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  • U.S. Debt To Hit $20 Trillion, Poverty Remains Rampant

    As long-time clients and readers are well aware, the explosion in our national debt has been one of my continuing themes over the last 30+ years, under both Republican and Democrat presidents. So today’s discussion is not a political issue, and it should worry us all.

    By the time President Obama leaves office in January 2017, the US national debt is projected to have almost doubled during his eight years in office. Put differently, Obama will have added as much to the national debt as all presidents before him combined. That is simply staggering!

    Throughout history, no major nation that has accumulated debt of more than 100% of Gross Domestic Product has ever paid it back. Instead, they have defaulted. So will we at some point if we don’t reverse course, which seems very unlikely.  As such, the question is when will the US default and what will trigger it?

    Saddest of all is the fact that, despite almost doubling the national debt over the last seven years, with much of the spending on social programs, the poverty rate in the US is near an all-time high; ditto for those living on food stamps. You would think that doubling the national debt and increasing entitlements should have dramatically lowered poverty and those living on food stamps. It didn’t.

    Over the last decade, we’ve also seen an explosion in the number of Americans who receive disability benefits. Unfortunately, Congress has watered-down the requirements to receive disability payments to the point that many able-bodied Americans are no longer working.

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  • Fed Offers Bailout of European Banks

    Last Thursday we learned that the US Federal Reserve has decided to make unlimited US dollar loans (swaps) to the European Central Bank (ECB) and directly to European money center banks that are in trouble, at least through the end of this year. And what will the Fed get in return as collateral? Eurodollars that are quickly falling in value as of late. So even as our own economy may be falling back into recession, the Fed sees fit to bail out the European banks that are sinking in sovereign debt from the likes of Greece, Ireland and Portugal.

    All eyes are on tomorrow's Fed Open Market Committee policy statement. The Fed is expected to announce its so-called "Operation Twist" strategy that is intended to lower medium and long-term interest rates, which may or may not work. Some people expect the Fed to comment on its latest decision to make unlimited US dollar loans to European banks, but I will be very surprised if they mention a word about it. They're keeping it very quiet (which is another good reason to read my E-Letters and blog postings).

    Speaking of blog postings, I will write about tomorrow's Fed policy decision on my blog before the end of the day tomorrow. Go to www.GaryDHalbert.com and subscribe to read my take on the Fed's announcement.

    Following the Fed discussion, I will bring you the highlights of the latest report on US poverty from the Census Bureau. Poverty is now at an all-time high. Ditto for the number of Americans that depend on food stamps, according to the Department of Agriculture. These two reports are very troubling.

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