There are people in comments who still believe this national ship can be saved, that somehow the nation can right itself, if only we elect the right people. Let me explain why that can’t- and more importantly, won’t happen.
The Debt
We currently have a $40 trillion national debt. Here is how it breaks down:
- $8 trillion of that is money we owe to ourselves in money that was stolen from Social Security. Essentially, the SS trust fund is a pocket full of IOUs that we left behind when we spent the trust fund money.
- $20 trillion of that is owed to mutual funds, pension funds, insurance companies, banks, and individual investors who hold T-bills and Savings bonds
- about $5 trillion is owed to the Federal Reserve
- $9 trillion to Foreign investors
- The remainder to state and local governments
We are 8th in the top 10 largest debtor nations in the world.
- Sudan ~252%
- Japan ~230%
- Singapore ~175%
- Greece ~142%
- Bahrain ~141%
- Maldives ~141%
- Italy ~137%
- United States ~123%
- France ~116%
- Canada ~113%
Just two years ago, we were tied for 10th place with Bahrain.
Repudiating this debt will destroy pension funds and savings of US citizens more than it will hurt others. Of course, that will have to happen eventually, and when it does, the US economy will completely tank.
Budget Deficit
The US has a huge budget deficit. Last fiscal year, the US government spent $7 trillion, but only collected $5.2 trillion in taxes. To illustrate the scope, it only cost $296 billion to fight all 4 years of World War 2 ($4 trillion in today’s dollars).
What Voters Want
Every voter in the US has their own pet projects they don’t want cut. The fact is, about 60% of the residents of the US gets more in Federal funding than they pay in taxes, and there is no recovering from that. To illustrate- what would you say if DJT announced tomorrow that to save the nation, the entire Social Security and Medicare system was ending on January 21, but the taxes would remain in order to pay off the massive $40 trillion in debt? Would you:
- Be OK with that, calmly walking into personal bankruptcy, secure in the knowledge that your personal sacrifice saved the nation?
- or would you scream some variation of “That’s my money! You took it from me, and I want it back!”
That’s why we have a deficit in the first place. Any politician who votes to cut those pet projects will get voted out of office. Imagine someone voting to stop paying Social Security, Welfare, Medicare, the military, or any other project that people consider to be important to them. Fill in the project that’s important to you, and you will see the issue. If ~60% of people are net recipients in an annual sense, asking them to accept an immediate, visible hit to their lifestyle is fighting three stacked disadvantages:
- Loss aversion beats civic virtue: People weigh losses about 2× more heavily than equivalent gains. “You’ll lose X now for a collective benefit later” is psychologically uphill.
- Diffuse benefits vs. concentrated pain: The “public good” is abstract and long-term. The lifestyle hit is personal, concrete, and immediate.
- Electoral time horizons are short: Voters punish pain now even if it prevents worse pain later. Politicians know this and act accordingly, which is why the can keeps getting kicked down the road. That’s a problem for future America, but politicians need votes now.
That combination is why austerity platforms almost always lose in normal times. It just isn’t possible to change our nation’s course. Voting won’t change it. Politicians work to provide graft for themselves, while at the same time sending money to their base constituency. Call it doomsaying, call it black pill, call it what you want- but saying that we can vote our way out of this is foolishly mistaken. There are no cuts, no magic wand waving, and no solution that the people of this nation will accept until they are forced to accept it. This only ends when the current system collapses.
Whatever your own personal theory on how to save this sinking fiscal ship, there isn’t one that enough people will accept that will be doable in an electoral sense. It just isn’t going to happen. Instead of fixing it, we kept kicking the can down the road, and we will continue to do so until it all collapses.
This isn’t a new thing- I have been telling people this for 20 years.
So what will happen? The lesson is found over and over again in history books. Economic collapse will create hard times. People will demand that the government fix things. Once voters believe that some scapegoat:
- The wealthy
- Corporations
- Political elites
- Capitalism itself
are insulated or there is some gaming of the system, support collapses instantly. Even small symbolic elite sacrifice can matter more than the raw dollars. At that point, the electorate demands that something be done.
What doesn’t work
- “It’s economically responsible”
- “Experts say we must…”
- “Future generations”
- “The math demands it”
- “Hard choices”
Those arguments persuade analysts, not electorates. Thinking people, capable of reason. There are people that read this very blog, perhaps even you, who are seeking scapegoats. Instead of asking 60% to accept cuts, democracies tend to choose:
- Inflation (stealth lifestyle reduction)
- Debt monetization
- Bracket creep
- Means-testing by complexity
- Regulatory costs instead of taxes
- Deferred pain
These spread losses invisibly and avoid direct electoral punishment. So what tends to happen when an electorate kicks the can down the road over and over again, until the inevitable happens, and the can just can’t be kicked any further?
Economic Collapse
This is one of those questions where history is depressingly consistent. When electorates repeatedly defer pain and the system finally hits a hard constraint (currency, credit, or productive capacity breaks) the outcome tends to follow a fairly predictable sequence. The details vary by country, but the pattern shows up again and again.
Stage 1: Sudden loss of illusion
For a long time, reality is abstract:
- Debt numbers are big but distant
- Inflation is “temporary”
- Growth is “around the corner”
Then something snaps:
- Bond markets revolt
- The currency plunges
- Banks freeze withdrawals
- Imports disappear
- Pensions don’t pay on time
This is the moment when credibility collapses faster than the economy. People don’t just lose money, they lose trust in the system’s promises.
Stage 2: Rapid political radicalization
Once the can truly can’t be kicked:
- Centrists get wiped out
- “Responsible gradualism” is treated as betrayal
- Voters jump to whoever sounds decisive, not correct
- You usually see:
- Hard-left promises to protect livelihoods at any cost
- Hard-right promises to restore order by force if needed
- Populists blaming internal enemies, external enemies, or both
The technical cause of collapse (debt, demographics, productivity) becomes irrelevant. Politics turns moral and tribal. I believe that we are in the later portions of Stage 1, and the beginning portions of Stage 2.
Stage 3: Emergency economics
Normal rules die quickly. Governments reach for:
- Capital controls
- Forced conversions of savings from personal to government accounts. Seizing of retirement accounts, 401k’s, those sorts of things. They are ready sources of emergency cash. At last count, Americans have about $48 trillion in retirement savings. That amount of money is quite tempting.
- Pension “adjustments”
- Price controls
- Nationalizations
- Wealth grabs framed as a form of “social justice”- it isn’t fair that rich people have so much, while poor people have so little.
These measures are rarely optimal—but they are fast, visible, and politically palatable. The goal shifts from efficiency to maintaining order. This is likely the point where our government as we know it is gone. We will essentially have a Communist/Socialist government, and even though caused by profligate government spending, capitalism and capitalists will be blamed for the failure.
Stage 4: Informal systems replace formal ones
As institutions lose credibility:
- Black markets explode
- Barter reappears
- Hard assets substitute for money
- Family, ethnic, or local networks matter more than law
- The state still exists, but compliance becomes conditional and transactional.
At this point, the social contract is already broken, even if the flag still flies over the ruins.
Stage 5: Scapegoating and memory laundering
Once the pain is unavoidable, the electorate rewrites history. Typical narratives:
- “We were lied to”
- “This was done to us”
- “If only we had stopped them earlier”
The scapegoats pay the price. Rarely do electorates say: “We voted for this path over decades.” Responsibility is externalized because collective guilt is politically unusable. This is when the scapegoats are imprisoned or even slaughtered.
Stage 6: One of three endgames
- Authoritarian stabilization
- Strong executive power
- Crushed opposition
- Managed scarcity
Partial economic recovery at the cost of liberty. This is historically the most common outcome.
- Painful democratic reset
- Mass defaults or restructuring
- Pension and entitlement cuts
- Currency reset
- Lost decade(s)
- Eventually sustainable footing
This requires exceptional institutional strength and social trust. Rare, but real. I think this is the least likely path that will occur here. There is not enough national unity and too much tribalism for that to occur in the US.
- Fragmentation or chronic instability
- Brain drain
- Persistent inflation
- Cycles of protest and repression
- Weak state capacity
- Not a collapse into chaos—just a long, grinding stagnation.
I think this is less likely than than authoritarianism.
This is what history says happens time and time again. History doesn’t repeat, but it sure does rhyme.
The way things are going, I think we are going to see a communist dictatorship, unless the US gun owning public joins the fray. I don’t see that as being likely, however, for the same reason why people won’t vote to cut their own benefits for the public good. If a person won’t vote for fiscal martyrdom for the public good, they certainly won’t elect to throw themselves into the civil war meat grinder.
No, the right will continue to sit on the sidelines, claiming that the time isn’t right to act, until it is too late for that to help. This ship is going down, and there is nothing to be done but hope it won’t happen during your lifetime.
