Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Tom Woods and Gene Epstein Discuss US Debt (aka: Our Fiscal Road to Hell)

  by    0   0

Earlier this month, the Congressional Budget Office released a 55-page report on the long-term US budget outlook. Basically, it concluded what we already know: the US government is on a fiscal road to hell.

The federal debt currently stands at the highest level since shortly after World War II. But that’s not the worst of it. If the US government maintains current policies and economic trends continue, the debt will likely double over the next 30 years, rising to about 150% of GDP. CBS News characterized it as a ‘bleak report‘:

“The explanation for the CBO’s finding is no mystery: the government spends more money than it takes in, and that gap is projected to widen, not close, as time goes on. In 2017, the annual deficit is expected to be approximately 2.9% of GDP. The CBO report found that, by 2047, the annual deficit will be 9.8% of GDP. The swelling deficits will be driven primarily by increased spending in three areas, according to the CBO: Social Security, health care entitlement programs like Medicare and Medicaid, and interest on the debt.”

The biggest expense facing the federal government in the coming years isn’t Social Security, Medicare, or military spending. It’s the interest on the debt. And that will only increase if the Federal Reserve ever gets around to normalizing interest rates. The CBO highlighted two factors it expects will continue driving debt service costs higher:

“The first, and more important, is that interest rates are expected to rise from their current low levels, making any given amount of debt more costly to finance. The second reason is the projected increase in deficits: The larger they are, the more the government will need to borrow.”

On a recent podcast, Tom Woods talked with Gene Epstein about the CBO report. Woods made the point that it’s easy just to ignore CBO projections, or blow them off as unrealistic hysterical predictions. After all, the CBO has been issuing the same warning for several years, and we haven’t seen any doomsday scenarios playing out before our eyes – at least not yet. So, by-and-large, the mainstream simply ignores these annual reports.

But Epstein said this is really just the calm before the storm. And while policy changes could kick the can down the road, or even possibly reverse the government’s fiscal direction, the current situation certainly warrants concern.

“They keep citing their 2010 study comparing the US with Greece and Argentina and showing that they’re indeed uncomfortably parallel … The reason I think the CBO is right to point out the dangers are very great – that the US is on the road to hell – is that … this is no way to run a budget. This is no way for the federal government to operate, running the serious risk of causing a major fiscal crisis in the economy.”

Woods and Epstein break down the CBO report pretty thoroughly, take apart Paul Krugman’s arguments relating to CBO projections, and even offer some potential solutions to the problem. As a bonus, Epstein explains the difference between a good Keynesian and a bad Keynesian.

The bottom line is the US is on an unsustainable financial path. When even a mainstream government organization like the CBO recognizes the problem, you know it must be real. There is still time to reverse course, but knowing politicians have a future horizon that doesn’t extend much beyond the next election cycle, doesn’t warrant much faith. It seems unlikely they will take the steps necessary to divert us from the fiscal road to hell.

 

Get Peter Schiff’s latest gold market analysis click here for a free subscription to his exclusive monthly Gold Videocast.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

[Total: 0    Average: 0/5]

Related Posts

US Threat to Cut China Off from the International Dollar May Be Empty

china flagEarlier this month, the US threatened to lock China out of the dollar system if it doesn’t follow UN sanctions on North Korea. Treasury Secretary Steven Mnuchin threatened this economic nuclear option during a conference broadcast on CNBC. If China doesn’t follow these sanctions, we will put additional sanctions on them and prevent them from accessing the […]

READ MORE →

Toys R Us Bankruptcy: It’s Not All About Amazon

Toys R Us filed for bankruptcy earlier this week, a wicked head-shot to a retail sector that’s been reeling for months. The TRU filing ranks as the second-largest US retail bankruptcy ever, according to S&P Global Market Intelligence. Toys R Us had $6.6 billion in assets at the time of filing. Only Kmart was bigger. It […]

READ MORE →

Cryptocurrency Website Says Now Is a Good Time for Gold

Even some of the biggest supporters of Bitcoin and other cryptocurrencies recognize the stability of gold. Last week was a bad week for Bitcoin. It’s price dropped significantly in the wake of a Chinese government crackdown on cryptocurrency exchanges in the country. Bitcoin’s price has recovered a bit this week, but a recent article published by […]

READ MORE →

Russia and China’s Golden Plan to Shift Economic Power East

Russia and China seem to be betting their monetary futures on gold. Their long-term maneuverings could seriously undermine the dominance of the US dollar and shift the world’s economic center of power from West to East. Russia and China buy more gold than any other countries in the world, with Russia leading the way. Over the […]

READ MORE →

Silver News: A New Administrator for the LBMA Silver Price Auction; Technological Breakthroughs

The London Bullion Market Association recently chose a new administrator for its silver price auction, and scientists have discovered a variety of rice that accumulates and stores naturally occurring silver in the soil. The Silver Institute covers these stories, and highlights several other technological innovations involving silver, in its latest issue of Silver News. [Total: […]

READ MORE →

Comments are closed.

close

Enjoy this blog? Please spread the word :)

Free Newsletter & Notification of Special Deals
RSS Feed
LINKEDIN
YouTube Channel
YouTube Channel
Google+
Google+
https://schiffgold.com/key-gold-news/tom-woods-gene-epstein-discuss-us-debt-aka-fiscal-road-hell
Call Now