Understanding the US Debt Crisis: Misallocation and Spending Issues

The U.S. debt crisis is exacerbated by unchecked government spending and economic distortions, leading to a widening wealth gap.

### Understanding the US Debt Crisis: A Deep Dive into Spending and Economic Distortions
* 💰 The US federal debt has **surged dramatically**, increasing from approximately **$9 trillion in 2009** to around **$35 trillion today**, highlighting a **severe spending crisis**.
* 💸 The government, likened to a "**drunk, insolvent Uncle Sam**," spends significantly more than it collects in taxes, leading to a reliance on **selling treasuries to cover the deficit**.
* 🌍 Foreign buyers, including entities like Saudi Arabia, are increasingly purchasing US treasuries, which allows the government to continue its **overspending habits**.
* 📈 The deficit, which has reached **unprecedented levels**, is expected to worsen, particularly if a recession occurs, leading to even more **treasury issuance**.
* 💵 Despite the alarming debt figures, demand for treasuries remains strong due to the **global monetary system's structure**, which encourages banks and corporations to **hold these assets**.
* ⚖ However, this reliance on treasuries creates economic distortions, as government spending **misallocates resources** and exacerbates issues like **homelessness and crime**.
* 🏙 The wealth gap continues to widen, with **asset owners thriving** while the middle and lower classes suffer, revealing a **troubling economic landscape** reminiscent of a **third-world country**.
* 🔍 Ultimately, the real crisis lies in **government spending** rather than the debt itself, necessitating a **reevaluation of fiscal policies** to restore economic balance and prosperity.

The US Debt Crisis Is Far Worse Than You Think

This channel will help you build and protect wealth through investing, real estate and an extreme dose of the economic RED PILL.  By using a very UNIQUE strategy I've increased my personal freedom and thrived financially in a world of out of control central banks and big governments.  And now I'm going to teach you to do the same.  

I'm NOT a guru, I'm a former entrepreneur, turned investor, who has years of experience investing in multiple countries.  My goal is simply to share my secrets of success with you.     

So what are you waiting for?  SUBSCRIBE NOW!! 

George

SUPPORT THE CHANNEL!  1.  Donate via PayPal  2.  Use our Amazon affiliate link  
 
https://paypal.me/GeorgeGammonSupport?locale.x=en_US

https://amzn.to/2Duz8CE

Follow me on Twitter! https://www.Twitter.com/GeorgeGammon


George Gammon

The US federal debt is rapidly increasing, leading to concerns about a potential debt crisis for the next president.

The government's spending exceeds its tax revenue, forcing it to borrow money and sell treasuries to the private sector and foreign buyers.

This cycle of overspending has intensified over the past 15 years, contributing to the current crisis situation.

national debt has increased from $9 trillion in 2009 to $35 trillion today, with the last 15 years accounting for an additional $25 trillion.

This rapid growth is driven by government deficits, with spending consistently exceeding tax collections.

The situation is expected to worsen, with a potential recession leading to even more government spending and an explosion of treasuries and debt.

Treasury Demand on the Global Monetary System

The Federal Reserve's potential intervention in buying treasuries from the government could lead to inflation and a crash of the U.

treasuries is minimal compared to the influence of banks and multinational corporations in the global monetary system.

These entities aim to eliminate risk through various strategies, but they face challenges such as interest rate risk, credit risk, and foreign exchange risk.

The Role of Treasuries in Risk Management

Corporations buy treasuries to eliminate credit and interest rate risk, as they are denominated in government-created currency units.

Banks, with dollar liabilities, also turn to treasuries but face interest rate risk, which can lead to negative cash flow and potential bankruptcy.

The dollar's status as the world reserve currency and its liquid derivatives markets allow banks to hedge their interest rate risk, making US treasuries the only viable asset for managing dollar liabilities.

The Profit Strategy of Banks with Treasuries

Banks borrow money at a low interest rate and invest in Treasuries at a higher rate, pocketing the spread.

When inflation rises, they lower the interest paid to depositors, increasing their profit margin.

The demand for Treasuries often comes from entities indifferent to the U.

inflation rate, and banks face the challenge of volatile asset values when depositors withdraw their funds.

The Impact of Gold and Treasuries on Financial Stability

A $10 billion gold asset losing value to $9.

5 billion creates a $500 million shortfall, risking bankruptcy for those with dollar liabilities.

A global dealer, profiting from transactions with banks and corporations, anticipates economic slowdowns and loads up on treasuries to lend them to banks in need of collateral.

This rehypothecation strategy increases demand for treasuries and creates a financial cycle, raising questions about the severity of the US debt crisis.

The Impact of Government Spending and Debt

debt has increased by $25 trillion in 15 years, but the Treasury yield has decreased, indicating higher prices for Treasuries.

The speaker argues that there is no debt crisis, but rather a government spending crisis, leading to misallocation of resources and economic distortions.

These distortions are evident in the drastic changes observed in cities like Tucson, with increased homelessness and crime, attributed to government intervention in the economy.

The Impact of Government Spending on Wealth Inequality

Government actions, including lockdowns and supply chain disruptions, have led to a significant increase in inflation and a widening wealth gap.

While the average person's purchasing power has decreased, those who own assets have seen their wealth grow.

The economic distortions caused by government spending are driving the U.

towards a crisis, with the middle and lower classes experiencing an economic depression similar to the 1930s.