In this world, few things can be measured in the trillions. The US national debt, which first hit $1 trillion under President Reagan, is one. During his tenure, the national debt increased from roughly $700 billion to $2 trillion; a percentage increase that, if happened today under President Biden, would be nothing short of calamitous.
The era of the trillion-dollar balance sheet is still relatively new, with 2008 being the first time the Fed’s balance sheet crossed the trillion-dollar threshold. Apple, in 2022, with assistance from the Federal Reserve’s $5 trillion increase in asset purchases since the start of the pandemic, became the first company valued at $3 trillion. Meanwhile, at $1.76 trillion, the largest asset held by the United States Government is the student loan account receivable.
Yesterday Forbes reported that:
Biden announced an extension of the student loan pause. For over two years, payments on most federal student loans have been suspended, along with interest accrual and collections efforts against borrowers in default on their federal loans.
Without a doubt, the $1.76 trillion “asset” (plus interest) will never be collected by the US Government. To even call this an asset is disingenuous since “government grant” or “student stimulus” is more befitting.
Contrary to popular opinion, debt does matter. Like the student loan debt, the current national debt of over $30 trillion will also never be repaid; not that anyone in power seems to mind. The only real questions to ask are: “How many trillions will the next government spending bill require?” “When will the next stimulus check arrive?” and eventually… “How many trillions are needed for the next Federal Reserve bailout?”
Society has never moved beyond inflationism as a monetary policy. Perhaps that’s why every new generation of economic wizards conjure up inventive names to describe their Magical Monetary Techniques, hinging upon the pretense of increasing the supply of money and credit, passing it around rather hurriedly in times of societal distress with claims of making our lives easier.
We’ve seen the Paycheck Protection Program nearing the trillion-dollar mark. As part of a $5 trillion pandemic relief fund, it included several government stimulus checks totalling around a trillion dollars. Considering all we’ve been through in the past few years, society may have very well become numb to the significance of a trillion dollars.
A trillion here and a trillion there. No one knows when the next big crash will happen. But a crash after a boom is always inevitable, unless we’ve entered a new epoch where market downturns and stock market crashes never happen again. The timing of the catastrophe is unknowable. But the response by our central planners is reasonably assured. There will be trillions in government spending, trillions added to the balance sheet, and with enough new trillions added to the financial system, the stock, housing, and bond markets should be poised to gain that much more trillions in value.
Sadly, everyone is a trillionaire in Zimbabwe. We can only hope it will never come to this, but there’s nothing to show us it won’t. Yet it lies within the realm of possibility that our children, or our children’s children will all be trillionaires. And should this day ever come to pass, they’ll all remark how: “a trillion dollars ain’t what it used to be.”
