By John Q. Hosedrinker 
According to J.P. Morgan Asset Management’s David Kelly, the U.S. government faces long-term financial challenges due to a growing national debt, currently exceeding $37.8 trillion. While the government is “going broke slowly,” the debt-to-GDP ratio is projected to increase, potentially impacting long-term interest rates and the dollar. Despite some optimism due to factors like tariff revenues, risks such as potential court challenges to tariffs and the possibility of a recession could accelerate debt accumulation. Therefore, investors should consider diversifying their portfolios to mitigate the risk of a faster deterioration in the federal finances.
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America is ‘going broke slowly’ says JPMorgan, as national debt balloons and tariff revenue looks shaky. The whispers, or perhaps they’re shouts now, that the US is on a financially precarious path are getting louder. JPMorgan, a name that carries weight in the financial world, seems to be echoing these concerns, using the phrase “going broke slowly” to describe the situation. And when a major financial institution flags a warning, it’s time to pay attention. The core issue is clear: a rapidly expanding national debt, coupled with shaky revenue streams, particularly those related to tariffs.
The national debt, as we all know, is the cumulative sum of all the money the US government has borrowed over the years. It’s a huge number, and it continues to grow. This growth isn’t happening in a vacuum. It’s fueled by various factors, including spending on social programs, defense, and tax cuts, particularly those favoring the wealthy. As the debt rises, so does the interest paid on that debt, creating a vicious cycle. We’re essentially borrowing more and more just to keep up, and this doesn’t even touch on our other growing obligations such as retirement commitments.
Adding to the problem is the uncertain outlook for tariff revenue. Tariffs, as we know, are taxes on imported goods. While they can generate revenue for the government, they also have a few downsides. The biggest one is that tariffs are often passed onto the consumers in the form of higher prices, which acts as a form of inflation. And when foreign countries retaliate with their own tariffs, it can lead to trade wars, which can hurt the global economy overall. The hope that tariffs would magically bring in massive amounts of revenue, while simultaneously revitalizing the US economy has been largely unfulfilled.
One of the anxieties is that the current policies are seemingly creating a scenario where the deck is stacked against the average citizen. There’s a sense that wealthy individuals and large corporations are benefiting from policies that may be contributing to the overall financial instability. This leads to concerns about the fairness of the system and the direction the country is headed.
The situation is further complicated by a lack of consensus on how to address the issue. Political polarization often prevents meaningful action. A common suggestion is to tax the wealthy, the thought being that increased tax revenue could help reduce the debt and fund important public services. But, politically, this is a difficult path, with arguments coming from both sides.
The implications of this situation are serious. A large and growing national debt can make the country vulnerable to economic shocks. It can also lead to a decline in the value of the dollar, which would further impact American consumers. There is a general agreement that the US dollar’s dominance in the global market cannot be taken for granted. We have many enemies both foreign and domestic that would love to see this happen, and the current policies are accelerating this process.
The notion of “going broke slowly” should be concerning. This isn’t a sudden collapse; it’s a gradual erosion of financial stability. Think of it like a slow leak in a tire. It might not be immediately noticeable, but eventually, the tire will be flat. It’s also a case of robbing Peter to pay Paul, with the future of the country’s finances being mortgaged for today.
The potential long-term consequences are equally concerning. A weaker economy could lead to slower job growth, stagnant wages, and reduced opportunities for future generations. The country’s ability to respond to economic crises or invest in its future could be severely hampered.
While the situation is serious, it’s not necessarily irreversible. There are measures that could be taken to address the debt and improve the financial outlook. Tax increases on the wealthy and corporations, reductions in government spending, and strategic investments in infrastructure and education are all potential avenues. But, implementing these measures requires political will, something that seems to be in short supply at the moment.
Ultimately, the warning from JPMorgan and the overall tone paints a picture of a ship slowly taking on water. The question is, will the crew, the politicians and the financial elite, address the leaks before the ship sinks? The stakes couldn’t be higher.