At the end of September 2000, the US government had managed to accumulate nearly $5.7 trillion in debt since being debt free briefly in the mid 1830s. It took 165 years to build up that level of debt. By the end of 2017, less than 20 years, the US will have nearly quadrupled that amount to more than $20 trillion. How in the world could a country increase its debt nearly fourfold in less than a 20 year period over what it accumulated in over a century and a half? And by the way, these numbers do not include unfunded liabilities such as future Medicare payments. That would get the national debt up to around $75 trillion or so.
Let's see. First is the perpetual war machine and soaring surveillance state. Second add to that a falling economy that has never gained full traction. What has driven the economy since 2000 has been debt not investment and savings. A debt based economy isn't driving tax revenues from higher incomes and productivity. Third was the more than $10 trillion printed to save the banking sector.
Since 2009 the global economy has added about $70 trillion in debt. Much of this for the US has come in the form of credit card, student loan and automotive, particularly sub prime, consumer debt. The US government has added about $10 trillion. Corporations have taken advantage of cheap money to borrow to fund stock buy backs, dividends and acquisitions. None of this adds to employment or an overall productive economy.
Consequently, we are in a debt bubble like nothing known to mankind and well worse where we were in 2008. Add to that the trillions if not a quadrillion plus of derivatives and we have debt loads that are endangering the human race. Furthermore, none of this debt mathematically can be paid back to any measurable amount. The US has not paid a penny in principal in decades and issues debt just to cover interest payments. Normalizing interest rates could never happen. The weaken economy and dying consumer demand prevents inflation from occurring, which could be used to inflate debt away.
All of this debt along with an ever declining employment market in terms of both quantity and quality is a severe drag on the economy. Already tax receipts for the current fiscal year are expected to be down. If Trump passes lower taxes and infrastructure the deficit could grow by $2 trillion a year unless the activity produces offsets.
Default rates on credit cards are rising while escalating on student loans and sub prime auto loans.
What to do? Clearly its time for a jubilee and a debt reset. Consumer debt needs to be written off and the national debt needs to be severely restructured. In doing so our society will revert back to prudent lending. Gone will be the days of lending for wars and American hegemony. Same for speculation and frills.
Americans will go back to savings and investing. Instead of instant credit Americans will be forced to save for certain goods or at least have an appropriate down payment. More importantly, a jubilee would unchain Americans from a ball and chain of debt. With easy to get credit gone Americans might be likely to save more discretionary income.
Finally the US government would be forced to choose between maintaining a country or spreading its military and ruling hegemony. Investors would no longer fund both.