US National Debt Exceeds 33 Trillion But Wealth Surged beyond 153 Trillion!

The U.S. National Debt has exceeded $33 trillion for the first time. But it’s important to note that the country’s national wealth has grown significantly in the past decade. Between 2012 and 2021, it increased by 220% to $153 trillion, even after controlling for inflation and economic growth. Therefore, the National Debt must be placed into proper perspective. Certainly, the New York Times’ Alan Rappeport article sounding the alarm about the debt, does not suggest any fiscal trajectory due to the spiraling debt when our wealth and growth are quadrupling. If our country is weak economically with high poverty then a high debt is a problem. But when the economy has this much wealth and growth then we can afford to have high debt. But give Americans the money.

Introduction:

U.S. National debt Exceeds 33 Trillion While National wealth surged by hundreds of trillions more! A more nuanced perspective emerges when juxtaposing debt with wealth. In a recent report by The New York Times, the U.S. National Debt soared to unprecedented heights, surpassing $33 trillion for the first time. This staggering figure has prompted concerns about the country’s fiscal trajectory, especially as Washington grapples with the imminent threat of a government shutdown amid debates over federal spending.

However, a more nuanced perspective emerges when juxtaposing this debt milestone with the remarkable growth in the nation’s wealth. Over the past decade, the country’s national wealth has experienced an astounding surge, catapulting from $69 trillion to an impressive $153 trillion between 2012 and 2021. Even after meticulously controlling for inflation and economic growth, this represents a remarkable 220% increase, as detailed in a report by the St. Louis Federal Reserve.

Wealth Growth and Economic Context:

This substantial growth in wealth, when considered alongside the escalating national debt, demands a recalibration of our understanding. Alan Rappeport’s article in The New York Times emphasizes the stark reality of the U.S. fiscal landscape, prompting a critical reassessment of our economic narrative. The debt, when viewed through the prism of quadrupling wealth and robust economic growth, does not necessarily indicate a perilous fiscal trajectory.

Indeed, the prevailing economic strength and burgeoning wealth underscore the capacity of the nation to manage a high debt load. The age-old dichotomy between a robust economy and a burdensome national debt is brought to the forefront, challenging conventional wisdom and emphasizing the importance of proper context.

Economic Perspectives and Political Choices:

Former Ambassador Nikki Haley’s recent remarks inject a dose of pragmatism into the economic discourse. Many Americans, she notes, believe in the economic prowess of leaders like Trump, who, despite growing the national deficit, are perceived as champions of economic stability. For the average American, economic guarantees often take precedence over other considerations, even as the national debt mounts.

Haley’s observations point to a broader truth – Americans are inherently spenders, and economic well-being holds significant sway over political choices. Amidst concerns about debt, questions arise about the allocation of substantial funds overseas. This apparent contradiction prompts contemplation: Are the economic interests of Americans truly prioritized during times of high national debt?

Unemployment Realities and Inflation Figures:

Scrutinizing the reported unemployment figures reveals a stark disparity from the ground realities faced by many. The exclusion of 1099 workers, entrepreneurs, and those navigating the gig economy distorts the true employment landscape. Business closures, foreclosures, and the economic fallout of the pandemic paint a bleak picture that is not adequately captured by traditional metrics.

The Times’ report highlights the pushback against efforts to raise revenue and cut spending, sounding an alarm among budget watchdog groups. Michael A. Peterson of the Peter G. Peterson Foundation emphasizes the compounding fiscal cycle’s potential damage, projecting over $10 trillion in interest costs over the next decade.

Political Divides and Fiscal Responsibility:

As Republicans and Democrats in the House and Senate remain divided on strategies to avert a government shutdown, the blame game intensifies. Republicans advocate for spending cuts, holding the belief that out-of-control spending is the root cause of the nation’s fiscal woes. Meanwhile, the White House points fingers at Republicans, attributing the debt increase over the last two decades to tax cuts favoring the wealthy and big corporations.

The Treasury Department’s report on a $1.5 trillion deficit for the first 11 months of the fiscal year underscores the urgency of finding common ground. Treasury Secretary Janet L. Yellen, in a CNBC interview, expresses comfort with the current fiscal course but stresses the importance of mindful future spending, emphasizing proposed measures to reduce deficits while investing in the economy.

Wealth-to-GDP Ratio and Economic Shifts:

While the national debt takes center stage in discussions, The Economic Research Council sheds light on the critical context that often goes unnoticed. Analyzing U.S. wealth data from the Financial Accounts of the United States, the report reveals a significant shift in the wealth-to-GDP ratio over the past two decades.

Traditionally stable between 1950 and 1995, the wealth-to-GDP ratio witnessed a cyclical pattern from the mid-1990s onward. Corporate business and household assets drove two noticeable cycles, with the past decade experiencing an unprecedented surge. This rise, predominantly propelled by the value increase in corporate business and residential housing, presents a new economic landscape.

Factors Driving Wealth Growth:

Exploring possible explanations for this rapid rise, the essay considers factors such as increased market power of firms and the expectation of fast-rising future profitability. The rise in corporate-business wealth is viewed not merely as a reflection of current GDP but as an anticipation of future growth, supported by the high price-to-earnings ratios of U.S. technology companies.

Moreover, the report points out that GDP may underestimate the current economic landscape due to the inadequacy of accounting for certain services provided by technology companies, which are essentially free but immensely valuable to consumers.

Concerns and Implications:

However, concerns loom over the recent surge in the wealth-to-GDP ratio. Historical precedents show that similar increases triggered recessions in 2001 and 2008. The current surge, larger and more rapid than ever before, raises questions about the sustainability of this trajectory and the potential risk of another asset bubble.

As economic complexities intertwine with political choices and fiscal responsibility, the broader implications for the U.S. economy remain uncertain. The narrative surrounding the national debt must evolve beyond sensationalism, embracing a more nuanced understanding of economic forces and their consequences.

Conclusion

In conclusion, the juxtaposition of the national debt and wealth growth paints a complex picture of the U.S. economy. While concerns about fiscal responsibility and a potential fiscal crisis persist, the interplay between economic strength, wealth accumulation, and political choices highlights the need for a holistic and informed discourse. The Economic Research Council’s detailed analysis of the wealth-to-GDP ratio provides a crucial backdrop, urging policymakers and the public to consider the broader context in navigating the economic future of the United States. In Neoliberalism, the issue of income inequality as measured by the Gini provides even greater analysis and context. Over the last decade, income inequality has also been surging. We noted the Gini coefficient for post-industrial countries as against the Caribbean and other global south places. In the second edition of “Neoliberalism, Neoliberal Globalization Reconsidered, Neo-Capitalism and the Death of Nations,” we go even further exploring the rise in income inequality as against child poverty and crime and violence, while richer continues to get richer while limiting spending and mobbing up liquidity with the application of several incremental interest rate hikes. 

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Reference List:

1. McKenzie, Renaldo, “Neoliberalism, Globalization, Income Inequality, Poverty and Resistance,” Charlotte SC, Palmetto/The NeoLiberal, 2021.
2. Rappeport, Alan, U.S. National Debt Tops $33 Trillion for First Time – The New York Times (nytimes.com)
3. Chien, YiLi and Ashley Stewart, The Recent Rise of U.S. National Wealth | St. Louis Fed (stlouisfed.org)

About The Author:

Renaldo McKenzie is the author of Neoliberalism, Globalization, Income Inequality, Poverty and Resistance and the upcoming new book, “Neoliberal Globalization Reconsidered, Neo-Capitalism and the Death of Nations.” Renaldo is a graduate at the University of Pennsylvania and currently doing Doctoral work at Georgetown University. Renaldo is an Adjunct Professor at Jamaica Theological Seminary, Creator and Host of The NeoLiberal Round Podcast and Channel and President of The NeoLiberal Corporation.

Follow Renaldo on Twitter, https://twitter.com/renaldomckenize.

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