The US Spiral Towards Bankruptcy
Gary Null PhD
Progressive Radio Network, December 30, 2020
This week the Dow Jones industrial average reached a remarkable rebound to 30,327. Due to the Covid-19 pandemic the net wealth of the billionaire class, the Bill Gates and the Jeff Bezos of the nation, increased their riches by $931 billion. Many on Wall Street and within the large mega-corporations believe the economy is not only returning to its pre-Covid growth but will continue to accelerate well into the new year.
However beyond the prosperity of those in the privileged stratosphere of excessive wealth, celebrity status and power, the rest of us are not rejoicing. For the vast majority, there is little incentive to celebrate. We already know that the nation’s reckless reaction to the virus and the ensuing panic has decimated over 200,000 small businesses in the US alone. Many, if not most, will not return. Corporations are finding it less expensive to allow employees to work from home. Consequently, many are leaving the major cities. However, as New York City experienced an exodus of 300,000 apartment owners and renters, most of these vacancies are rapidly being replaced by the younger professional, educated class due to the substantial cost reduction to live in the city as the pandemic drags on. For many who have left, it is a permanent relocation to states such as Florida, North Carolina, Texas and Vermont. For now, these states are less costly and can provide a better quality of life.
But there is something seriously missing from this scenario and the uncertain promise for a celebration ahead when life returns to normal after mass vaccination.
As a nation, the majority of Americans are dead broke, bankrupt, and this trend started prior to Covid’s arrival. Therefore it is time to take a honest and sober look at the landscape and realize the US is not a single economy. There are multiple economies. Over half of the population is unable to write a check for $500 in the event of an emergency. College students and recent graduates are buried in student loans and many suffer from food insecurity. Sixteen million children are estimated to go to bed hungry daily. Fifty-four million Americans are technically in abject poverty and an additional 100 million tilt towards that threshold. Ergo what can the future of a post-Covid society promise them?
As those who applaud Biden’s victory place their hopes into a significant turn around in their financial status and quality of life, we need to take a thoughtful look at the debt crisis before us.
At this moment the US is sitting on $82 trillion in Total Debt, which includes the federal, state and local governments, households, businesses, and financial institutions. Citizens alone are holding $21 trillion, or $63,200 per person. With current GDP at $21.3 trillion, most are led to believe that the national debt to GDP is minus 144.5 percent. However, this is only when the GDP is calculated against the $27 trillion of the US National Debt, the principal amount of marketable and non-marketable securities currently outstanding. Yet when additional US liabilities (social security, Medicare. Federal debt held by the public and federal employee and veteran benefits) are added to the actual Total Debt, we are sitting on $238.4 trillion, a GDP debt ratio of 1,100 percent.
Comparing that with other nations – the EU government at 90%, China at 335%, and one of world’s least indebted nations, Russia, just under 20% — it is self-evident that the US is set for extremely difficult times ahead.
During the aftermath of the Great Recession in 2007-2008, economists spoke about the financial basket cases of Greece, Italy, Spain and other European nations as their national debt to GDP ratio flirted between 100 and 180 percent. The transnational elite within the regime of the International Monetary Fund and the global lending institutions, including predatory lenders such as Goldman Sachs, found opportunities to exploit this debt with high interest rates and severe austerity programs compounding the suffering those countries.
However, at this moment, the US and its population are collectively looking at a 1,100% debt to GDP ratio. In effect, we are most the indebted country in the world. It is an debtors’ prison we can never escape. For those who are in the top 30 percent of our society – the millionaires and professional and managerial class – life will be fine. For the remainder there will be growing economic and emotional pains.
Avoiding a collapse into this cavern of debt cannot be prevented if we remain dishonest about its existence.
Now we are being told by the World Economic Forum’s founder Klaus Schwab and those elite, who in the words of Samuel Huntington, identify themselves as Davos Men, there is a solution to rectify this burden of debt. This remedy is being called the Great Reset. We are being told this new stakeholder strategy to reconfigure the world’s economic and social wrongs of shareholder capitalism will benefit large segments of society by relieving the debt burden in order for a global rebirth to emerge. Yet to accept the word and judgment of the very institutions and privileged financers who created the very conditions for the economic crisis and the social inequalities that have stockpiled during the past three decades, and who now perceive the pandemic as a global opportunity for fundamental change, would be foolish. Despite the Reset’s mask of humanitarian rhetoric, its promised utopia is sorely disingenuous.
In 2008, in order to “save our economy from imploding” or collapsing, Barak Obama gave power to the Federal Reserve and Treasury to first bail out Wall Street to the tune of $800 billion. Later we would discover a shocking $14.4 trillion was given over and above TARP. Virtually all of the culprit banks and firms that contributed to the subprime mortgage debacle were not only made whole but also provided with the capital with near zero interest to buy up their competition. Consequently the financial regime became even more monolithic and monopolistic. In the process they leverage their bad debt and washed it through the Federal Reserve. The money was not shared with employees nor invested towards improving the average American’s life.
So we await with open-mindedness what these same characters of market neoliberalism will be serving us in the Great Reset.