This article was published by The McAlvany Intelligence Advisor on Wednesday, October 3, 2018:
It wasn’t until the death toll following last Friday’s Indonesian earthquake and tsunami reached 800 that the global media began to make it front page news. By Tuesday the toll exceeded 1,200, with many more still buried in dozens of collapsed buildings in the towns of Sigi and Balaroa. Some 62,000 citizens have been displaced either because their homes have become uninhabitable or were flattened.
At least they had some advance warning, but there was little they could do. Most were caught off guard, unprepared. As of this writing, many have gone four days without food.
What was unnerving is the report from the U.S. Treasury just three days later giving advance warning of the economic tsunami preparing to roll over the American economy. Precious few are taking heed. On September 20, the Senate passed another spending bill – $854 billion – calling it a “stopgap” bill to pay the government’s bills until after the midterm elections. It passed 93-7.
This brought the national debt of the United States government to $21.5 trillion, up from $20.2 trillion a year ago. The Treasury report for the fiscal year that ended on September 30 showed an increase in the national debt of $1.3 trillion, year over year, or more than six percent. Unless federal spending is reined in, that means that the national debt of the United States government will double – to $43 trillion – in less than 12 years.
Six of the Senators opposing the bill were Republicans (Bernie Sanders was the only Democrat opposing). One of them, Senator Rand Paul (R-Ky.), is the son of former House member Ron Paul, a Republican from Texas.
In July, Ron Paul pointed out that the national debt now exceeds the total economic output of goods and services in the United States in a year, but even that isn’t the whole story: “Social Security and Medicare trust funds will both soon be bankrupt, putting additional strains on the federal budget [and] on American taxpayers.”
That’s because the “reserves” in those trust funds have already been spent by the federal government and have been replaced with promissory notes to be redeemed by the Treasury in the future. The future is now, and as those reserves are tapped, those promissory notes will be redeemed by the Treasury, adding more billons to the national debt.
FirstPost.com said that “a series of natural disasters in Asia have led to massive economic damage [and] human loss,” explaining:
A recent string of natural disasters, the latest a deadly earthquake and tsunami in Indonesia, have exacted a severe toll in economic damage and human lives throughout Asia. The UN … says up to 1.6 million people could be affected by the magnitude 7.0 earthquake and tsunami it created [on] Friday in a central region of Sulawesi Island.
Not only was the tsunami unexpected, allowing no one to escape, but the toll exacted was far higher than originally estimated.
Such disasters tend to hurt the poorest people in the poorest countries most severely … annual losses from disasters like earthquakes, tsunamis, and typhoons average $250 billion to $300 billion.
When the U.S.’s national debt becomes unsustainable, everyone will suffer losses that make the Indonesian suffering pale into insignificance. As Paul predicts:
When the economic crisis hits, there will be no choice but to cut spending and raise taxes. Of course, Congress is unlikely to raise taxes or cut benefits. Instead, it will rely on the Federal Reserve to do [its] dirty work via the inflation tax. The inflation tax is the worst type of tax because it is both hidden and regressive [hitting the poorest the hardest].
The escalating national debt will have unintended consequences before that day of reckoning, says Paul:
Increasing federal debt will also put pressure on the Federal Reserve to keep interest rates low to prevent federal interest payments [now running close to $400 billion annually] from skyrocketing.
Eventually, the Fed’s monetization of the debt [buying government bonds using newly created money] will lead to hyperinflation [see Venezuela] and a rejection of the dollar’s world reserve currency status.
The question is when, not whether, the welfare-warfare state and the fiat [phony paper] currency system will end.
Unlike the unhappy Indonesians who were caught unawares by the tsunami that engulfed their island, Americans have little excuse. People like Ron Paul and others have been warning them for years of the day of reckoning that is coming.
With the latest report from the Treasury, the tsunami can clearly be seen on the horizon. But how many are looking?
TreasuryDirect.gov: The Debt to the Penny and Who Holds It