Hey this is tom nash and unfortunately, this video isn't gon na be pleasant to make, but we got ta make it now. We have a major problem that has been overlooked and ignored for decades and now it's about to blow up in our face. Let's talk about it, okay, so let me show you by example: imagine you're in a big ballroom, there's hundreds of people everybody's having a great time dancing joking about sports weather drinking some tea eating some cake in the middle of this room, packed with people. There's a guy who's, sweaty, he's angry, he's, holding two grenades and he's basically screaming hey i'm about to let go.

Please please listen to me we're in trouble and everybody just ignores him as if he doesn't exist. Now that sort of situation sounds ridiculous, and yet this is exactly what's going on right now in the united states. Right now, we're covering topics such as the inflation potential stock market crash. Will the fed raise the interest by half a percent or three quarters of a percent all while we completely ignore the elephant in the room with the two grenades the u.s national debt is a much bigger problem than any of the issues.

I just mentioned how bad? Well, imagine that we are currently at 21 trillion dollars of gdp gross domestic product. This is the best economy in the world 21 trillion dollars. This is what the us makes in a year. You want to guess how much that we have 30 trillion dollars.

We have 30 trillion dollars of that right now, over 21 trillion dollars of gdp. Now, just three years ago, in 2019, our debt was 17.. We went from 17 to 30 trillion dollars in three years. We have almost doubled our debt in three years.

We now have way more debt than gdp. This is the equivalent of somebody maxing out all his credit cards and then getting some more credit cards, maxing them out and eventually getting some more credit cards and maxing them out, and just thinking that this will never never be a problem. We can just keep getting new credit cards. Unfortunately, the world doesn't work like that and we're about to hit it hard.

Let me explain: the us enjoys the status that no other country in the world has, which is the world's reserve currency. This is the best economy in the world. This is the safest economy in the world. The currency is like gold.

It's a standard. Every country in the world wants to hold dollars whether it's to buy oil, because you can only buy oil in dollars or it's to buy commodities or to hedge. For whatever reason, there is no alternative for the dollar, which creates a massive demand for this currency, allowing the us government to issue these bonds for virtually very low to non-existing interest. As you know, in bonds, the higher the demand for a bond, the lower the yield.

So this is kind of a hack. This is why the u.s has allowed its citizens and residents to have this insanely comfortable lifestyle, because it could just print money on demand and when i say print money, i'm not talking about literally printing money in the printer. This is how the us gets money. They issue more.

These bonds, countries or institutions buy them. We get more money now. The problem is that you can only do it so far and now that we have ballooned to 30 trillion dollars. The problem starts to surface because, as it stands, even at these zero rate, interest rates almost zero, we're paying one and a half percent of interest of our gdp to service these loans.

Just to give an example, we're paying almost as much as the united states spends on infrastructure, roads and education, which is two and a half percent of our gdp for servicing debt, now make no mistakes about it. By 2030, we're gon na hit two and a half percent of our gdp, even at these almost non-existent interest rates. So in a few years we're going to be paying just as much for infrastructure, education and anything else that you can think of. As far as progressing our country to service a debt now, this will only get worse again, assuming there's no interest rate hikes long term by 2050.

We're going to pay 60 trillion dollars 60 trillion dollars in debt service by 2050. We're gon na spend nine percent of our gdp per year on servicing debt by 2043. The expense that we have on these interest payments is going to be the largest of any governmental spending program in existence and the problem with that that the gdp is a zero-sum game. You take some out, you got ta get some back in.

So if you take out so much of a gdp to service that other things have to suffer like education, infrastructure security, all of these things that the government is now financing will have to be cut back to pay for these interest payments. And that's assuming the interest rates will never ever go up. They'll stay nearly zero percent forever and now imagine that this delicate system that can only operate and even that, with a lot of question marks when everything is peachy, imagine somebody throws a monkey wrench into the system exactly what happened a couple years ago we got the Pandemic we printed a lot of money. There are still supply chain shortages, oil prices, energy prices, geopolitical tensions, lockdowns.

All of this created massive inflationary pressures, and now the federal reserve basically has to stop inflation from basically wreaking havoc through our economy. I mean we don't want to get to a place where we pay ten thousand dollars for soup. I mean that happened before look at russia at the end of the nineties i mean that thing is not funding now. The problem is that the fed is now looking at this and saying: hey guys, you just screwed us, because we can't raise interest rates, which is something we absolutely have to do to stop inflation, because we would not be able to afford to pay interest on this.

Massive debt that you, the u.s government, has accumulated because for us as the federal reserve, the only way we can do to stop this is to raise interest rates and stop the economy from going crazy. But if we raise the interest rates, you guys would not be able to service this massive debt that you've accumulated. So what are we doing here now in this video i'll? Show you possible solutions to this. This isn't doom and gloom, and just see you later, i will show you that there are solutions but they're, not politically popular.

That is why your politicians are basically not taking the correct action because they're trying to kick the can down the road i'll talk about in a second now, just to show you how bad interest rate increases will be. Let me give an example: the amount of interest payments we paid for the first five months of 2022 are bigger by 30 billion of what we pay last year, and that is with point 25 interest from march, so no interest until march from march. Until now, for two months, point 25 interest and we're already at 30 billion more this year for the parallel term that we had last year. Imagine what would happen at two percent, three percent, four percent five percent interest.

Now how much exactly we need as far as increase rates? Well, we need a lot there's a very famous rule, and if you want to research about it, go ahead, it's called the taylor rule. The taylor rule essentially says that you take whatever inflation. You got right now, you subtract the baseline inflation, which is the inflation you want to have, which is two percent. You get a number in our case.

Eight minus two equals six. You multiply this number by two. You get twelve percent and that's exactly what you need today. You need twelve percent interest today to stop this inflation from going rampant.

You think the u.s government is in the position to enact a 12 interest rate hell. No because, as it stands, we're already paying over 300 billion a year to service the existing debt at zero rate. Now, according to the congressional budget office by the end of the decade 2030, that is we're gon na go to almost a trillion dollars and that's with current interest rates without taking into account any inflation and stuff like that. However, as i mentioned, this isn't a doom and gloom video.

There are solutions now. One solution that is a fake solution is raising the debt ceiling, which is a political move that actually has zero implications on solving the problem. It's a giving aspirin to somebody who just lost his leg. He needs an operation.

That's that bad. Now, what are the actual solutions we can actually apply here instead of this pr stuff? Well, number one! We have to raise the retirement age as unfortunate as it is as unpopular as this politically. We have to raise the retirement age to increase our tax collections to pay for this debt without printing, more money, because actually, printing more money is just going to increase inflation back again, it's an ever-ending cycle now, the other thing we have to do in this again, Something, that's not so popular is basically cut governmental spending. We have to spend less.

The government has to be leaner and let the market sort itself out. We cannot afford a fat ass government. We have to cut governmental spending again, not popular but insanely necessary right now, and most importantly - and this is the most misunderstood part - is that you hear a lot of people saying hey. We need to pay for all this excess interest and the only way to pay for it.

We need more tax revenue, so we have to tax the rich more. We have to tax the corporations more. That's the only way we're going to get more money to pay, because otherwise, we'll have to print more money, physically print, more money, use the printer essentially put the money in the system and make inflation even worse. So that's going to be basically putting out water with a cup out of the boat and then having a hose, putting water back in essentially going to sink.

It's not going to work! So here's the big problem - here's the big disconnect raising the corporate tax in america is not a good idea as politically popular that this concept is it's not a good idea. Unfortunately, and you can check out the laffer curve, increasing tax rates can only increase your collections as much as it goes to the optimum point. Beyond a certain point, increasing the tax rate will reduce your tax collections, because people will be more incentivized to plan themselves. Out of these tax rules, you have to understand that the politicians don't want you to know this, but the optimum point right now - and you can check me on this.

According to the oecd, the average in the oecd countries is 21. We're right on that average. The us is right that smack on that average and if you add in beyond the federal tax, also the state corporate tax we're a little bit above that so we're slightly above the oecd average for corporate tax. So increasing the corporate rate isn't going to solve this.

As politically popular as it may be, what needs to be done is actually two things: lowering corporate tax in the u.s down and increasing enforcement, and applying new tax rules to basically cover all this global tax. That is not being collected right now by the us. The united states is a home for many many companies that have offshore earnings in ireland, in singapore, in a gazillion of other countries that they're not bringing back to the us and they're not taxed on. So the problem isn't the u.s domestic goldberg tax rate.

So the problem isn't the us domestic rate, which is just fine. The problem is that this offshore activity is going on, isn't being taxed in the us. You can easily solve it right now. You can enact the clause that actually exists in other countries, such as the uk, which is called the management and control clause if a company is being managed in control in the u.s everything it's generating outside the u.s, no matter what the tax rule is saying.

No matter what the transfer pricing is saying, no matter nothing if it's a foreign income, that's being generated by a u.s company, this income will be taxed in the us and we don't care if you repatriate the money back to the us or not. So if you use corporation and doesn't have to be officially if you're managing control in the us, even if you're registered in an island somewhere we're going to tax you in u.s on all your global income, you know how much money we're going to generate by doing That imagine coupling that, with lowering the corporate tax rate to let's say 15 percent, there's going to be such a huge incentive for corporations to go back with increased informants, because what you'll be doing is going to be creating the carrot and the stick. The stick is going to be the enforcement of all these international profits and the carrot is going to be lower tax rate. If you actually come home and just be playing vanilla now that with increased retirement age, when cutting the spending of the government might give us a shot, because, unlike what you're going to hear from these politicians who want to feed you, they lie that we can keep Ballooning, the debt endlessly and we'll never have to solve it.

It's not going to work. Imagine somebody who owes so much money to credit cards. Eventually it will blow up in their face. We cannot get to a place where 10 of our gdp is just interest payments, and that's why i feel that the politicians have to take action right now, as unpopular as it is, because that's the right thing to do, even though it might cost them their job And here comes the kicker betting that politicians will do the right thing, even at the cost of their own career is a very shaky bit we'll see how it plays out.

Let me know below, if you agree with me, if you disagree with me, comment below i'll. Do my best to reply, thank you for the channel members. Thank you for the patreons. I love you all see you next video.