Agenda-focused economists and Democratic Party spokespeople keep repeating the claim that the economy is strong. But economic power can often be a deception.
We've all seen families with big, beautiful homes, luxury cars, designer clothes, and country club memberships. At first glance, things seem to be going well, right? But if you borrow a lot of money to buy it all, you're not financially secure. They are simply creating the illusion of wealth, which will eventually catch up with them.
An economy cannot be called strong if the underlying financial foundation is full of cracks, smoke, and mirrors.
That is exactly what the US government is doing, creating the illusion of economic growth by financing it with increasing debt. From the outside, the economy appears to be thriving, which is why some economists and propagandists continue to insist that the economy is rock solid. However, a quick look at the numbers tells a different story.
The national debt is currently estimated at nearly $35.5 trillion, or more than 120% of GDP. Major financial institutions have suggested that it should be about half that amount for stability.
Under Joe Biden and Kamala Harris, credit rating agencies, often slow to reveal the depth of the fiscal crisis, have downgraded the nation's debt rating multiple times.
We currently pay more than $1 trillion a year in interest. This means that the cost of financing what we have already “bought” exceeds the cost of spending on national defense. This reminds me of Niall Ferguson's quote. “A great power that spends more on debt servicing than on defense cannot remain great for long.”
Added to this growing debt burden are huge deficits. We historically, we have a large deficit against GDP during war and emergency (or emergency events like new colonovirus), but the Biden Harris administration is in the deficit during the war, that is, The country has a deficit of approximately 7-8%, which is twice the GDP. Historical average for periods when there were no direct wars and the economy was considered to be doing well.
A deficit of more than $2 trillion becomes even more alarming given that the government received more than $5 trillion in revenue in the most recent fiscal year. Not only is this a record amount (compared to $3.46 trillion just five years ago), it also exceeds the GDP of every country on earth except the United States and China.
What the government is doing is mirroring the extravagant families mentioned above, creating the illusion of a strong economy by taking on huge debts. Deficits inflate the facade of growth at huge costs.
The government is also receiving help from struggling consumers who are taking on record levels of personal debt and dipping into their savings.
An economy cannot be called strong if the underlying financial foundation is full of cracks, smoke, and mirrors.
So economists want to change the subject and focus on the rise in home prices and stock portfolios.
This is not a strong argument being presented. Asset inflation started before the cost of living rose. While this benefits those with assets, it does nothing for salaried workers who struggle to meet basic living expenses. It only widens the gap between the “haves” and the “have-nots,” and history shows that such disparities are unhealthy.
The economy is not working well for everyone. Even when things seem to be working, they are happening at huge and unsustainable costs.
What happens if the Joneses can't keep up with themselves? That could very well cause the world economy to collapse. We need to face reality instead of accepting illusions.
