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August 15, 2022

Financials Matter

"It's Not Just About Finance"

Gov’t Interest Expense Exceeds Military Spending

Regardless of how you feel about our armed forces, they now make up our nation’s second largest expense.

Our #1 expense is interest payments owed on our debt.

Two major factors are:

  • Excessive borrowing (Printing Trillions of new dollars)

  • Dropping interest rates to the lowest in 5,000 years.

Both have been desperate attempts to keep our financial system from collapsing in the last decade.  (Thanks to Greenspan/Bernanke).

The numbers are staggering.

But let’s put them into perspective.

The US military spends more money every year (making weapons and supporting our troops around the globe) than the ten largest competing countries combined.  (Including Russia and China)

Interest expense is crowding out everything else.  And rising interest rates is like throwing gasoline on a towering inferno.

Welcome to the Sovereign Debt Crisis.

But, Hey!  What’s a few Trillion among friends?

Besides, Europe and Japan are worse off than we are, Right?

Correct.

And they’ll default on their debt before we do because all governments borrow money knowing they’ll never pay it back.

You don’t have to be a history buff to know this.  All you need to do is look at how every empire in history has crashed.

They collapse under the weight of their own debt.

The Roman Empire couldn’t pay their military (world’s largest) when they defaulted on their debt.  Roman troops then began ransacking cities to compensate for their lost pensions.

Hmmmmm!

So, here we are facing rising interest rates and no way of mathematically paying off our debt.

If you own bonds (especially bond funds or ETF bonds), it’s time to wake up and smell the coffee.

Learn how to avoid the crushing grip of the new 800 lb. Gorilla in the room (HERE).

 

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