Consumers don’t have a debt problem. The US government does | Gene Marks
A recent report from the Federal Reserve warned that consumer debt is now more than $18tn and the people are worried,Americans’ “credit card and household debt reach all-time high”, reports Fox News,Consumers are “finding it harder and harder to pay off their debt”, claims CNN,A “third of Americans have more credit card debt than emergency savings”, says Marketplace,Yes, consumer debt has ticked up this year.
It’s true that some consumer debt – particularly student loans – has soared in the past few years,But – although worrisome – this debt is still being used to fund education and skills,Other consumer debts are being used to buy homes and cars and fund the purchases that make life livable, not to mention the many industries that rely on this spending,I’m not worried about consumer debt,But as a business owner I am worried about our national debt.
After years of hearing and ignoring the warnings, I’m starting to see just how this debt is going to actually hit my business,And yours,Will it be because of a default? That’s unlikely,We are not Greece,Our debts – most of which are to real-life people, companies and governments – aren’t in a currency that we don’t control.
It’s in US dollars.That’s a good thing.But also a bad thing.Here’s why: our interest payments as a percentage of total federal spending are ballooning.When our government spent money in 2020, 7% went towards interest.
In just four years, that number has more than doubled to 16%.That’s because our levels of debt have increased during that time from $24tn to $36tn and interest rates charged to banks have increased from close to zero to over 4%.If 16 cents on every dollar is now being spent by the government on interest, where does that money come from? It has to be taken from somewhere.How does the government meet these obligations? There are only three ways.The government can cut expenses in order to afford these higher interest costs.
But c’mon, despite Elon Musk and the PR campaign of the so-called “department of government efficiency’”, how much will really be cut in the end? When has the federal government actually decreased its expenses? Never.Almost two-thirds of our government budget is non-discretionary payment for social security, Medicare, defense and other entitlements.And in the end, how much will really be saved after all the lawsuits, negotiations and accounting trickery?What about revenue increases? Please.As if the government is going to raise taxes at the exact time that the Trump administration is pushing trillions of dollars of permanent tax cuts.That is political suicide.
Which really leaves only one solution: printing more money,Greece couldn’t do that, because being on the euro, it wasn’t their money to print,But the Fed can print money all day to meet our obligations,And that’s exactly what they’ll do,Why should we care? It’s simple supply and demand.
More money in the system that’s just paying interest and not being used to produce any tangible product creates an oversupply.And what happens when there’s too much of something? It loses its value.And in this case, that loss of value will ultimately drive more inflation.And to combat this, the Fed will need to maintain higher interest rates, which keeps us in the same never-ending cycle.Some economists still believe that inflation will return to the Fed’s preferred 2% level.
Maybe, but only in the very short run.But if you’re running a small business you can expect that higher than historical inflation and interest rates – even higher than what we have today – will probably be the norm for the foreseeable future.I don’t see any other scenario.Consumers don’t have a debt problem.Our government does.
Italy 24-73 France: Six Nations – as it happened
Antoine Dupont led France to an overwhelming 73-24 rout of hosts Italy as they ran in 11 tries in an action-packed Six Nations triumph on Sunday, bouncing back in style from their one-point loss to England in their last game two weeks ago.The French captain was at his imperious best as he directed matters at the Stadio Olimpico and scored two tries, as did fullback Leo Barré. The other French tries were shared among Mickaël Guillard, Peato Mauvaka, Paul Boudehent, Gregory Alldritt, Louis Bielle-Biarrey, Theo Attissogbe and Pierre-Louis Barassi, while Thomas Ramos booted over eight conversions and substitute Maxime Lucu one.Italy had opened the try scoring through Tommaso Menoncello in the 12th minute with his centre partner, Juan Ignacio Brex, dotting down their other first-half try in what had been an end-to-end opening. Paolo Garbisi contributed a try midway through the second half and kicked over the conversion while Tommaso Allan booted over a penalty and two conversions, but the hosts finished almost 50 points adrift
India beat Pakistan by six wickets in Champions Trophy – as it happened
Virat Kohli completed his 51st one-day international century with the winning runs as India beat Pakistan by six wickets in their Champions Trophy match in Dubai.Electing to bat first, Pakistan made 241 before being all out with two deliveries left in their stop-start innings. Saud Shakeel (62) and Mohammad Rizwan (46) scored the bulk of the runs for Pakistan while spinner Kuldeep Yadav claimed 3-40.Kohli anchored a tricky chase with his unbeaten 100, completed with a cover drive that saw India reach their target. Shreyas Iyer added 56 as India registered their second successive victory in Group A of the tournament with 7
Arizona apologize for anti-Mormon chants after team’s loss to BYU
Arizona have apologized after some of the team’s fans directed abuse at BYU after the Cougars’ upset victory over the Wildcats on Saturday.The game, in Arizona’s home arena, ended in controversy after a number of calls went BYU’s way. As the players left the court chants of “Fuck the Mormons” could be heard around the McKale Center. Around 98% of BYU’s student body are Mormons and the university is sponsored by the Church of Jesus Christ of Latter-day Saints.“Following tonight’s men’s basketball game, it was brought to our attention that an unacceptable chant occurred,” Arizona athletic director Desireé Reed-Francois said in a statement
‘Like a bullet going right by you’: affluent English towns and suburbs rail against noisy, unstoppable rise of padel tennis
Across the affluent suburbs and well-heeled country towns and cities of England the sound of “gunfire” – or the fear of it – has been ringing out in recent months. From Bath to Weybridge and Winchester to Lytham St Annes a street battle of sorts has been waged as desirable neighbourhoods seek to repel what they see as a menacing new threat to the peace: the sport of padel.“When the best players play, I can only describe it as like a bullet going right by you,” says Nick Christou, whose garden is a few yards from two padel courts at Hazelwood sports club in Enfield, north London.Invented in Mexico in 1969, and said to be the fastest growing sport in the world, padel is a mashup of tennis and squash played within a mesh-and-glass caged court with what look like oversized table-tennis bats – the kind of rackets, according to offended ears, that make a racket.The Lawn Tennis Association took over the running of the sport six years ago and instituted a plan to “integrate padel into the fabric of tennis in Britain”
England’s iron-chinned boxers get on the right side of ifs and buts | Andy Bull
Another week, another one-point win. This was an ugly, bloody and basic victory, as pretty as Steve Borthwick’s broken nose, but funnily enough the 80,000-odd England fans inside the stadium didn’t seem too fussed about that when England bundled the ball into touch at the final whistle. It’s been eight years since they last saw England win a Calcutta Cup game here at Twickenham, and if it was Scotland who filled the highlights reel, and outscored England by three tries to one, well, England’s one workaday try, along with a conversion and three penalty kicks, added up to more than enough to shout about.It was a match that was characterised, in the large part, by the dogged efforts of England’s proud pack of forwards. They crushed every scrum, clattered into every ruck and reached, over and again, right down into the dark and nasty places, returning, often as not, with the ball in hand
Gregg Popovich not expected to return to San Antonio Spurs this year – report
San Antonio Spurs head coach Gregg Popovich, the NBA’s all-time winningest coach, is not expected to return this season as he continues recovering from a mild stroke suffered in November, according to ESPN’s Shams Charania. The future of the 76-year-old Hall of Famer remains uncertain as the team navigates a challenging season without him.Popovich, who has led the Spurs since 1996 and won five NBA championships, suffered the stroke on 2 November before a game against the Minnesota Timberwolves. Assistant coach Mitch Johnson stepped in as interim head coach and has since compiled a 21-27 record while leading a young Spurs squad.The Spurs faced another setback when franchise star Victor Wembanyama was shut down for the season on Thursday after being diagnosed with deep vein thrombosis in his right shoulder
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