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Borrow till you drop January 9, 2017

Posted by hslu in China, Debt and deficit, Economics, Global Affair, Military, Putin, Russia, Taxes, US Government.
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As if the U.S. isn’t spending enough on defense, Navy wants to build 355 more ships in the next 30 years. The initiative is the result of Trump’s denand to re-build American’s arm forces to counter the threats from China and Russia.

Since Navy revealed its wish list, Army, Air Force and Marines will send in their’s too. Then there is Coast Guard and Special Ops. Every department wants a piece of the big pie.

America defense spending already accounts for ~45% of the total defense spending by every nation in the world.

But, where will the money come from; Medicare, Medicaid, ObamaCare, education or food stamps? Will the Freedom Caucus go along with this kind of reckless spending? Will Democrats play dead and let Trump have his way? No way.

U.S.national debt is already a whopping $20 trillion right before Obama’s moving vans clear 了the White House gate. With Trump in the WH, it is likely that U.S. annual deficit will explode to the upside and forcing America borrowing 0even more from its foreign credictors. But, will they? If they reduce their purchases, market interest rate of the weekly Treasury auctions will rise.

With the U.S. economy and labor market reportly poised to improve after spending the past 8 years in the out house, the Fed will be forced to raise the overnight lending rates. It will push all lending rates higher which will increase the interest payment on American’s national debt. 

In a rising rate environment, what the Fed should have done is to sell the short term Treasury notes and replace them with long term Bonds to lock in low rates before they go up. But, that’s not what the Fed is doing. As a result, interest payment on U.S. national debt will be out of control in a few years.

Empire comes and empire goes. The first sign of trouble usually shows up in too much debt. The empire of America is still sailing at pretty high speed but the load it carries gets heavier and heavier and the hole under the boat gets bigger and bigger. 

Do you get the picture now?

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