The U.S. economy had a blockbuster second quarter, with growth surging to a 4.1 percent pace, the Commerce Department said Friday. That was nearly double the first quarter rate of 2.2 percent and the strongest pace in nearly four years.
President Trump has been steadfastly claiming that his policies will catapult the U.S. economy into a much higher rate of growth — 4 percent over the next few years.
That would be about double the growth rate in recent years. And it would almost certainly mean a big boost in the standard of living for many Americans, with higher wages and better public services as the government raked in more tax dollars from a booming economy.
“We’ve accomplished an economic turnaround of historic proportions,” Trump said in remarks at the White House Friday morning. “Once again, we are the economic envy of the entire world.”
Even with the economic surge, are there still fundamental warning signs?
Socialist Democrats continue to screech for universal healthcare, free college tuition, guaranteed wages, and more free, free, free, the federal government is already spending approximately 52,000 dollars per second. The national debt has reached a record 21 trillion dollars, which is more than America’s gross domestic product (GDP).
This year, both Social Security and Medicare will have to draw down on their reserve funds to be able to pay benefits. The Social Security and Medicare trust funds will both soon be bankrupt. This will all have to be accounted for in the federal budget and by American taxpayers.
The Untied States is currently spending more on its military than the combined budgets of the next seven highest spending countries, and Congress recently increased military spending by 82 billion dollars–a total of 716 billion dollars. The US House has also recently passed a farm bill that increases spending by more than 3 billion dollars over the next five years. This bill does not take a step toward ending subsidies to wealthy farmers and even continues providing farm subsidies to non-farmers. The House version of bill increases the budget for food stamps by at least 1.7 billion dollars over the next five years.
Logically, congress will need to cut spending and raise taxes. They will never do that, and will instead, it will rely on the Federal Reserve to fix things using the inflation tax.
Trump’s tax reform plan increases the inflation tax by authorizing the use of “chained CPI.” Chained CPI hides inflation’s effects by claiming that rising prices do not harm Americans as long as they can still afford low-cost substitute goods to replace products they can no longer afford due to the Federal Reserve’s devaluation of the currency.
Increasing federal debt will also force the Federal Reserve to keep interest rates low to prevent federal interest payments on the debt from exploding. The Fed’s monetization of the debt will lead to hyperinflation and a rejection of the dollar’s world reserve currency status.
The danger, the good and bad is that the welfare and the fiat currency system will have to end. What that means for the average Joe is that they may need to develop a taste for cat food.