Friday, October 28, 2016

U.S. Debt & Deficit Growth
Is Insane & Unsustainable
The U.S. Government Is Putting 
More & More Spending 
Under "Off-Balance Sheet"
John Mauldin*: "You are probably aware that the U.S. budget deficit jumped to $590 billion for fiscal 2016. What you might not be aware of is that U.S. government debt rose by $1.4 trillion last fiscal year. That difference between the deficit and debt increase is an enormous number, and I bet you’re just as curious as I was to know what in the heck we spent that additional $800 billion on .. The increase in debt has exceeded deficit growth in 27 of the last 30 years, and the trend is now for larger 'off-budget,' debt-swelling items each year .. You have to remember that we are subsidizing, either partially or completely, 25 million people under the Affordable Care Act. The rising premiums for those people will indeed mean an increase in the deficit. Within a few years that could add $200 billion to the deficit unless we somehow or other figure out how to control healthcare costs. Care to take the over or the under on whether we can do that? The present trend certainly says that betting that we will figure out how to manage healthcare costs is a losing proposition. So what will rising government debt do to future growth?"
Dr. Lacy Hunt: "If new fiscal measures are enacted, debt-to-GDP ratios will be increased and will further depress growth, thereby causing interest rates to move lower, not higher. In a highly incongruous development, governments will therefore be able to finance their new debt offerings at lower costs. While this may seem to be a good thing for the individual governments, the great majority of their constituents will be harmed. The higher debt will set off a chain reaction of unintended consequences. The 70-75% of the households that receive the bulk of their investment income from interest bearing accounts will have fewer funds for retirement. This, in turn, will cause older members of the workforce to work longer and save more, blocking job opportunities for new entrants into the labor force. Thus, fiscal decisions, which result in higher deficits, are likely to perpetuate and intensify our underlying economic problems .. Unfortunately, the 2017 economic horizon is clouded by the rising likelihood of further increases in government spending and debt. The inevitable result will be slower economic growth and declining interest rates, a pattern similar to the 2016 experience."
LINK HERE to the Report in PDF
Click "Mauldin October 26" to download Mauldin's letter (may need to provide your email address), or hit "View Fullscreen" at the bottom next to the Scribd logo to enlarge viewing .. John Mauldin, Best-Selling author and recognized financial expert, is also editor of the free Thoughts From the Frontline that goes to over 1 million readers each week. For more information on John or his FREE weekly economic letter go to: http://www.frontlinethoughts.com/learnmore

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