Consulo Indicium - 3/2/20

Information for your Consideration…

The Gaping Hole In Our Economy – The US Treasury Department recently reported that the federal deficit swelled to more than $1 trillion (yes with a “T”, trillion) in 2019.  Now, it’s been there before back in 2012 when the US economy was still recovering from the most significant recession since the stock market crash of 1929.  But, the bigger issue that is looming like a massive storm cloud is that the Congressional Budget Office is predicting the $1+ trillion deficits are going to continue for at least the next 10 years – even reaching almost $2 trillion in the early 2030’s.  The end result is a whopping total deficit of $31+ trillion, which will push the debt-to-GDP ration to 98% which is the highest it has been since World War II.  That’s ominous in many respects. From a health care perspective this is important because the cost of care is one of the single most important reasons why the deficit is increasing. Those of us in the health care community need to take notice. The cost of our care not only impacts individuals but, is directly impacting the capabilities of the nation! 

The issue is that we’re experiencing these types of deficits during periods of economic growth.  So, what happens when another, unanticipated recession hits?  The ability of the US to borrow and spend for stimulating the economy is contingent upon the ability to gain access to world markets. If the debt level is too high – it will not be possible to gain access to those funds.  While it’s unlikely that the US would become a “banana republic” – primarily because there are few places in the US where you can grow bananas – we could clearly become a nation of debtors that would destroy what our ancestors worked so hard to preserve.  And, finally, the part that really is quite disturbing is that not much is being done in Washington.  It reminds me of the story of Nero – the emperor of Rome who was decadent and unpopular.  He “fiddled while Rome burned.” The expression has come to convey a double meaning: Not only did Nero play music while his people suffered, but he was an ineffectual leader in a time of crisis. Hmmm.

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