To sum up my previous three essays for Military History in the News: In the next decade, we face the merging of two crises of our own making. First, our national debt will crash the economy. No nation can borrow more every year and maintain a stable currency. We have only ourselves to blame for reaching that precipice. Our politicians reflect our will. Nothing will be done to avert the debt collapse because a majority of voters favor the entitlements conferred by the borrowed money.
When debt service exceeds about 23% of revenues in next decade, then bond holders will demand higher yields. The Federal Reserve will step in to provide the liquidity, but at a cost of letting loose hyperinflation. Only during that chaotic period of, say, a month’s duration, will Congress bitterly debate cutting entitlements and/or raising taxes. It’s a 50-50 bet Congress will refuse to pass sensible legislation. If it remains deadlocked, our standard of living will plummet.
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