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Economic Doom Loop Well Underway

Economic Doom Loop Well Underway

From 2007 through 2018, births in the US have declined by 470 thousand on an annual basis, or an 11% decline.  The US fertility rate has likewise cracked lower, from 2.12 births to 1.72, an 18% decline (2.1 births over a females childbearing years is considered zero growth).  This has resulted in 4.5 million fewer net births in the US since 2007 than the Census had estimated in 2000 and again in 2008.  This is over an entire years worth of births that never took place.  The sharp decline in births, against an anticipated rise, and a deceleration from anticipated immigration has resulted in the Census downgrading US population growth through 2050 by over 50 million persons (detailed HERE).  This decelerating growth and outright declines are happening across the globe among the “wealthy nations”, leaving little growth opportunity for the “poor nations” (detailed HERE).

The decline in US births has been particularly steep among those with the lowest incomes and assets.  From 2007 through 2016, Native American fertility rates have collapsed from 1.62 to 1.23.  Hispanic birthrates have fallen from 2.85 to just 2.1.  Black birthrates have turned lower from 2.15 to about 1.9 and white birthrates from 1.95 to 1.72.  Again, these birthrates are only through 2016 and the declines in 2017 and 2018 are significant and accelerating downward.

The reason for fast declining birthrates since 2007 in the US and among most nations globally seems to be the current ZIRP and low interest rates and Quantitative Easing programs which have the effect of inflating asset prices.  The majority of assets are held by large institutions and post child bearing age populations.  The flow through of these policies are asset prices rising significantly faster than incomes.  For example, non-discretionary items like homes, rent, education, healthcare, insurance, childcare, etc. are skyrocketing versus wages.

 …click on the above link to read the rest of the article…

Census Bureau, Treasury, EIA Detail American Insolvency

Census Bureau, Treasury, EIA Detail American Insolvency

Since 2007, US births and net immigration have consistently and unexpectedly fallen sharply.  Over the same span, US federal debt and unfunded liabilities have soared while federal tax receipts, as a percentage of the federal debt and unfunded liabilities, continue declining.  Total US energy consumption also peaked in ’07 and continues declining in contradiction to those soaring asset valuations.

Simply put, this article details an American insolvency and the ongoing attempt to print and inflate away this reality.  America has shown it isn’t afraid of (mis)using this digital printing press via collusion among the Federal Reserve, Treasury, and the Federal Government to disguise the simple truth that America is bankrupt and incapable of meeting its present and future obligations absent unlimited and unending monetization.

Demographic Development and Population Growth
According to the latest 2017 Census projection, the Census expects a near halving of population growth…or 50 million fewer Americans than it expected just 8 years earlier.  But critically, nearly all the projected declines are among the under 45 year old population while the 65+ year old population growth is still on track to swell.

Given the record low birth rates in 2017 and 2018, which came in 700 thousand annually below the ’08 Census projections, plus diminishing immigration, netting at least a half million annually below ’08 Census projections, the 2020 Census is likely to significantly further downgrade the potential for US population growth.  The impact for US economic growth, unfunded liabilities, and outgrowing personal, corporate, and federal debt is devastating.

What Happened?
From the mid 1990’s to 2007, a surge in immigration (both legal and illegal) and a rise in births resulted in significantly larger child bearing population and broad assumptions that America could outgrow its unfunded liabilities and debt issues. 

 …click on the above link to read the rest of the article…

Depopulation and Monetization…Like Peas & Carrots

Depopulation and Monetization…Like Peas & Carrots

In contemporary, post world war II times, the process of depopulation is the declining number of births pitted against significantly longer life spans of the existing population.  Given this, depopulation starts from the declining quantity of young and slowly works its way up the population.  So, as depopulation is taking place, it is tracked by declining births, and eventually by declining 0 to 64yr/old populations vs. still expanding 65+yr/old populations.  Outright depopulation only takes over once the declines among the under 65yr/olds outweigh the ongoing growth among the 65+yr/olds.

In 2011, there was one state plus Puerto Rico that experienced outright depopulation.  However, by 2018, that number has increased to 9 states (Alaska, Connecticut, Hawaii, Illinois, Louisiana, Mississippi, New York, West  Virginia, Wyoming),plus Puerto Rico that are outright shrinking (chart below).

In 2018, an additional 16 states (Maine, New Jersey, Pennsylvania, Ohio, Michigan, Indiana, New Hampshire, Rhode Island, Vermont, Connecticut, Kentucky, New Mexico, Kansas, Missouri, Wisconsin, Alabama) are now experiencing the precursor to outright depopulation; declining 0 to 64yr/old populations versus ongoing growth among the 65+yr/old population.  Simply put, half the states plus Puerto Rico are experiencing either outright or the early onset version of depopulation (under 65yr/old depopulation).

Speaking of Puerto Rico, the flood to the exits appears to be on.  The chart below shows the annual net population declines that began in 2005 & hit warp speed in 2018.  Since 2005, the Puerto Rican population has fallen about 16%!!!

But the chart below shows the change in population among different segments of the Puerto Rican population.  While the 65+yr/old population continues to stay put and grow (+3%), the ramping exodus and collapse among all segments of the under 65yr/old population is of epic proportion. 

 …click on the above link to read the rest of the article…

Economic Breakdown Starts In East Asia due to Collapsed Births & Childbearing Populations

Economic Breakdown Starts In East Asia due to Collapsed Births & Childbearing Populations

The floor under the East Asia neighborhood (consisting of China, Japan, South / North Korea, Taiwan, & Mongolia) is about to fall away.  These nations (combined) equal slightly more than 20% of the global population and consume 27% of total global energy.  From 2000 through 2016, this region (spearheaded by China) represented 48% of the global growth in total energy consumption.  So, when I tell you these countries are economically entering long-term domestic declines (or perhaps outright collapses), the impacts will reverberate everywhere.
Why domestic economic decline or collapse?  This is simply following a massive population decline which has already taken place (past tense).  The chart below details the 44% fall in births since the double peaks seen in East Asia in ’67 and ’89.  This is an ongoing birth dearth of over 14 million fewer annually, since 1995.  Now this birth dearth will be compounded by the rapidly falling childbearing population of 15 to 39yr/olds, represented by the red line below (I exclude the 40+yr/olds because they simply have so few children as to simply create distraction).  By 2035, the East Asia child bearing population will decline by 30% or -202 million (no estimation, this population is already born and will just shift forward).  Absent some seismic shift (or turning away from the inflationary urbanization underway?), births will continue to tumble and national populations will ultimately likewise crumble.
Noteworthy above is the low water mark of just 15 million births in 1996…and the muted L shaped aftermath.  Those born in 1996 will be 23 years old in 2019, or generally entering adulthood.  On an annual basis, this is a relatively sudden 50%+ decline in new adults, new potential employees, new potential parents, new potential consumers entering the economy…and this is just the start of the “new normal”.

 …click on the above link to read the rest of the article…

Monday Musings on Monetization and Markets (or Fundamentals Don’t Matter, Liquidity Does)

Monday Musings on Monetization and Markets (or Fundamentals Don’t Matter, Liquidity Does)

Being I’m not an economist nor associated with any financial or investment institutions nor do I have anything for you (dear reader) to buy or sell, I have total freedom to say what I please and freedom to share what I see.

In that spirit, I round back on the Federal Reserves balance sheet versus the curious case of excess reserves of the mega-banks.  Last week I detailed that every time the Fed has ceased adding to its balance sheet or outright reduced, the outcome has been decidedly negative for asset prices (HERE).  However, like everything, there is a little more to the story.

The chart below shows the rise in the Fed’s Treasury’s (blue line), Mortgage Backed Securities (red line), and rise plus fall of Bank Excess Reserves.  What is so interesting is that bank excess reserves didn’t begin declining when the Fed’s Quantitative Tightening began, but immediately upon the conclusion of QE in late 2014.  And excess reserves have already declined by $1.2 trillion while the Fed’s balance sheet has declined by “only” about $400 billion.

Now, if I were cynical, I’d say it’s almost like the Fed’s plan with the excess reserves was to use them like a sponge to soak up liquidity during QE and then continue releasing liquidity long after QE ended…and even well after QT was underway (actually, I’m quite cynical).  The term for this is “monetization”, something the Fed said it would “never do”.

The chart below shows the massive rise in the Fed’s balance sheet (white line), bank excess reserves (black line), and the quantity of monetization (yellow line) floating in the system just waiting to be leveraged into 5x’s or 10x’s or perhaps even 20x’s that amount.

…click on the above link to read the rest of the article…

2019 Considered…Macro Population Cycle & Business Cycle Turning Down Together?

2019 Considered…Macro Population Cycle & Business Cycle Turning Down Together?

Well, 2019 is here and it’s time to consider what sort of growth is possible.  Speaking from a macro’est viewpoint, it’s helpful to acknowledge that 90% of the wealth/ income/ savings and nearly 90% of global energy is consumed by the high and upper middle income nations of the world (those with per capita incomes ranging from nearly $90k/yr all the way down to $4k/yr).  This is the high income nations of the US/Canada, most of the EU, Japan/S. Korea, Aus/NZ, etc. plus the upper middle income nations of China, Russia, Mexico, Brazil, Turkey, Thailand, Iran, etc (as defined by World Bank…previously detailed HERE).  In 2019, this represents about 3.85 billion of earths approximate 7.7 billion population…or about half of earths population (50% consume 90%, while the other 50% consume just 10%).

So, let’s examine the primary fuel source available in 2019…the growth among the 0 to 69yr/old global consumer population.  The blue line in the chart below shows the total 0 to 69yr/old population which includes the potential working age population (20 to 69yr/olds?) and child bearing population (15 to 45yr/olds) versus the annual change in that population (red columns).  Astute chart watchers will note that population growth has decelerated by 30 million annually, a 75% reduction, since the 1988 peak.  2025 is the year growth ceases entirely and by 2035 this population is estimated to be declining by <10> million annually.

Consider that upon the completion of every business cycle since 1960 and onset of recession, (highlighted by the blacked out columns in the chart below), there was still significant growth (fuel) among the global consumer population.  That population growth coupled with the Federal Reserves rate cuts and federal governments stimulus restarted not just domestic but global economic growth.  The macro population cycle among the global high/upper middle income nations consumer base expanded anywhere from 30 to 40 million persons annually from 1960 through 1990, but growth slowed to about 20 million annually from 1995 though 2015.

 …click on the above link to read the rest of the article…

Why the Fed, Nor Any Central Bank, Can Ever Truly “Normalize”

Why the Fed, Nor Any Central Bank, Can Ever Truly “Normalize”

Last week, I highlighted that since ’00, when the Federal Reserve has ceased adding to its balance sheet or begun “normalizing” (via rolling off assets), equity markets have swooned (detailed HERE).
A simple idea today…that the end of population growth (where it matters) has long been upon us (detailed below).  Absent population growth among the nations that do nearly all the consuming, a debt based economic and financial system (to coerce ever higher levels of debt fueled consumption) can’t ultimately succeed.  That is, without population growth, assets generally don’t appreciate, homes are just shelter rather than “investments”, and debt is generally only a drag on future spending.  Likewise, without population growth, total global energy consumption is on the precipice of secular decline (detailed HERE).

In this reality, the only means of maintaining or lifting asset prices further is ever more central bank monetization (aka, centrally planned and executed counterfeiting).  Of course, this monetization scheme is doomed to fail but while it continues, the gains are privatized while the losses are socialized.  But ultimately markets (and economies, as a means of honest exchange), will get cleared.  So, without further ado, I detail the end of population growth (particularly where it matters):

1- Simply put, topline global population growth (births) ceased increasing almost 30 years ago!  Looking solely at the top-line (dashed black line, chart below), note that from 1950 to 1989, annual global births increased 73% (+57 million).  Conversely, from 1989 to 2018, annual global births have risen just 1% (+1 million).  Based on UN data and UN median (overly optimistic) future estimates.

However, the distribution of those births among the differing groupings of nations (by income) has dramatically changed from 1950 to present…and will shift further by 2050.

 …click on the above link to read the rest of the article…

A Debt Based System Can’t Succeed Without Population Growth

A Debt Based System Can’t Succeed Without Population Growth

A simple idea today…that the end of population growth (where it matters) is upon us.  Absent population growth among the nations that do nearly all the consuming, a debt based economic and financial system can’t ultimately succeed.  That is, without growth, assets generally don’t appreciate and debt is generally only a drag on future spending and activity.  The timing of the failure can be delayed and the gains privatized while the losses are socialized, but ultimately markets (and economies, as a means of honest exchange), will get cleared.  So, without further ado, the end of population growth:

1- Simply put, topline global population growth (births) ceased growing almost 30 years ago!  Looking solely at the top-line (chart below), note that from 1950 to 1989, annual global births increased 73% (+57 million/annually).  Conversely, from 1989 to 2018, annual global births have risen just 1% (+1 million/annually).  Data based on UN data and UN median estimates.

However, the distribution of those births among the differing groupings of nations (by income) has dramatically changed from 1950 to present…and will shift further by 2050.  The chart below shows the proportion of births among the high income, upper middle income nations, and China have nearly fallen in half since 1950…while the proportion of births among the lower middle and low income nations have soared.  More simply put, births among those that consume heavily (about 90% of total energy) have long since collapsed while births among those who consume relatively little (less than 10%) have soared.
But now, lets look at the sources and timing of those changing births and the implications for consumption.
High income nations births (blue line) and year over year change (red columns).  Incomes range from $90k to $12k, per capita, and these nations (US/Can, EU, Japan/S. Korea, Aus/NZ, etc.) consume 47% of total global energy.

 …click on the above link to read the rest of the article…

Seeds of Market Collapse in the Federal Reserve’s “Autopilot” Balance Sheet Normalization

Seeds of Market Collapse in the Federal Reserve’s “Autopilot” Balance Sheet Normalization

A lot of talk last week centered around the potential for the Federal Reserve to revise their planned “normalization” of holdings on their balance sheet. In particular in the post FOMC press conference, Powell said, “I think that the runoff of the balance sheet has been smooth and has served its purpose and I don’t see us changing that,”…and then “The amount of runoff that we have had so far is pretty small and if you just run the quantitative easing models in reverse, you would get a pretty small adjustment in economic growth, and real outcomes.”

Trouble is, the correlation of changes in the Fed’s balance sheet to changes in asset prices are unambiguous that Powell is either unwittingly wrong or, more likely, knowingly collapsing an asset bubble that was in large part created by the Federal Reserve itself.

Fed Held Treasury’s
To set the table, the chart below shows the total Federal Reserve holdings of US Treasury’s (blue line) and weekly changes (yellow columns) from 2003 to present.  The August ’07 through January ’09 period is noteworthy as the only period with a like Treasury holding drawdown to what we are presently witnessing.  The subsequent highlighted areas show the periods of no growth in Treasury holdings, or most recently the outright declines.  The most recent period represents just $230 billion reduction of a proposed $1 trillion total “normalization” in Treasury holdings.
Perhaps the reason equities tanked when Powell suggested that the Fed’s plan to normalize its balance sheet was on “auto-pilot” can be seen in the chart below.  Red line is the Wilshire 5000 (representing all publicly traded US equities) and yellow columns are the weekly change in the Federal Reserve’s holdings of Treasury’s.  On the five occasions (highlighted again) since 2007 that the Fed has ceased buying or outright sold Treasury’s, the Wilshire has gone into convulsions or outright cracked lower.

 …click on the above link to read the rest of the article…

Global Economy On Precipice of Secular Decline…Detailed via Shifting Population, Demographics, Income, and Consumption

Global Economy On Precipice of Secular Decline…Detailed via Shifting Population, Demographics, Income, and Consumption

Many look at global population growth as a given to greater consumption…and looking at the chart below of total global population set to hit 7.8 billion by 2020, one might be forgiven for this viewpoint.  However, the reality, when one looks into the numbers, is that growth in global consumption has ended, as I recently detailed, Investing for the “Long Run”? You May Want to Consider This.  This article explains why this population growth will no longer equate to economic or consumptive growth.

0 to 64 year old Global Population
The 0 to 64 year old global population is about 7 billion persons, as of 2018.  The chart below shows the distribution and changing size of that population from 1950 through 2050 by high income (black line…$12,000+ income per capita including the US/Canada, most of Europe, Japan, Aus/NZ, etc.), upper middle (yellow line…$12,000 to $4,000 per capita income including China, Russia, Brazil, Turkey, Mexico, Thailand, Columbia, etc.), lower middle (red line…$4,000 to $1,000 per capita income including India, Indonesia, Pakistan, Bangladesh, Ukraine, Philippines, Egypt, etc.), and low income nations (blue line…less than $1,000 in per capita income including most of sub-Saharan Africa, Afghanistan, Haiti, etc.).  The simple takeaway should be that the 0 to 64 year old populations among the high and upper middle income countries have ceased growing and will now be shrinking, indefinitely.  All 0-64 year old population growth from now forward will be among the lower middle and low income nations of the world.  So what?

Income by Age of Head of Household
Why the focus on 0 to 64 year old populations?  Average income and expenditures vary greatly by the age of the head of household.

…click on the above link to read the rest of the article…

No Seller, Let Alone China, Can Disrupt US via Selling US Treasury’s…But the “Why” Ain’t Good

No Seller, Let Alone China, Can Disrupt US via Selling US Treasury’s…But the “Why” Ain’t Good

I often read that China may retaliate against US trade sanctions by further decreasing their US Treasury holdings, sending Treasury yields significantly higher, thus blowing out US deficit spending on interest payments.  Trouble is, Chinese Treasury holdings peaked in 2014 (on an annualized basis) and have been declining since.  The Chinese have not only ceased accumulating US Treasury debt, despite continued record trade surplus’ with the US resulting in significant dollar surplus’, but have been decreasing their holdings.  All this, according to the Treasury International Capital (TIC) system.

But this postulation that the Chinese could wound the US via selling a portion (or all) of its Treasury holdings (as Russia recently did) is submarined by the recent actions of the Federal Reserve.  I say this based on the magnitudes greater accumulation and subsequent dumping of specific maturities of US Treasury debt done by the Federal Reserve.

The Federal Reserve accumulated almost $800 billion in 7 to 10 year US Treasury debt (red line, chart below) from 2009 to 2013, and then subsequently dumped $600 billion from early 2014 through the most present August 2018 data.  And the impact on the 10 year yield (blue shaded area, chart below)…essentially zero.  Yes, while the Fed rolled off and/or sold off 7 to 10 year holdings, they were busy buying short term debt.  But this still meant someone had to step up in duration and buy all that longer duration debt the Fed no longer wanted.

To put the relative size of China’s 7 to 10 year holdings in perspective to the Fed’s like holdings, the chart above estimates that a third of Chinese Treasury holdings (likely an overestimation) were of the 7 to 10 year variety (gold line).  The Fed has already rolled off / sold off 1.5x’s more 7 to 10 year debt than the Chinese even have.  

…click on the above link to read the rest of the article…

America’s Greatest Crisis Upon Us…Debt to GDP Makes It Clear

America’s Greatest Crisis Upon Us…Debt to GDP Makes It Clear

America in the midst of its greatest crisis in its 242 years of existence.  I say this based upon the US federal debt to GDP (gross domestic product) ratio.  In the history of the US, at the onset of every war or crisis, a period of federal deficit spending ensued (red bars in graph below) to overcome the challenge but at the “challenges” end, a period of federal austerity ensued.  Until now.  No doubt the current financial crisis ended by 2013 (based on employment, asset values, etc.) but federal spending continues to significantly outpace tax revenues…resulting in a continually rising debt to GDP ratio.  We are well past the point where we have typically began repairing the nation’s balance sheet and maintaining the credibility of the currency.  However, all indications from the CBO and current administration make it clear that debt to GDP will continue to rise.  If the American economy were as strong as claimed, this is the time that federal deficit spending would cease alongside the Fed’s interest rate hikes.  Instead, surging deficit spending is taking place alongside interest rate hikes, another first for America.
The chart below takes America from 1790 to present.  From 1776 to 2001, every period of deficit spending was followed by a period of “austerity” where-upon federal spending was constrained and economic activity flourished, repairing the damage done to the debt to GDP ratio and the credibility of the US currency.  But since 2001, according to debt to GDP, the US has been in the longest ongoing crisis in the nations history.

But what is this crisis?  The chart points out the debt to GDP surges in order to resolve the Revolutionary war, the Civil War, WWI, and WWII. But the debt to GDP surges since 1980 seem less clear cut.  But simply put, America (and the world) grew up and matured, but the central banks and federal government could not accept this change.

…click on the above link to read the rest of the article…

“Will The Real Global Economy Please Stand Up”

“Will The Real Global Economy Please Stand Up”

To say I’ve become skeptical of “markets” and their movements is probably an understatement.  However, rather than waste more time trying to make sense of these skewed markets, I believe real economic activity is more accurately represented by changing populations and their energy consumption.  So today, we’ll play a little “To Tell The Truth”, an old television show where two imposters could lie but one contestant had to tell the truth.  The celebs would ask questions and then attempt to pick which contestant was the real deal.  I’ll lay out the data and let you determine how well this lines up with non-stop narrative of record market valuations and stories of strong economic activity.

I’ll start with Japan and work my up progressively larger.  The population data is from the UN and I use the 15 to 60 year old population to avoid speculation about changing birth rates over the next fifteen years.  Energy data is from the US Energy Information Administration (EIA) and their projections using their IEO’17 (International Energy Outlook, 2017) models.

Japan

  • Core population peaked 1993, declined 14% since (as of 2015), will decline 22% by 2030 and 33% by 2040.
  • Energy consumption peak 2006, declined 17% since
    • My est. -25% by 2030, -30% by 2040
    • IEO’17 est. +3% by 2030, unchanged by 2040.


Germany

  • Core population peaked 1995, declined 5% since, will decline 17% by 2030 and 19% by 2040.
  • Energy consumption peaked 2006, declined 14% since, will decline 22% by 2030 and 28% by 2040.  IEO’17 data will be wrapped together for EU below.

Italy

  • Core population peaked 2005, declined 4% since.  Will decline 17% by 2030 and 25% by 2040.
  • Energy consumption peaked 2005, declined 17% since.  I estimate declines of 26% by 2030 and 32% by 2040.

Greece

  • Core population peaked 2006, declined 5% since.  Will decline 15% by 2030, 29% by 2040.
  • Energy Consumption peaked 2007, declined 27% since.  I estimate declines of 40% by 2030, 47% by 2040

…click on the above link to read the rest of the article…

What Patient Zero, Japan, Can Tell Us About China & The Developed World At Large

What Patient Zero, Japan, Can Tell Us About China & The Developed World At Large

To see the future, sometimes you have to look to the past.  Japan is patient zero in the global epidemic of slowing growth and although Japan was assumed to be the emerging world power in the ’80’s, we now know better.  The title of emergent power now rests with China…and for the same reasons it didn’t work out for Japan, it won’t work out for China.  To make my case, I’ll use UN population data coupled with EIA total primary energy data (cumulative energy consumption from coal, oil, natural gas, nuclear, and renewables), plus EIA fore-ward looking forecast data (the International Energy Outlook, 2017 or IEO’17).

First, Japan.

The Japanese 15 to 60 year old population peaked in 1993 and declined over 15% by 2018.  The core population will continue falling, down 24% by 2030, and 34% by 2040.  Energy consumption growth began stalling in 1997, consumption peaked in 2006, and has declined 17% from the ’06 peak through 2015. However, the EIA estimates the falls seen since ’06 will cease shortly and energy consumption will stabilize through 2040.

The chart below breaks down the annual change in the 15 to 60 year old Japanese population versus the annual change in energy consumption.  The twin deceleration should be fairly obvious.

Below, the actual data as above versus the EIA IEO’17 forecast.  While the core population will fall at an even faster rate, the EIA forecasts energy consumption will stabilize (against all logical rationale)?!?
To round out the picture, the Japanese 15 to 60 year old population versus 60+ year old population.  All growth is currently in the 60+ population until it too is projected to peak in 2040 and begin declining.

What does this mean for China?

…click on the above link to read the rest of the article…

Who Is It That Wants to Buy Trillions of US Treasury’s???

Who Is It That Wants to Buy Trillions of US Treasury’s???

As of the latest Treasury update showing federal debt as of Wednesday, February 15…federal debt (red line below) jumped by an additional $50 billion from the previous day to $20.76 trillion.  This is an increase of $266 billion essentially since the most recent debt ceiling passage.  Of course, this isn’t helping the debt to GDP ratio (blue line below) at 105%.

But here’s the problem.  In order for the American economy to register growth, as measured by GDP (the annual change in total value of all goods produced and services provided in the US), that growth is now based solely upon the growth in federal debt.  Without the federal deficit spending, the economy would be shrinking.

The chart below shows the annual change in GDP minus the annual federal deficit incurred.  Since 2008, the annual deficit spending has been far greater than the economic activity that deficit spending has produced.  The net difference is shown below from 1950 through 2017…plus estimated through 2025 based on 2.5% average annual GDP growth and $1.2 trillion annual deficits.  It is not a pretty picture and it isn’t getting better.

Even if we assume an average of 3.5% GDP growth (that the US will not have a recession(s) over a 15 year period) and “only” $1 trillion annual deficits from 2018 through 2025, the US still continues to move backward indefinitely.

The cumulative impact of all those deficits is shown in the chart below.  Federal debt (red line) is at $20.8 trillion and the annual interest expense on that debt (blue line) is jumping, now over a half trillion.  Also shown in the chart is the likely debt creation through 2025 and interest expense assuming a very modest 4% blended rate on all that debt.

…click on the above link to read the rest of the article…

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
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Olduvai
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Olduvai II: Exodus
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Olduvai III: Cataclysm
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