In one of Heinlein’s stories (I forget which one, and the search engines haven’t helped on this odd query) a character awakes after having been in suspended animation for many years and catches up on what he’s missed by spending a few hours reading a history book, then remarks on how much time he would have wasted had he read a newspaper every day for all that time, reading about matters too ephemeral to make the history books.
If you do follow the news (I try to spend as little time as possible doing so), keep in mind that the most important thing may be what’s not in the daily news. Many of the things that end up in the history books were complete surprises to those embedded in the “news cycle” and to the “experts” who feed it. For example, check the newspapers for early October 1929, November 1941, October 1989, the latter half of 1990, or August 2001: you’ll find little or nothing about the imminent stock market crash, Pearl Harbor, fall of the Berlin Wall, collapse of the Soviet Union, or terrorist attacks in the U.S. And yet, in retrospect, the circumstances which led to these “surprises” were in plain sight. Thus, I’m always interested in the big story that none of the chattering classes are chattering about. Which brings me to…
There have now been more than eight elapsed hours of “debates” among the Democrat contenders for the U.S. presidency and, in recent months, as many hours of mass rallies by the incumbent president. I have listened to many of these, as I often put them on as background noise whilst plowing through the tedious system administration and clerical tasks which occupy much of my time these days. And, you know what?—unless I’ve missed something (which is certainly possible), I haven’t heard a single mention of budget deficits, which are now forecast (according to the U.S. Fiscal Year 2020 budget [PDF], p. 25) to top US$1 trillion for Fiscal Year (FY) 2019, and continue above that level for FY 2020–2022.
Nor has there been any mention of federal debt (same reference, p. 131), currently in excess of US$ 21 trillion, and forecast to increase to US$ 26.5 trillion by the end of FY 2022, at which time it will stand at 107% of GDP, having spent a decade, starting in FY 2012, above the “red line” of 100%. Based upon International Monetary Fund calculations, the U.S. ranks 14th in the world by this measure, with countries carrying a larger debt load including Lebanon, Yemen, Eritrea, Cape Verde, Sudan, Gambia, and the Republic of the Congo. The only developed countries with higher debt to GDP are Singapore (111%), Portugal (126%), Italy (131%), Greece (182%), and Japan (236%). (Japan has long been an outlier, but its very high domestic savings rate means a larger fraction of this debt is held by those within the country, giving it a different character than countries like the U.S. whose creditors are largely overseas.)
The solons in the imperial capital are aware of this situation, and they have sprung into action. On August 1st, 2019, the U.S. Senate passed a bill, 68–28, earlier approved in the House by 284 to 149, which suspends entirely the statutory limit on the public debt until July 2021. President Trump, who tweeted “Budget Deal is phenomenal for our Great Military, our Vets, and Jobs, Jobs, Jobs! Two year deal gets us past the Election. Go for it Republicans, there is always time to CUT!”, signed the bill (H.R. 3877) yesterday, 2019-08-02. (Representative Thomas Massie introduced an amendment to change the title of the bill to “A bill to kick the can down the road and for other purposes”. His amendment was defeated 384–47.)
“[A]lways time to CUT!” Well, maybe…. Ever since the 2008 financial crisis, interest rates have been artificially suppressed, picking the pockets of savers and putting pension plans in peril to benefit debtors, including the federal government. But holding down interest rates is like welding shut the safety valve on a boiler: you can get away with it for a while (often longer than anybody expects), but the pressure continues to rise and sooner or later it’s going to blow. The Federal Reserve, which slashed its benchmark Federal funds rate to 0.25% in December 2008 and left it there until December 2015, has been moving it up incrementally, 0.25% at a time, since then, reaching 2.5% in December 2018. Last week, on 2019-07-31, the Fed announced the first cut, from 2.5% to 2.25%, since October 2008. This seems to indicate a belief that the economy is slowing and is need of stimulus. If, in fact, the economy moves into recession (and I as noted in my Gnome-o-Gram of 2019-06-24, “Inverted Yield Curve”, the current economic expansion is getting, by historical standards, very long in the tooth and, in July 2019, broke the record for the longest economic expansion ever) tax receipts will fall, government expenditures will grow, and deficits will balloon well beyond those forecast in the budget.
All of this is to say that the dog that didn’t bark may be a debt and financial crisis erupting some time between now and the 2020 U.S. presidential election. While at the moment, the news seems full of how many tens of trillions this contender or that wants to spend on trying to change the weather, “forgiving” debts run up to bogus institutions of “higher learning” for garbage credentials, “reparations” paid by people who never owned a slave to people who never were slaves, “free” “education” for “undocumented immigrants”, and “free” abortions for trans-women, and so on, an impending financial collapse can concentrate the mind wonderfully.
Just because the dog doesn’t bark doesn’t mean it won’t bite.