Politicians and economists love to fantasize about unlimited government spending without restraint. The argument is that the US is so creditworthy that they will never default on their debt (just like the RMS Titanic was supposed to be unsinkable … until it sank on April 15, 1912 killing more than 1,500 people after striking an iceberg.
The US economy is already at a Q2 MZM money velocity BELOW 1 (actually 0.955) and public debt to GDP of 136%.
This becomes even more relevant since Vice President Biden is proposing $11 trillion in new Federal spending (Harris wants $40 trillion in new spending). Of course, both of these will require massive tax increases). But as we know, the wealthy have a cadre of tax accounts to minimize their tax liabilities, so Biden/Harris will have to go after the middle class (the households making under $400,000 per year, the vary households that Biden/Harris and their mouthpieces claim will not see tax increases will of course see tax increases). The rest? MORE public debt!!
Of course, the US national debt is already large than the total economy.
And then we have the Green New Deal (or Biden’s Climate “Plan”). The American Action Forum, estimated that the plan could cost between $51–$93 trillion over the next decade. They estimate its potential cost at $600,000 per household. It is unclear whether Biden/Harris are low-balling their true Green spending intentions or not. But needless to say, the Biden/Harris spending fantasies assume that there is no iceberg ahead.
BUT what happens when the US economy strikes the iceberg? Look for taxes to skyrocket, crushing economic growth. Etc. And interest rates to soar.
Maybe The Federal Reserve can take a lesson from Rumpelstiltskin and spin gold from hair, a truly renewable resource.
