A Crisis Cometh. Or Why Dick Cheney Was a F*cking Idiot

Deficits don’t matter.

-Dick Cheney, former (worst) vice president

Let’s start today’s dispatch with a number: $49,350.

That, we’re going to pretend, is how much money you earn each year.

But you’ve decided that you can’t possibly live the life you deserve on that level of income. So… you’ve instead budgeted your spending for the year at $65,170.

You’ll just borrow the $15,820 you need to cover the gap. Take money from a home equity line-of-credit, and whatever that doesn’t cover will go onto your credit cards.

You’re happy with this arrangement.

You’re living your best life… though you certainly cannot afford that life.

No matter.

The banks are happy to float you. Your credit card companies love you because you always make the minimum payment due.

But then one day, a bored banker is sitting at her desk when an application for another loan for you lands with a thud. She’s seen so many of these applications over the years that she decides to dig into your finances. She rightly wonders: “This dude already has $340,000 in cumulative debt—can he really afford all this extra borrowing and the interest costs?”

And what she discovers is that every 100 days, because of all your ongoing borrowing, and all the interest you owe on all your outstanding loans, your debt is increasing by $1,000 per day… $36,500 per year in additional debt… 74% of your annual budget in additional debt… on top of the borrowing you’re already relying on.

That, in a family-sized nutshell, is America today.

I’ve simply erased eight zeros from America’s expected 2024 tax receipts ($4.935 trillion) and the White House’s projected spending ($6.517 trillion), and from the expected deficit for 2024 ($1.582 trillion), as well as the $34 trillion existing debt America now shoulders.

The $1,000 in additional debt per day is from a Bank of America analyst who recently calculated that Uncle Sam is tacking on $1 trillion in debt every 100 days. That works out to $3.65 trillion every year, or $10 billion per day.

To put that into some perspective:

  • Social Security is projected to cost $1.453 trillion for 2024.
  • Medicare is projected to cost $1.574 trillion in 2024.
  • Discretionary spending—everything else America pays for, including defense—is projected to cost $1.730 trillion in 2024.

So, to be clear: Uncle Sam’s financially inept minions running the country have now worked us into a position where debt is rising every year at a pace 2x faster than even the largest budget item. Which means Congress could axe spending on every single line-item outside of Social Security and Medicare—basically turn off all the lights, stop spending on tanks and guns, shutter every federal office, and close the books on every federal program—and America would still need to find a way to double those cost savings just to afford the additional debt.

Look, I am just a simple writer. I don’t possess advanced economics degrees from Wharton or the University of Chicago.

What I do have, however, is a particular set of skills known as common sense.

Doesn’t matter if you’re a family, a company, or a country, you cannot rely on deficit spending every year and think it doesn’t matter.

Sure, Uncle Sam’s co-dependent pushers over at Treasury and the Federal Reserve can print as many dollars as they want. And, sure, people can choose to believe Dick Cheney’s “deficits don’t matter” line of inane bullshit. And, yes, the mental midgets in academia and government can assert their faith in Modern Monetary Theory and the idea that so long as government controls a currency and can raise taxes, debts never matter.

Mathematical gymnastics might support those beliefs. And a country can get away with hewing to those beliefs for just long enough that proponents begin to think they were right all along…

But common sense tells you that the math doesn’t math and the beliefs are unbelievable—that the people promoting them are so blind to reality staring them in the face that they couldn’t find a crow in a bucket of milk… even if the milk was missing and the crow was wearing a blinking marquee announcing “I am a crow!”

This is my guarantee to anyone who will listen: A crisis cometh.

America must deal with her debt in one way or another.

Debt is as suble as Glenn Close boiling a rabbit (if that perfect reference sails over your head, go watch Fatal Attraction).

Debt cares not for your feelings or your financial situation.

Debt demands one thing: Repayment.

That’s all. That’s everything. The whole ball of wax, as they say.

Don’t repay, and bad things happen… even if you do control the currency.

In fact, controlling the currency is arguably the worst possible situation. It fuels a belief that all a leadership need do is print more and more currency units to afford all the spending and the debt.

That, however, is a disaster for the people. Just ask Weimar Germans, and modern day Venezuelans, and Argentinians over the last four or five decades, and Zimbabweans. There are others, but no need to belabor the point.

America’s financial handlers are not so off-the-charts savvy that they can outsmart debt, which has thousands of years of ball-busting every government that relied overaggressively on debt to grow.

So, prep now for the crisis to come.

Wean yourself off dollars to the degree that your life allows it. Own as much gold and silver as you’re comfortable owning. Stuff some bitcoin into your portfolio (2% to 5% is a good number, even for conservative investors). And own some Swiss francs as currency insurance.

Fuck Dick Cheney and the ghosts he left behind…

Deficits absolutely do matter.

They add up over time to a mountain of debt that has felled every single empire.

Sign Up for Jeff's (almost) daily Field Notes