The Unsustainable Path of Excessive Debt
Jed Clampett and his family may have been uneducated hillbillies, but they had more common sense than most of their Beverly Hills neighbors.
They’ve also produced some of the most accurate assessments about bankers and politicians I’ve ever heard:
Granny: “Politicians are a rich man’s tool.”
Milburn Drysdale: “When I give my word, I expect you to keep it.”
Jed Clampett: “He was such a liar then, he used to have to get somebody else to call his dog fer him.”
The swamp rats in Washington D.C., have always had a flexible relationship with the truth and are quick to blame someone else — anyone else — when something goes wrong.
That includes the numbskulls at the Federal Reserve.
Jerome Powell’s Blame Game
Federal Reserve Chairman Jerome Powell is worried, really worried, about the economy.
Not only has the Fed cut interest rates three times this year, but the Fed also recently launched its largest ever bond-buying program, buying over $300 billion in Treasury securities in just the last 2½ months.
Your tax dollars at work!
The Federal Reserve’s balance sheet has ballooned from $3.76 trillion to $4.05 trillion in less than 90 days.
Powell and his Fed buddies know they’re running low on monetary bullets and will be close to powerless when the next recession arrives.
And like Mr. Drysdale of The Beverly Hillbillies noted, Powell is already pointing the finger at someone else — namely the U.S. Congress.
Three weeks ago our national debt hit a record $23 trillion and Powell used that as an opportunity to pass the buck:
The federal budget is on an unsustainable path, with high and rising debt… The debt is growing faster than the economy and that is unsustainable.
Over time, this outlook could restrain fiscal policymakers’ willingness or ability to support economic activity during a downturn.
This is coded language that means Congress will soon need to save the economy because the Federal Reserve will no longer be able to:
“Nonetheless, the current low-interest-rate environment may limit the ability of monetary policy to support the economy.”
That $23 trillion national debt is only going to get bigger. The budget deficit will hit $984 billion in fiscal 2019, the highest in seven years, and it’s expected to top $1 trillion in fiscal 2020.
That’s what happens when you spend more than you make.
The Treasury Department has already reported the federal deficit reached $134 billion in just the first month of fiscal 2020!
Politicians on both sides of the aisle have given up on fiscal responsibility. It’ll only get worse if Medicare for All or the Green New Deal becomes a reality.
Here’s my point.
The more irresponsible Washington D.C., becomes, the more important it is for YOU to be responsible with your own finances.
Now more than ever before you need to pay down your debt, build up a rainy-day emergency fund and spend less than you make.
In short, behave like a responsible adult and not like the spendthrift clowns in Washington D.C.