In case you were wondering about the precarious fiscal health of America, it’s really bad (and getting worse).
This morning on The Call @ Hedgeye, Hedgeye analyst Josh Steiner explained the mindboggling debt insanity coming down the pike. A rough transcript of his conversation with Keith McCullough follows below the video. Stop reading now if you don’t want to ruin your weekend...
“The deficit over the next decade is projected to run at NEGATIVE $20.3 TRILLION. Right now, you’ve got about $32 TRILLION in debt outstanding at the federal level. Roughly $25 TRILLION of that is held publicly. That public debt piece is going to grow from around $25 TRILLION up to $47 TRILLION.
And that assumes no recession in the next decade. It also assumes no other exogenous shock like a war, or a pandemic or anything like that.
In other words, best case scenario—the debt is going to grow to $47,000,000,000,000 by 2033.
One other callout in this.
On the interest side—if we look at the next ten years, the amount that’s budgeted to be spent on defense is around $10.3 trillion over the coming decade. The net interest side, assuming these rate assumptions which I don’t know are right either, as a country over the next decade we’re going to spend $10.6 trillion on net interest expense on the debt, that’ll be outstanding. So more than the defense budget on net interest over the coming decade. That seems pretty remarkable and notable.
“2033 by the way is right inside the leather on the timing of the Fourth Turning, never mind assuming there’s no recession which is ridiculous. Maybe that’s the point. You get a $47 trillion dollar debt bomb.
As opposed to listening to some farmer named ‘Jim’ on CNBC about the future economy, maybe entertain Stan Druckenmiller’s views? That’s actually somebody who called a recession after being bullish, sounds familiar, and made money during recession.
Druckenmiller is as good as anyone on the planet on this, and he’s way more bearish on this topic than you and me on this topic.
