$40 Trillion Debt: The Mistake Empires Make

The U.S. national debt has reached forty trillion dollars for the first time. Treasury Secretary Scott Bessent publicly stated he does not understand what is happening with oil prices and bond markets.

Bessent's admission of uncertainty is unwise because it suggests the Treasury Secretary is losing control during a fraught market situation.

Diesel is in increasingly short supply because heavy crude from Russia and the Persian Gulf is not reaching global markets in needed quantities. Venezuelan crude production is insufficient to make up the difference in diesel supply.

U.S. deficits expanded significantly during the pandemic and grew further under Biden's major spending program.

Biden's spending program misunderstood the current U.S. economy and ran it hot, resulting in more inflation rather than economic or industrial growth.

The Trump administration has increased the budget deficit further despite Republican talk of fiscal responsibility. The administration is planning a $1.5 trillion defense spend, resulting in an even bigger deficit. DOGE and Elon Musk's attempts to rein in spending failed.

China is becoming less willing to buy U.S. Treasuries due to an ongoing economic conflict with the United States. Japan is evolving its economy by considering selling U.S. debt and repatriating savings, reducing demand for Treasuries. AI companies are releasing large amounts of debt to fund investment programs, competing directly with government debt and pushing yields higher.

Inflation will likely rise due to higher energy and food prices.

Raising interest rates to counter inflation is undesirable because the rate of interest on existing government debt is already grim.

The U.S. could pull out of the conflict with Iran to help oil prices, calm insurers and tankers, and improve the global economy. Removing sanctions against Russia would help the economic situation.

The U.S. will not de-escalate with Iran or remove Russian sanctions because ideology and politics make it impossible.

High U.S. GDP numbers are often simply a reflection of debt issuance rather than real growth.

Policymakers mistakenly believe that spending more will drive expansion faster than debt accumulation, based on a misunderstanding of 1930s and 1940s economic policies.

Many in the U.S. assume the country has unlimited credit, but no nation ever does. The mistake of assuming unlimited credit has been made by past empires including Rome, France in the 1780s, Russia in the 1960s, and Britain in the 1930s.