Today I'm Turning 9

The first post in my little corner of the world was on a Sunday: February 21st, 2010.  Today, I'm turning nine.

That post was my first economics rant, and Blogger tells me I've used the post tag "Economics" 481 times.  I talked about the US Debt Clock (with the abbreviation ATTOTW meaning "at the time of this writing"):

The national debt, about 12.4 trillion ATTOTW, is financed largely through the sale of long term bonds. Note the line in the middle, “US Total Debt”; ATTOTW 54.8 trillion dollars – that’s the outstanding total of these bonds and other debt instruments.

Tonight, the clock is telling me those numbers are $22.03 Trillion for the National Debt and $72.27 Trillion for the "US Total Debt".  Quite some growth, isn't it?  The national debt is up 77.7% while the Total Debt is up 31.8%. 

Now take a look at Social Security, bottom left of the debt clock. ATTOTW, the obligation is around 14 trillion dollars.
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Notice the bottom line, the total “unfunded liabilities”. At the time of this writing, it’s somewhat north of 107 ½ trillion dollars ... . This is money the .gov has promised to us citizens and is obligated to pay, but (using a method that would get any business in America thrown into prison) keeps “off the books”. If you or I did that, we would be room mates with bad men in heat.

Those numbers updated for today are Social Security $19.98 T and Unfunded Liabilities $122.7 T.  The Social Security debt has gone up by 43% in these 8 full years, while the unfunded liabilities have gone up 14%.  Comparatively, that's a better sounding increase.

It's helpful to swag that the gross domestic product for the entire world is about $60T.  We don't need to have the money for those Unfunded Liabilities today because that money isn't all due today; that includes liabilities spread out for many years to come.  Still, needing an amount that's twice "all the money in the world" is sobering.

Count me still among those who think a bad financial reckoning will happen.  One thing I've proven to myself over and over is that I simply can not predict the timing of things.  When I wrote that piece in 2010, I thought the whole collapse and recovery could be over within 10 years:

We could go into a full tilt, great depression-style collapse, but with Ben Bernanke literally promising to drop currency out of helicopters to prevent it, a Weimar or Zimbabwe-style inflation is also possible. I just know that after it’s over, in – perhaps – 10 years, there will be more sanity in government finances. My hope is that liberty survives and that my kids, and their kids, can live in a place more like the Founder’s Republic.

Today, I still think it's possible that we could have a worldwide reckoning in the next year, but being over the effects in a year seems unlikely.  Every nation in the world is playing the same games: fiat currency systems, gaming their exchange rates or using asymmetric tariffs to get advantage.  If we go down, it's likely to cause a global collapse.  To borrow the old saying, "when the US sneezes, the world gets a cold".

Image courtesy Freepik.com.

Earlier in the month, we read that Subprime auto loan defaults were spiking to the highest levels since the 2008 crisis.  Danielle Di Martino Booth, a former Fed Insider,  now CEO of Quill Intelligence and author (her Twitter feed) has long said that those defaults were a bad harbinger she kept watch for.  There are more of them out there.    

These days, I tend to take the Captain Capitalism motto to heart.  Enjoy the decline.  Does the economy have to collapse?  Of course not!  It just needs political leaders not afraid of doing the right thing; leaders who are grown ups that make tough decisions and are willing to be unpopular.  The victim society has to realize that sometimes life is tough.  The socialists have to realize that people are either free or equal, but making all outcomes equal makes no people free.  They need to learn that they're not smarter than the decisions of the market. 

In other words, not a freakin' chance we don't collapse.  There's nothing we can do to prevent the collapse and coming dark ages, so enjoy the functioning society while we have it.