By Jordan Chussler On February 25, 202307:00 AM
https://audio.beyondwords.io/e/6320239
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| By Jordan Chussler |
$31.5 trillion. That is where America’s federal deficit now stands.
For context, that is roughly equal to the combined gross domestic products of the U.S., China and Japan — the world’s three largest economies.
Put another way, that is $94,391 in debt per citizen. But because not all citizens pay taxes, for every taxpayer, that is $246,867.
To get an even better idea of how bad things have gotten, the federal debt-to-GDP ratio has skyrocketed over the past 40+ years:
- From 34.52% in 1980
- To 59.05% in 2000
- And now, in 2023, an astounding 120.37%.
The interest alone on our debt has now surpassed $534 billion … or roughly the GDP of Sweden.
If this appears unsustainable, that is because it is. But rather than point fingers at this administration or that administration (they are all guilty), I want to discuss …
Who Owns America’s
Ballooning Debt
The answer may surprise you.
Some $6.8 trillion of the deficit is in intragovernmental holdings — debt to other federal agencies. For example, agencies like the U.S. Social Security Administration take in more revenue from taxes than they need. These agencies then invest in U.S. Treasurys.
The rest of our federal deficit — a staggering $24.6 trillion — is public debt held principally by foreign governments, U.S. banks and investors.
However, when thinking of foreign governments, most people suspect China or oil-rich nations like Saudi Arabia hold the most debt. Fact is, it is Japan with $1.08 trillion. China does rank second, though, with $870 billion.
Major foreign holders of U.S. public debt.
Click here to view full-sized image.
But when it comes to the world’s three largest economies, misery loves company.
Revisiting the debt-to-GDP ratio, as of December 2022, Japan’s debt is 225.9% of its GDP, and China’s is
273.2%.
It is frightening to realize that the nations with the three highest GDPs are being propped up by massive, debilitating, distending debt.
And while the best we, as average citizens, can do is hope a divided Congress does not allow the federal government to default …
Hope that China and Japan continue to want the U.S. dollar to remain stronger than the yuan and yen to keep their respective exports cheap and their economies growing …
And hope the global fiat currency standard remains the greenback …
It is increasingly evident that investors must take matters into their owns hands in order to protect their wealth using proven Safe Money strategies.
To learn more about how to do that, here are this week’s top stories from our team of editors and analysts.
Tesla’s Self-Driving Recall Only Proves Its Dominance
Last week, 362,758 Tesla (TSLA) vehicles were recalled in the U.S. due to an issue with their Full Self-Driving Capability. The company’s stock dropped 5.7% on the news. But unlike traditional vehicle recalls, Tesla owners do not have to drop their cars off at a dealership. Instead, the company will fix the problem with an over-the-air software patch. Senior Editor Tony Sagami reports on how this is not a sign of weakness, but rather a sign of an industry dominator.
VIDEO: Market Minute with Kenny Polcari
In his weekly video installment, Financial News Anchor Kenny Polcari touches on recent macroeconomic data, including the U.S. Manufacturing and Services Purchasing Managers’ Index, the Personal Consumption Expenditures Price Index and what they mean for the markets going forward.
Morgan Stanley’s Hot New Tool Makes It a ‘Buy’
Pulitzer Prize winner Jon Markman details Morgan Stanley’s (MS) zero days to expiration options and how they expire on the same day they are issued, making 0DTEs extreme, short-term structures offering a big advantage for speculators.
Dr. Copper’s Rx for Riches in 2023
Copper is called Doctor Copper because it takes the temperature of the global economy. And while the jury is out on U.S. growth, Doctor Copper says the global economy is doing just fine. Senior Analyst Sean Brodrick discusses how the metal is performing and one way investors can leverage its demand to the benefit of their portfolios.
Could This Make Buffett Change His Mind About Bitcoin?
Warren Buffett, one of the most successful investors ever, has been critical of tech stocks since the 1990s. However, according to Income Analyst Nilus Mattive, Buffet’s decision to ultimately invest in Apple (AAPL) demonstrates why investors should not turn their backs on innovators like Bitcoin (BTC).
Don’t Time the Market — Spend Time in the Market
Analyst Kenny Polcari explains why now is not the time to take chances, how time in the market beats timing the market and why conservative investment strategies are the key to enduring the Federal Reserve’s ongoing interest rate hikes until its target inflation goal of 2% is met.
Until next time,
Jordan Chussler
Managing Editor
Weiss Ratings Daily
