CELENTE: As We’d Say in The Bronx, 'Money Talks, Bullshit Walks'
America’s debt level is way above the near $37 trillion level being reported
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As we had forecast, a Top Trend that would be dealt this year is a Wild Card. And week after week, month after month it is a socioeconomic and geopolitical game changer.
And now, while it was not unforeseeable and considering the facts are there for all to see, when Moody’s downgraded the United States credit rating on Friday, The Street took it as a Wild Card.
When the U.S. equity markets opened yesterday, stocks, the dollar and bonds all slid because of Moody’s downgrade. But they popped up a bit before the markets closed despite there being no real economic juice to keep them on their inflated high.
Making a bad Moody’s reality situation worse, the money junkies running Amerika pushed through tax-cuts that, like Trump’s 2017 tax cuts, will enrich the rich while boosting the nation’s debt levels. Yes, the facts are all there and we had reported how, back then, President Trump said that the tax breaks given to the big corporations would escalate their spending of the money to create high paying jobs as they put their new free money into capital improvements.
Of course, as we’d say in The Bronx, “Money talks, bullshit walks.” And that’s all that it was. Pure Trump bullshit. According to the Tax Policy Center, the one percent got 64 percent of the tax break benefits of Trump’s 2017 tax-cutting bill. And rather than putting the money towards capital improvements, the money junkies had a record year of stock buybacks.
As for the latest round of tax cuts, which will drive up the U.S. debt level, the Financial Times reported that the legislation, which includes hundreds of billions of dollars in tax cuts that are not offset by changes in spending, is expected to increase the federal deficit, which stood at 6.4 percent of GDP in 2024—well above levels economists see as sustainable in the longer term. “The bill is helping drive up the long end,” said Subadra Rajappa, head of U.S. rates strategy at Société Générale.
Indeed, the Committee for a Responsible Federal Budget reported that Trump’s tax bill will increase the U.S. national debt by $5.2 trillion over the next decade. And at the current debt level, the interest on U.S. debt is about $1 trillion per year.
On the news of the coming tax cuts and the Moody’s U.S. credit downgrade, the 30-year U.S. Treasury yield spiked to above 5 percent yesterday, hitting its highest level in a year and a half. The New York Times quoted George Saravelos, the global head of foreign exchange research at Deutsche Bank, who wrote that “The combination of diminished appetite to buy U.S. assets and the rigidity of a U.S. fiscal process that locks in very high deficits is what is making the market very nervous.”
TREND FORECAST: America’s debt level is way above the near $37 trillion level being reported. When so-called “off-balance sheet” debts are included, such as Social Security and Medicare payments for recipients, the real debt level is above $100 trillion. Some have said it is as high as $220 trillion.