt is an issue for you or not. I have already made up my mind.

And please…don’t try and make a case that the national debt can be paid off. It can’t. There is no realistic way that the US national debt can be paid off…period!

Lastly…when these talking head experts vomit spew their guru knowledge…well, think it through for yourself.

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Related Articles –

• MMT what it is and why we should be VERY worried!
• Heads-Up…the Economy!
• SitRep – 3/1/2021
• The Fall of the U.S. Empire

 

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