How can a country go on without a budget???
The U.S.A. has not had a budget in almost 4 years. The only budget offered by this President was unanimously defeated with not one person on either side of the aisle voting for his budget. This is how far from reality the current President is thinking.
WHY do we need a budget?
Because we have SIXTEEN TRILLION in debt and it is growing at a rate of TWO BILLION DOLLARS A DAY.
OK - some debt is OK. What is OK depends on the ability of the USA to take in revenue. So lets look at the numbers in easy format.
We pay interest on this debt. The more interest we have to pay, the less money there is for other programs. Programs like food stamps - welfare - highway contraction - defense - medicare - social security. All good programs.
Every dollar we spend on interest is a dollar we can not spend on these programs.
Right now, we are keeping the interest rates almost at zero. But when interest rates rise, so will the interest we will have to pay on the debt. As the interest rates rise, the money available to pay for all the great programs is less.
And to make matters worse, some countries are beginning to raise their inter-bank interest rates. WHY is this important? Because all the other interest rates like loans and mortgages are based on these inter-bank rates. The higher the inter-bank rates the higher the loan rates.
As these rates rise, the rates on our debt will begin to rise every week. Why every week? Because we normally re-finance a part of our debt every week in Treasury auctions. The companies that "bid" on the each week's re-financing will bid slightly higher each week. Bidding higher means at a higher interest rate. As the interest rates go up - so does the interest on our debt go up.
Now some numbers. Lets assume the debt is exactly Sixteen trillion dollars and it is all in Treasury bills.
If the interest rate goes up just ONE HALF OF A PERCENT, the increase in interest cost to the treasury will be an EXTRA EIGHT HUNDRED BILLION DOLLARS over the year.
There is zero chance that we could ever afford to pay this extra interest over what we are now paying.
So we will print more money to cover the difference. BUT everyone will know we are printing money to cover the interest. It's like trying to cash a check with no money in the bank. So the interest rates will continue to rise at every weekly auction. Soon the rate will rise for another Half Percent.
The interest in the debt then will be an extra ONE TRILLION, SIX HUNDRED BILLION DOLLARS. This is more than the entire revenue of the US Treasury in a year. There will be zero money left for any programs. The dollar will collapse and become worthless. Everyone will become instantly poor and unable to buy anything. No food - No electricity - No gasoline - NOTHING.
This is why we need to start reducing the debt by at least 20% immediately. And then continue to reduce the debt until it is under the Gross Nation Product. This will make the dollar strong and keep America FREE. It will also allow for all the programs to be funded.
Allowing the debt to soar is the path for an absolute financial destruction of America.
And that's the way I see it...
Straight Talk with Jay Clifford.
