The Peter Zeihan Podcast Series - Will the National Debt Kill the US Economy? || Peter Zeihan

Episode Date: September 26, 2024

Click the link to join Peter Zeihan's Patreon for early access to videos and newsletters, exclusive access to live Q&As and news digests, and more: https://www.patreon.com/peterzeihanThe US national debt is so high that it has exceeded 100% of GDP. We're talking over $35 trillion. Nice little chunk of change there. So, what led us to this point and how do we move forward?Full Newsletter: https://mailchi.mp/zeihan/will-the-national-debt-kill-the-us-economy-patreon-launch

Hey all, Peter Zion here coming to you from a foggy, drizzly Colorado. If you are seeing this, you are undoubtedly one of the imbibers of my daily newsletter. Now, it didn't start out that way. If you go back to COVID when life was paced differently, I needed a way to reach out to folks. We started switching from a written form to a video form, and it turns out that not only did you all like it, that I kind of liked it, too. So for the last two years, it's been a daily product that has absorbed more and more of my, my staff's time. And we've all come to the conclusion here at Zion on Geopolitics that we don't want to compromise on quality or quantity. And to that end, we're going to be doing more in the

immediate future. Starting on the 1st of October, we are partnering with the platform Patreon to turn this into a subscription service, which will have not just all the videos that you've come to know and love or hate based on the day. But a number of supporting materials will be introduced as well. You'll see part of the Daily News Digest that I get to start my day. We'll have a community forum or seven. And we will introduce question time, which will give subscribers the ability to grill me directly on a regular basis. I can't believe I allowed myself to be talked into that one. Anywho, sign up here, sign up now. For those of you who, for whatever reason, want to stick with the free service, rest assured, it will continue.

However, the subscribers at Patreon will have first access to all of the new information, as well as all the add-ons. The bare-bones service will continue to be provided, but at a delay. Okay, that's it for me, and I'm looking forward to this lunch. We're going to have a lot of fun. Hey, everyone, Peter Zine here, coming to you from the top of the Turner Cascade in southern Yosemite. That's the ridder range behind me. That's where I'm going for the next three days.

Today we're taking an entry from the Ask Peter Fora, which is also actually one that's on my things I do or don't worry about lists. And that's the national debt. The United States now has a national debt in excess of 100% of GDP. It's ballooned in recent years. And the question is, isn't this going to be a problem soon? Problem yes, soon, no. So let's deal with the problem side first because that's more obvious.

The baby boomers over the last 40 years have voted themselves more and more social benefits, have expanded things like Medicaid, Social Security, and such, and then raided the funds that were built to fund them to the point that they're all going to go bankrupt in the next decade or two. In addition, we had George W. Bush with the War and Terror and the 9-11 attacks that ran some of the largest budget deficits we'd see in modern history, followed by Barack Obama, who doubled it in a time of peace, followed by Donald Trump. who doubled began in a time of peace,

and now Joe Biden, which, let's see, we're in August now. I think he's going to top Trump's record this month. Anyway, so yes, budget has gotten out of control, and since Donald Trump purged the fiscal conservatives from the Republican Party, there's no longer a voice in Congress that seems to have any interest in fiduciary responsibility. So we're seeing the budget getting higher and higher and higher,

and now that the baby boomers are majority retired, most of them have gone for being tax payers to tax takers, and it's only going to increase in the years and decades to come. Even worse, the new generation coming in, Generation Z, is the smallest generation we've ever had. So we're going to be looking at constrained ability of the government to raise money through taxes for at least the next 50 years. But you have to keep this in perspective.

The Europeans are in a much worse situation demographically. Their equivalent of Gen Z is the same as arguably equivalent of Gen X. And then their millennials are even fewer and their Zs are even less. So they're going through where we will be in 30 or 40 years right now. And a lot of these countries are already spending as much as three times on pensions as we are. Second, look at the Chinese. Technically, they're debt isn't national. It's corporate.

But you were talking mostly state-owned companies here, so it's more or less the same thing. And since 2008, they have exploded their debt up to 300% of GDP. It would be like if we had done COVID emergency spending every year for 15 years. But then there's Japan. Japan crashed and had their demographic adjustment back in the 1990s. They haven't run a budget surplus since. They haven't had much economic growth since,

much like the Europeans they've aged out. they have been running deficits of the scale that we had during COVID since the 1990s, which means that they now, if you include pension arrares, which I think you should, have a debt-to-GDP ratio of about 500%, and they're still there. Now, the point of this is not that we don't have a problem. Of course we have a problem. Of course it's going to adjust. Of course, we're going to have to pay for it, and it's going to hurt.

but you've got to keep it in perspective. The United States is the largest economy in the world. We are the safe haven for currency. There is no even theoretical competition for that anymore now that the Eurozone is basically facing obsolescence for demographic reasons. So, if all we do is keep going on the path we're on, we have another 30 years before we're in a Japan-style situation

and Japan's still there now. So is this a problem? Yeah, is it going to manifest in ways that we know? Yeah, is it going to manifest in ways we don't know? Oh, yeah. But not today and not next year. And probably not next decade either. Oh, one more thing.

Oh, and this is the Turner Headwall. This is the head of the Merced Glacier back in the days. So Haftome, El Capitan. This is where it all started. This is Turner Lake. Anyway, one more thing. A lot can happen in 30 years. In fact, in those 30 years, we're almost certainly going to see the collapse of the

Chinese system in the end of the Eurozone. Systems that are far more indebted than the United States. And as we have seen with every country that has had a debt crisis in the last 70 years, when the money moves because it doesn't want to be there anymore, it almost always comes to the United States. So we are looking at absolutely mythic levels of capital flight as these systems break down, which is only going to buy the United States some more time. All right.

I'm done for real. Bye.