The High Cost of the U.S. Kicking the Can Down the Road

What happens when you kick the can down the road too many times?

The United States has been kicking the proverbial financial can down the road for many, many years.  In order to keep up the illusion of consistent economic growth with no recessions the U.S. government has borrowed over thirty six trillion dollars and used deficit spending to try to cover up every little financial downturn. 

This is a foolhardy process that is absolutely unsustainable over long periods of time.  Economies, like societies, are part of a natural order that is subject to various cycles and changes.  They need time to adapt to disruptive technological innovations, population shifts, geopolitical rebalancing, environmental changes, and a host of other factors.  By shifting from the gold standard to fiat currencies, governments have had free rein to borrow and spend vast sums of money that is backed by promise – nothing more – and this illusion can carry as long as they have willing buyers who will pay for their debt. Unfortunately, this strange dance is nearing its end.  During the next decade, the harsh reality of this process will likely be revealed.

It is common sense that people should try to save money during the good times in order to have the reserves to deal with rainy days.  This simple practice was utilized by the Pharaohs thousands of years ago, but the modern financial wizards have been espousing a new logic that will undoubtedly end in tears.  They tout that their brilliant strategies have permanently put an end to financial cycles.  Recessions are officially dead, as we no longer have to be subject to the basic rules and practices of mere mortals.  If only it were true.