Just over a week ago, America’s national debt surpassed $32 trillion. As of Friday this week, it climbed to $32.1 trillion, and the prospects for reducing the debt appear to be nonexistent. This is primarily due to the continuous raising of the debt ceiling and the role played by the Federal Reserve in the money creation process.
According to Fox Business, the bill passed last week:
… will allow the government to borrow whatever it wants until the end of 2024, when the debt ceiling suspension ends.
One critic, Maya MacGuineas, president of the Committee for a Responsible Federal Budget, weighed in on the issue, stating:
Much more will need to be done to ensure we don’t burden future generations with a smaller economy and a larger national debt.
Unfortunately, is there anyone alive who remembers a time when a true, concerted effort to avoid burdening future generations with a larger national debt ever existed?
Instead, the nation runs on debt, and the rest of the world follows suit. A meaningful discussion about resolving this issue cannot be taken seriously if it fails to consider Austrian economics or the role of the Fed.
Fed Chair Powell’s latest press conference failed to provide any reassurance regarding the resolution of this national crisis. However, he did reference the Congressional Budget Office (CBO) in his remarks.
CBO also says that federal debt will be 52 trillion by 2033.
An additional $20 trillion debt is projected to be added in the next decade, but this is highly optimistic, to say the least. Perhaps the only thing certain is the lack of desire to alleviate the burden on future generations.
Making matters more confusing, during the same press conference, a reporter raised the question of the debt to Powell, asking:
At what point do you talk more firmly with lawmakers about fiscal responsibility?
In which Powell replied:
I don’t do that. That’s really not my job. We hope and expect that other policymakers will respect our independence on monetary policy. And we don’t see ourselves as, you know, the judges of appropriate fiscal policy. I will say, and many of my predecessors have said that we are on an unsustainable fiscal path and that needs to be addressed over time.
This is strange because a few months ago in May, following Powell’s decision to hike rates, he seemed quite okay with sharing his thoughts on fiscal policy. In his own words:
From our standpoint, I would just say this: It’s essential that the debt ceiling be raised in a timely way, so that the U.S. government can pay all of its bills when they’re due. A failure to do that would be unprecedented.
With a national debt of $32 going on to $52 trillion if all goes according to plan, rest assured, things will not go according to plan. It is highly likely that within the next 10 years the debt will far exceed the projected $52 trillion mark.
If anything else should be made clear, it’s that the idea of “central planning” is one of the world’s greatest misnomers, as those in charge of monetary and fiscal policies have not the slightest care or capability of planning for the future.
