I was wrong.
It was spring 1995, twenty three years ago, when I sat with a friend at lunch and declared that "the US government will default on its debt in the next 30 years". His jaw dropped, he looked me in the eye and said that I was crazy. Technically, I still have the next 7-8 years to "win" on that bet, but to be honest, though I hedged my bet by saying 30 years, I didn't think the US government would make it to the year 2000 ...
But the reason why I thought the US government would default was the excessive high levels of government debt. Of course, the levels today are so much higher, stratospheric even. We have found new asset classes to leverage that were unheard of in 1995, the decade that saw an explosion of debt instruments like "junk bonds" and over-leveraged notes.
This is one of the biggest reasons why people are conservative. Ever increasing debt burdens, and the danger that the public treasury is simply an open piggy bank to be rifled through constantly by special interests have made for many a conservative.
Well, folks are sounding the alarm again; and my concern is right there with them. Big government and it's associated spending is bad news for the long term health of any nation. Will I be wrong again? I hope so; I would rather not be right and I don't wish financial collapse of a national scale on anyone. But ask yourself, if you were an investor, would YOU lend your money to the government, expecting to get it back?
Read article: https://www.cnbc.com/2018/05/21/goldman-sachs-the-fiscal-outlook-for-the-us-is-not-good.html
