Banana Republic

Donald Trump is probably the luckiest presidential candidate in history to have lost an election. He doesn’t realise it yet as he suffers from a self-inflicted wound in the final moments of his presidency. Nor does Biden yet realise how unlucky he is to have won. But that will soon change as his presidency goes from crisis to crisis in all areas from monetary to fiscal to social and political. Very little will go right during his presidency.

The next four years could easily be four years of hell for Biden (if he stays the course for the whole four years), for the US and thus for the world.

TRUMP OBLIGED AS PREDICTED

When Trump won the election in November 2016 I wrote an article, dated Nov 18, 2016, called “Trump Will Grow US Debt Exponentially” .

The article also contained the following graph. In the article I predicted that US debt would double by 2025 to $40 trillion and that it would be $28t in January 2021 at the end of the four years.

Well, surprise, surprise, the debt is today $27.77t which can easily be rounded up to $28t.

I am certainly no forecasting genius, nor was the forecast just luck.

No, it was applying the best method that we have all been given but that few apply or understand.

This method is called HISTORY.

DEBT UP 31X & TAX REVENUE UP 6X

US debt had on average doubled every 8 years since Reagan took over in 1981. So as Trump became president in Jan 2017, he inherited a debt of $20t. Easy then to forecast that 8 years later the debt would be $40t. The $28t forecast for Jan 2021 is just the mathematical in-between point between $20t and $40t.

Even worse than the debt explosion is the the lack of tax revenue to finance the escalating and chronic budget deficits. As the graph above shows, debt has grown 31x since 1981 whilst tax revenues have only grown 6x.

The US deficit is currently $3.3t which is virtually equal to total tax revenue of $3.4t. This means that 50% of annual government spending needs to be borrowed.

BANANA REPUBLIC

The US economy now clearly fits the definition of a Banana republic. A brief description is: “In political science, the term banana republic describes a politically unstable country with an economy dependent upon the exportation of a limited-resource product, such as bananas or minerals.”

In the case of the US, the product they export is of course dollars printed out of thin air – a wonderful export item since supply is unlimited.

Further description is: “Typically, a banana republic has a society of extremely stratified social classes, usually a large impoverished working class and a ruling class plutocracy, composed of the business, political, and military elites of that society.”

Like all Banana Republics, the US economy and social structure is now on the way to perdition with virtually nil chance for Biden & Co to reverse the inevitable course of events.

HISTORY – HISTORY

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Gary Anderson 1 month ago Contributor's comment

Way too pessimistic.

Katy Lin 1 month ago Member's comment

Why, what's your take?

Gary Anderson 1 month ago Contributor's comment

Well, I don't see money as being fake as long as it is backed by bonds as collateral. Also, no music is played when bonds are issued. Also, interest rates are too low anyway.