Fisher is wrong - for the most fundamental of reasons. The debt is *NOT* 23 trillion dollars. It is more like 150 trillion dollars, with some estimates going as high as 250 trillion dollars.
The reason for his mistake is that, while publicly traded companies are required to include the present value of future obligations when they report on their debt, the government exempts itself from this. That means that it doesn't make any mention of what it owes social security and Medicare beneficiaries. Those obligations are immense, underfunded and coming due now as baby boomers increasingly hit the magic age of 65.
Ironically, the following quote which comes far closer to the truth is also from USA Today. Does Fisher not get it, or is he a willing participant in the feel-good, pro-government lies liberal journalists spread every election cycle?
The cause of this coming debt deluge is no mystery: Social Security and Medicare are projected to run a staggering $82 trillion cash deficit over the next 30 years.
- David Schoenbrod and Brian Riedl, Opinion contributors, USA Today, August 15, 2018 - https://www.usatoday.com/story/opinion/2018/08/15/national-debt-growing-social-security-medicare-entitlement-reform-column/914488002/
September 22, 2019
Will America's massive debt really doom us?
by Ken Fisher, Special to USA TODAY
The U.S. national debt and deficit have become buzzwords for the 2020 election. But what's the difference? Just the FAQs, USA TODAY
America’s massive debt will doom us. That’s common wisdom, but wrong.
In Manhattan, a giant clock displays not only the total — almost $23 trillion for now — but your share, ticking up every second. Pundits say it's trouble. But U.S. debt fears have lurked forever and those troubles are no closer now than decades ago. In some ways, they’re further off.
Here’s how to see that, using tools that show when debt truly becomes problematic.
The $23 trillion total seems jaw-dropping, but says little about what really matters: How readily Uncle Sam can pay the piper.
Pundits cite our debt-to-GDP ratio as evidence of a debt addiction. With $21 trillion of GDP, that ratio is 103% — lower than Italy’s and Japan’s, but higher than Germany’s and Britain's. Debt topping GDP sounds dire. But that's misleading. The federal government itself owns more than a quarter of U.S. debt, money the government essentially owes itself. It’s an accounting entry. As an asset and a liability, it effectively cancels out. Otherwise, net outstanding public debt is $16.7 trillion— 76% of GDP. That’s still unimportant.
America’s massive debt will doom us. That’s common wisdom, but wrong.
Why? Because debt-to-GDP is apples-to-nonsense. Debt piles up year after year. GDP is an estimate of economic activity in a single year, ignoring long-term assets that back a country’s liabilities. America’s hard assets via Federal Reserve data — business equity, real estate, fixed income holdings, cash — amount to $175.3 trillion, 10 times public debt. But again, that's irrelevant.
Government solvency isn’t about paying off debt. It’s about affording interest payments and rolling over maturing bonds. Currently, annual U.S. interest payments represent just 9.8% of tax revenues, lower than any time in the 1980s and 1990s, when they peaked at 18.4%. If debt didn’t doom us then, why would it now?
Naysayers often rebut that by saying it’s all thanks to low-interest rates, which may reverse. Fair point. A 30-year Treasury bought 30 years ago carried 8.15% interest. Today, we can refinance at about 2%, a heckuva deal. Plus,10-year debt is cheaper too. But rates only matter to the government’s finances at issuance. Since America’s debt averages about six years in maturity, short-term rate wiggles don’t create danger.
For debt to become a problem, Uncle Sam must spend like a drunken sailor for decades (which he may). Or interest rates must skyrocket and stay there, with the country's interest payments ballooning and investors demanding more return for more risk. Do you see any signs of that now? Maybe someday. But not any time soon.
Pockets of debt trouble do exist around the world. To see them, look to markets. Compare low-default-risk Treasury rates to similar-maturity rates from other issuers — it's called a credit spread. For example, South Africa and Turkey are both suffering significant debt pressure. How do you know? America can borrow for 10 years at 1.62%. Investors demand 8.82% to lend to South Africa. Turkish rates are 15.18%.
Use that same approach to assess corporate debt. Corporate America doesn’t have a debt problem, despite frequent fears that hinge on its debt total alone. Overall corporate spreads have declined this year. To be sure, oil price pressures have squeezed the tiniest U.S. shale-oil drillers. Bonds of less-creditworthy drillers now yield 10.3%, up from 7.4% a year ago. That rise — while rates overall plunged — signals trouble. No shock: Driller defaults are climbing.
But while problems with debt darken isolated patches, debt doom doesn’t loom over America.
http://www.usatoday.com/story/money/columnist/2019/09/22/debt-debt-doom-america/2384550001/
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
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