The Debt Problem Is an Understatement: "Ya Got Trouble"

The phrase "life imitates art" has been around for centuries. It was first used by the ancient Greek philosopher Plato, who argued that art should imitate reality.

The Music Man was first performed on Broadway in 1957. The famous musical features a traveling salesman named Harold Hill who poses as a music teacher. He comes to River City, Iowa, and convinces the townspeople they need a marching band to instill moral values in their children.

In the song "Ya Got Trouble," Harold argues there are so many things that could go wrong with kids in the town, such as gambling, drinking, and the becoming obsessed with pool.

The message of the tune "Ya Got Trouble" is akin to the proverb "idle hands are the devil's workshop," i.e. when people are bored or complacent, they get into Trouble.

Now let's discuss the Trouble we have right now.

Because central planners outsourced American jobs to China and other sweatshops, American workers have been displaced due to labor arbitrage. So too many have turned to video games, social media, engaging in cultural wars, Amazon deliveries, Barbie movies, and Taylor Swift concerts.

Instead of having a strong manufacturing base (steel from Pittsburgh, tires from Akron, cars from Detroit, coal from Kentucky,) we have people delivering pizzas to one another through a smart phone app.

Trouble in Personal Savings

Americans' personal savings have collapsed by a staggering $5.5 trillion since April 2020 thanks to soaring inflation, according to Barchart.com.

And despite what the parasitic class (politicians) claim in their press briefings (“the economy may never have been more robust”), there's Trouble.

Household savings are way lower than before the Covid War started.

U.S. government stimulus checks and a drop in in-person spending gave households a false sense of security, but only briefly. Then follow this chain of events.

The Federal Reserve started hiking rates in March 2022. The first rate hike was 0.25%, and there were a total of eight rate hikes in 2022. The last rate hike was in July 2023, when the Fed raised the target range for the federal funds rate by 25 basis points to 5.25%-5.50%.

Historically high inflation in the U.S. since mid-2021 has eaten into the savings, as prices of everything from energy to food surged.

Inflation hit a 40-year high of 9.1% in mid-2022. The recession was redefined after consecutive quarters of GDP declines. Also, citing GDP is an inaccurate indicator of recessions because GDP also measures government spending and private-sector transactions.

This means all the pork inside the $1.75 trillion omnibus spending spree and the “Inflation Amplification Act” serves to artificially boost the GDP.

All deficit spending, including U.S. military spending, is captured in the GDP stats.

Think of one department in the government (Department of Hole Diggers) digging millions of holes in the ground. Then another department (Department of Ground Repair) refills the holes. Both these government projects would count toward GDP.

Trouble in Federal Deficits and Debt Service

The Trouble stems from an acceleration of insane spending and blowing through debt ceilings. The parasitic class (central bankers and their client politicians) won't make needed budget cuts.

The largest line item in the U.S. budget is now servicing the $32 trillion debt – at a cost of $1 trillion and rising.

More Trouble: Record High Household Debt Levels

1. Household Debt: $17.1 trillion
2. Mortgage Debt: $12.0 trillion
3. Auto Loans: $1.6 trillion
4. Credit Card Debt: $1.0 trillion

Troublingly High Interest Rates

1. Credit Card Debt: 25%
2. New Car Loans: 14%
3. Used Car Loans: 9%
4. 30-Year Mortgage: 8.0%

Student loan payments are set to resume in one month. Total student loan debt just hit $1.6 trillion. Will consumers be able to handle student loan payments on top of all of this?

The Debt Problem Is an Understatement. We got TROUBLE.

Historically high inflation has been the key reason for the decline in American consumers' cash reserves. People may try the familiar habit of tapping into Home Equity.

Still, this old playbook is closing because many people don't have homes, and those who do have less than the oft-required 20% equity (thanks to a cooling housing market from spiking interest rates.)

So people start using credit cards to cover everyday expenses – a death spiral due to the higher interest rates. Add to that the federal government’s own ballooning debt service costs.

U.S. and Europe Businesses and Record Bankruptcy Filings

In July 2023, Fox Business reported that the number of bankruptcy filings in the U.S. surged in the first half of 2023. It cites data from Epiq Bankruptcy showing that the number of commercial Chapter 11 bankruptcies jumped 68% in the first half of 2023 from a year earlier.

The opposite of debt, Gold and Silver are “Trouble Reducing” metals.

This is why I believe in them. This is why I write about them. There are no better alternative lifelines that I can think of.

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