Darrell Castle talks about debt and the effect it has had and is having on the nation and its people.

Transcription / Notes

THE FIRST 205 YEARS

Hello, this is Darrell Castle with today’s Castle Report. This is Friday the 22nd day of March in the year of our Lord 2024. I will be talking about debt and the effect it has had and is having on the nation. Debt as the U.S. government has accumulated It, is very bad and it has been accelerated by the ruinous nature of fake money, and the siren’s call of money without limit. I will argue that money without solid backing is perhaps the most corrupting influence in America today. Money, whether fake or real, is power, and power corrupts the mind and morals and thus our nation and its tradition of law and justice are corrupted.

I have more than 40 years’ experience as a bankruptcy lawyer and I, therefore, have a lot of experience dealing with debt. Debt can be used for production or to increase revenue and then it is good but otherwise it is an albatross around the neck of the debtor. The bible tells us in the book of Proverbs that the debtor becomes the slave of the lender. Lately, the U.S. has used debt to make war and pacify its people with bread so they will not see the circus that is Washington.

It took the United States 205 years to accumulate its first $1 trillion of debt, but now the process is accelerating. Washington was at $5 trillion by the administration of George W. Bush and now stands at $34.6 trillion at the time of this recording. The United States now adds $1 trillion of debt every 100 days. The latest projections show $60 trillion by 2034 or just 10 years from now. Keep in mind that projections almost always fall short of reality because economic conditions change as do the desires of politicians.

$60 trillion of debt would put the interest payment at around $3 trillion per year at average interest rates. Please keep in mind that total revenue in 2023 was $4.1 trillion and the president’s proposed budget for this year is $7.3 trillion, and yet Washington still functions and still funds war. The end result always takes time to play out. For example, even when Rome had debased its currency and looted the known world to gain the resources to continue its profligacy the barbarians took time to complete their work.

What if interest rates had to rise because the federal Reserve was afraid of out-of-control inflation. The what if is probably more like when and then all those estimates I just gave you are wrong. What about what increased rates would do to the average American. The median price of an American house is now $435 thousand up from $25 thousand in 1970. An average priced house at 12.9% which rate has happened recently, would cost a monthly payment of $4,676 interest only. I wonder what rates like that will do to the housing market and to the lifestyle of the average American. Even at a modest rate of 7% the payment would be about $3 thousand, or more than the average family can afford.

Would the house price come down as a result? Yes, most likely because of new houses not selling as well, but as the demand for credit increases, and it will because people have to use it to live, a debt crises might result whereby people are forced into bankruptcy and liquidation. Increased bankruptcy rates by people damage or destroy tax revenue on a national scale. People I talk to seem to think that debt, public and private, is no big deal because nothing I have been predicting has happened yet. That is because with public debt, even more debt using more fake money, has been the answer to paper over Washington’s profligacy. The situation now is different because it is increasing so exponentially that the entire system is threatened by it. As my friend Bill Bonner would say, when you jump out of an airplane in flight for a moment you feel suspended in the air just floating, but gravity will have its moment in your life.