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Global Times Observes U.S. Debt Problem Bigger than China’s

Jan. 6, 2020 (EIRNS)—A Jan. 5 Global Times article, “U.S. Debt Problem Almost Out of Control,” is a thrust at the lack of a positive future direction for the United States economy, given that it is consuming nearly $5 in new debt to create each additional dollar of domestic product. The ratio of total American government, household, and business debt combined is 330%, the unsigned article states, higher than the 295% ratio for China which City of London and Wall Street financial press regularly say is “catastrophic” and “makes a crash inevitable.”

The Chinese Communist Party-linked paper reports that, of 117 global corporate defaults in 2019 (up 43% from 2018 according to S&P Global Ratings), 77 were by U.S. corporations. This is hit correctly as the $15 trillion center of the huge and shaking debt bubble. The paper also implies that federal government debt, now at $23 trillion, can become unsustainable in the next few years.

While government debt is the part of the bubble in which defaults are not likely to appear, the way the Federal Reserve is dealing with it is threatening severe inflation at some point soon. More importantly, there is no prospect without science-driver crash programs, while under the evil spell of zero and negative interest rates from which China has not suffered, for the real productivity growth of the American population which makes such debt easily repayable.

Speaking of inflation, the Federal Reserve is effectively beginning to issue helicopter money, the first step to the “regime change” demanded by BlackRock and Bank of England Governor Mark Carney at Jackson Hole. This has been done not through the continuing liquidity repurchase loans, but through the program of purchasing $60 billion/month in short-term U.S. Treasuries which began Oct. 4, 2019, and is claimed to be “not quantitative easing.”

During late December and early January, the Fed was buying short-term U.S. Treasury securities from the primary dealer banks, whose purchase by those banks had just settled the previous day, or in some cases two days earlier. It was effectively buying new U.S. Treasury short-term debt as the government issued it—a violation of the Federal Reserve Act, and the definition of the threshold of helicopter money. This has so far been done on four separate days’ QE operations of $7.5 billion each of those days, so in the tens of billions total so far.

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