Unfortunately, people live a certain lifestyle and the extension of credit facilitates, making dreams become reality.  Most in society, live beyond their means, especially the most vulnerable, low-income earners. As a result, they get caught up in this web of debt that becomes very difficult to escape. It can only be described as economic enslavement.

Nonetheless, Central Banks have applied a sledgehammer to the issue at hand. The exponential increase in interest rates has doubled mortgages, car loans and so many other consumer loans, halting affordability. Inflations’ root cause has been to make access to money as simple as possible.

In Canada, the encouragement of home ownership to all became the driving force to sustainable economic growth. Many that did purchase and qualified at the bare minimum, didn’t realize what disaster they would face once the cost of borrowing surpassed their threshold of affordability. The expression of robbing Peter to pay Paul is applicable here because, in times of desperation, this method becomes the only alternative.

The topic now of even more significant concern is that in the United States. The Budget of cash flow to maintain the government administration and payroll. The facet of public expenditures maintains services and those that administer them. Notably the biggest employer has the greatest impact on economic stimulus. Simply because the people that are employed, buy homes, take vacations, buy cars and household items. They contribute by spending the money they earn to live the perceived freedom they assume they have.

Consequently, governments in comparison to businesses don’t seem overly concerned about budgets. When funding is restrictive, the public servant uses the power they wield to impose taxes or approves borrowing to cover their shortfalls. On the other hand, a business would claim bankruptcy or dissolve the company altogether. It can’t happen in the Public Sector even though the business model fails. 

Today, the topic of major concern is that of raising the ‘Debt Ceiling’. As Treasury Secretary, Janet Yellen states, the United States could default on its debt causing global ramifications. The fear-mongering is heightened to the point where the political solution is to extend the debt so that millions of employees can bring home a paycheck. All that will be accomplished is delaying the date before reality sets in. The whole system is based on borrowing from the Central Bankers that issue financing to governments for major initiatives. When the cash flow is unsustainable, the government borrows from the bankers on a global scale in an intricate web of credit swaps and other forms of financing. All bearing a cost while being funded by the public purse. It is absolute thievery in the way these public entities are managed.

Ultimately, time will catch up. They can’t continuously print money without dire ramifications. An economic implosion is inevitable, the question remains will we witness it before our time is up? Like any good politician would do, never on their watch. Tar and feathers will come at a premium if it does happen.

This morning,  weekly Jobless Claims show an increase to 264k from the previous (242k) vs expected (245k). This is the largest increase since October 2021. This a confirmation that economic hardships are starting to spread at a greater pace. Further with annual PPI accelerating upward to 2.3% in April, expected (2.4%), Central Banks are still considering raising rates further that will accentuate issues and poverty.