New Study: US Economy Actually About to Sink

New Study: US Economy Actually About to Sink by Jon Hellevig – Russia-Insider

Risking WWIII, catastrophic economic prospects push the desperate US regime in a crazed hurry to attempt the establishment of an absolute world hegemony

The US economy is about to go belly-up within 5 to 10 years threatening to take the empire down with it. At the same time China and Russia continue their meteoric rise economically, technologically, and militarily. This is why the US Deep State regime is in a crazed hurry to attempt the establishment of an absolute world hegemony within the few years before the window of opportunity for the New World Order shuts forever.

America is sinking. Will she take the whole world down with her?

This is why the US and its European vassal regimes have been stepping up their hostilities, trade wars and military provocations against Russia and China.

The Western globalist elite is desperate, therefore literally anything can happen. The fate of the whole world is at stake as the United States tackles its sinking economy.

A fresh study by Awara Accounting shows that two decades of debt-fueled sham growth, creative accounting practices and war spending has pushed the US economy to the brink. It is therefore doubtful whether the already exhausted US economy can bear the additional stress from the massive drive to expand the US global hegemony, the increased confrontation and arms race with Russia and China, as well as the incipient trade war with China. Most probably it can’t.

Skyrocketing interest on the ballooning US government debt might gobble up 25% of the budget

The already enormous US debt is ballooning as the government borrows trillions to keep the economic bubble in the air and to imitate growth. The US federal budgets for 2018 and 2019 and the 10-year projection will create huge deficits adding yet more debt to the tune of a trillion dollars per year – per official projections – until 2023. Our analysis shows that the actual borrowings might vastly exceed that, inflating the debt balloon by $10 trillion, or more, in just five years, and reaching 140% of GDP by 2024.

But new global economic realities have clouded the prospects of the US being able to count on continuous low-interest financing of its deficits. Following predictions of mounting debt and interest costs, even the government has factored in an almost 150% rise in annual interest expenditure by 2028, reaching $760 billion. We predict (concurring with other analysts) that the interest expenditure is very likely to actually swell twice as much and reach an annual $1.5 trillion by 2028. That’s a totally unsustainable level, and even double the size of the sacrosanct war budget for 2028 (as per the government’s 10-year plan). $1.5 trillion on interest would mean 25% of the total budget, compared with 7% in 2018. There is no way that the US economy can afford that cost. But because of skyrocketing social costs and the war budget priorities, the budget offers no flexibility, even when everything else is being thrown overboard.

In view of this, it is clear that the present US economic system will not survive beyond the next 5 to 10 years. Massive changes in the economic model would have to be undertaken either in an organized fashion (hardly imaginable) or through a mega financial crisis. Ultimately this would lead to a permanent downgrading of US standards of living as the economy would have to adjust back to its pre-financial bubble level of $14.5 trillion (a 30% drop from present debt-fueled level). Following these cataclysmic adjustments, the US would lose its economic hegemony and hegemonic military power. This would give a per capita GDP of just above $30 thousand, almost on par with Russia’s present $28 thousand per capita.

There has been no real GDP growth since 2007

We argue that there has been no real GDP growth since at least the 2007 – 2008 crisis – and most probably since 2000 when the tech bubble burst. The semblance of growth has merely been created by way of massive borrowings in all sectors of the economy: public and private, corporate and household. Starting with deregulation and liberalization of the capital markets (and the speculation it entailed) in the late 70s and 80s debt growth accelerated above growth of the underlying economy and really shot off in the wake of the two financial market crises. (Table 1). An even earlier turning point be can be identified in 1971 when the U.S. abandoned the gold standard. Whereas, the size of the debt has historically corresponded to the size of the underlying economy, the level of US total debt (public and private) is now 3 times higher than the GDP.

After the 2007 financial crisis, households lost their capacity to rack up more debt, but since then the government has stepped in to make up for the shortfall with its colossal borrowings in order to keep the economy floating. Table 2 illustrates the precipitous rise of national debt (government debt) over the GDP since 1980 – beginning of market liberalization – and again after 2000, in the wake of the tech bubble crisis.

In fact, the US government debt is higher than what is shown in the above graph. This is because contrary to global practices, the US only reports the debt of federal government failing to report debt of states and municipalities (local debt). With local debt, the US debt-to-GDP ratio would be 125%, which is the correct indicator for global comparisons.

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