Everything seems to be going amazingly in
the United States. The crazy years have returned. The economy is growing, employment rates are
strong, wages are rising and taxes are being cut while government revenues are at a historic
high. Yes, everything seems to be sailing smoothly
in the United States. Let’s take a look at the S&P 500, the most
important stock index, which covers the 500 largest listed companies in the United States. Well, we’ve been seeing uninterrupted growth
for 9 years… Therefore, it wouldn’t be unreasonable to
say that if we look at this index’s graph, it would remind us a lot of one of Elon Musk’s
rockets’ flight paths. Don’t believe me? Well, check out this data. Since 2009, that is, less than a decade ago,
the S&P 500, while including dividends, has had a return of more than 400% To give you an idea of how much that is, if
we’d invested… say… 10,000 dollars in 2009 in this index, in the S&P 500, today
we’d have 50,000. Not bad, right? That really is multiplying bread and fish.
In recent years, my friends, it’s been so easy to make money in the markets, that almost
anyone can feel like Gordon Gekko himself. But don’t jump off your seat just yet…
because here’s a question. Is everything really so rosy or does the US economy have
a hidden, less glamorous face? Well, listen up. (THE OTHER FACE) At VISUALPOLITIK we usually say that things
are never as perfect as they seem. Yes, right now the United States is an economic
machine… a high-speed machine; especially for anyone who has invested, as we saw, in
the United States stock exchange. However, the great American power has a problem…
it’s addicted to credit. You heard that right. Companies, families, governments… Thanks
to years and years of very low-interest rates, almost unlimited credit, and to Federal Reserve
policies, practically every institution in the country is submerged in debt. Yes, see, after the great 2008 crisis, the
world’s Central Banks decided to implement a policy that could be simplified as follows. If we issue, that is, if we create more money
–what is popularly known as “turning on the money printing machine”– and on top
of that, we set very low-interest rates, we will achieve two things: For one, we’ll get banks to lend more money
to families and companies, so they can consume and invest more, and any company in trouble
will be able to obtain financing and not have to shut down, thus making the economic machine
run again. And for another, with all this new money,
we can also finance governments, so they don’t have to make severe spending cuts and so they
can continue to consume. Sounds good, right? Well… wait a moment
because there’s a little problem… Sorry, little? Huge… See, this recipe, this plan… has other consequences…
because we’re talking about doping the economy. And when we talk about economic doping, we’re
basically talking about two things: debt and inflation. Don’t believe me? Consider this: In recent years, the United States has been
experiencing a golden age. More cars are being sold than ever, the real estate business has
taken off again and all kinds of products are flying off the store shelves….. of course, all those purchases have to be
paid for. American families are facing historically
high debts, which exceed $13 trillion, that’s more than $40,000 per citizen. But, my friends, if you think that’s all…
You’re quite wrong. If instead of taking a look at families, we
check companies, we find a very, very similar situation. The non-financial companies of the United
States accumulated debts of more than 8 trillion dollars. Nowadays, their leverage is higher than it
was in 2008 and most of that debt hasn’t gone to equipment, factories or anything like
that, but towards buying back shares and paying dividends Yes, folks, I know, these figures are so high
it’s hard not to get dizzy But… wait a moment. Neither companies nor families pose the biggest
problem… the biggest addiction problem is in Washington, with the Federal Government…
and the Trump administration. Here’s a question, and you can’t Google
it. Do you know how much money the United States government spends per year, how much
they cost? Listen up. (THE GOVERNMENT) At
the beginning of the year, specifically in February… of the year 2018, the United States
Department of the Treasury published its annual report for 2017. This is a report like the one that listed
companies present annually, where they state how much they spent, how much they paid, how
much they owe or what they forecast. Everything is collected clearly in a single easy to find
document. Yes, this is quite a good habit for the United
States government to have. But… these numbers are like a horror movie. In 2017, the federal government alone, that
is, without counting states and municipalities, spent or made payment commitments worth 4.6
trillion dollars… This means that by itself, the federal government is fighting to be the
third largest economy on the planet, not bad right? What a tally! But as you can imagine, the revenues aren’t
enough to cover all of these expenses… because the government far exceeded the gap by one
trillion dollars. Those really are losses. That’s more than Australia’s entire economy. To give you an idea, every minute that passes,
every minute! The US Government loses more than 2 million dollars. Yes, if the United States government were
a company, its shareholders would not be happy The most surprising thing about all this information
is that the year 2017 in the United States wasn’t a year of war, crisis, recession…
or anything like that…. it was just a normal year… well, I say normal… it was a prosperous
year, a year of economic growth. But, do you know what the result was? Well…
the federal government debt now amounts to the astounding figure that you see on the
screen… 20 trillion dollars! More than $ 60,000 per
American and almost triple, more than $170,000, per taxpayer. This means that the United States government’s
real debt exceeds its GDP by 100%. By the way, you’ll find the link to the Treasury
document in the description. Anyway, all of this debt may explain news
like this: (“China is reportedly thinking of halting
US Treasury purchases and that’s worrying markets” (The United States government debt currently
in Chinese hands decreases by 10% as compared to its historical highs”.) But… You know what? President Donald Trump
has a plan … (THE PRESIDENT’S PLAN) Lately it looks like Democrats and Republicans
can’t agree on practically anything. However… there’s a way to achieve this: break the
piggybank and distribute the gains. And that’s precisely what happened. In February,
Democrats and Republicans achieved the largest bipartisan agreement in a long time. What
for? Well, to increase public spending. (This agreement delivers on our commitment
to fully fund our national defense, no more short-term ploys and patches.” Paul Ryan,
Speaker of the United States House of Representatives.) With this agreement, the US government will
increase public spending by 150 billion dollars each year. Adding more wood to the fire! And take into account that the Republicans
spent 8 years criticizing Obama for overspending. Oh… because power does change everything.
It’s not so hard to understand Washington’s politicians, don’t tell me you wouldn’t
love to overspend with money that isn’t yours. But… that’s not all… Do you remember
Trump’s tax reform, the one that was just approved? We talked about it here on VISUALPOLITIK. Well… as we saw, with this tax reform the
government’s revenues are going to drop a lot. So the question is, if we lower income and
increase expenses, what do we get? Exactly! An even bigger deficit. So much so that in 2019 the US government’s
deficit is expected to be between 5 and 6% of the GDP… A huge deficit typical of a
country in crisis. Because, come on, when there’s a crisis
we can all understand the government having huge holes in its budget: low employment,
low collection, etcetera etcetera… but when all goes well? Yes, we were told that Trump was coming to
set order and put an end to Washington’s debauchery… but it looks like he finally
decided to join the party, and in style. But, based on everything we’ve been able
to see, more and more experts are wondering, who’s going to buy all this debt? Because, of course, in the next few years,
the United States Treasury is going to have to issue trillions and trillions of dollars
of debt to pay for this huge mismatch. And, in principle, the US’s 3 main lenders,
that is the Federal Reserve, China and Japan, are no longer buying… so the result seems
to be this: (We expect rising interest rates and a rising
debt level to lead to a meaningful increase in interest expense”. Goldman Sachs) Anyway, my friends, that’s the way things
are. This is the other less attractive face of the United States. I hope so many numbers didn’t make it harder
for you to follow this video, but we thought it was important to tell you the other side,
the darker side of the US economy, so that you can really know how things are and why
Washington should start taking this problem a little more seriously. And no, printing money isn’t the solution.
Every time more bills are printed, more inflation and debt come. And things like this happen: (“The dollar slipped to its lowest levels
in more than three years”. REUTERS) And we already saw here on VISUALPOLITIK,
how important it is to have a strong currency, a solid currency. But now it’s your turn, do you think Washington
politicians should cut public spending? Leave your answer in the comments as well
as in the survey. I really hope you enjoyed this video, please
hit like if you did and don’t forget to subscribe to our channel for brand new videos
every Monday and Thursday. Also, don’t forget to check out our friends at the Reconsider
Media Podcast – they provided the vocals in this episode that were not mine! And as always,
thanks for watching!