The Tribune

EDITOR, The Tribune.

The United States (US) national debt has reached 26 trillion and is expected to reach 30 trillion in 2021. The US total Tax revenue is 3.2 trillion. Interest rate on its debts are close to zero percent. If interest rates were to go up to 10% , US will not be able to service its debt. In 1970s US interest rates went to about 20%. This year, the US plans to create trillions more in US debt since February 2020, the Federal Reserve balance sheet grew 70%, the European Central Bank by 18% and the Bank of Japan 8% while China’s balance sheet decreased. The US debt to GDP ratio is 130.1%, the highest in US history. After world war 2 its maximum debt to GDP was 106%.

The US has a choice – default on its debt or print an extraordinary amount of money and inflate the debt away. The US has had a trade deficit from 1982 and its trade deficit has been on an upward trajectory. The US industrial capacity has been gutted and it cannot rebuild it in less than 10 years and 10s of trillions in investments. The collapse of the United States dollar is coming within five years.

The US household debt is 14.3 trillion at the end of March 2020. More than 8% of US mortgage are in forbearance but when that forbearance end will they be able to pay their mortgage? According to the Moody’s chief economist 30% will stop paying their mortgage . In the last 10 weeks 42.6,millions workers filed for unemployment in the US. The recent unemployment rate in the US was 13.3% but in the report it stated the actual unemployment is about 3% higher. It is manipulated data. According to the US department of labour and training the US workforce in February 2020 was 164,546 million, but in May 2020 the workforce was 158,227 million.

The social unrest caused by the unjustified killing by police of George Floyd is a prelude to future class war in the US. US corporate debt is 15.5 trillion which is 77.9 % of US GDP which has declined to 19.9 trillion from 21.7 trillion. The Federal Reserve buying of bonds, ETF and cheap loans are keeping the US companies on life support. 773 business filed for bankruptcies in May 2020 which is a 48% increase.

If oil increases by one cents it costs US consumers 1.42 billion annually. US invests in shale oil although it has not made a profit to keep oil prices below US $80 a barrel because it would cripple their economy of which 70% is consumption.

The Congressional Budget Office said that Corona Pandemic will cost the US economy 15.7 trillion during the next 10 years. In the first quarter of 2020 14% of China’s export was to the US while 16% was to ASEAN countries which is unprecedented. In 2018, 20% of China’s export was to the US. Going into a cold war with China, Russia, Iran and Venezuela is unwise when the US is very vulnerable and it cannot defeat them militarily because China and Russia have Nuclear. Russia missile technology has surpassed US. Is the US like the Soviet Union (USSR) which engaged vigorously in a cold war until USSR collapsed ?

BRIAN E PLUMMER

Nassau,

June 9, 2020.