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THE HILL: Biden's First Crisis

January 25, 2021
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Article by Judd Gregg in The Hill

The first real confrontation for the new president to manage will likely not be some foreign power, either directly or through technology, attacking a core interest or infrastructure of our nation.

The crisis, rather, is on the horizon. The world is losing confidence in us, as a nation. There is fear across the globe.

People everywhere have looked for decades toward the United States as the source of world stability, especially economic stability. Now there is a growing disillusionment.

It is our debt and our monetary policy — also known as money-printing. The massive, continued expansion of debt by our political establishment is the primary cause of this rising crisis.

The federal deficit last year exceeded $3 trillion. Biden proposes spending trillions more this year — $1.9 trillion for his COVID relief package alone.

But it is not the one-time massive effort to avert a major virus-driven economic downturn that is at the center of the potential global move away from the dollar. Rather, it is the structural deficit. Put plainly, our government’s spending exceeds its income as far as the eye can see.

Well beyond the pandemic crisis, deficit spending on programs that are primarily entitlements is the issue. Even without the pandemic, deficits are estimated to be around $1 trillion each year for the next 10 years and beyond.

Our national debt will soon stand at $28 trillion, up from $8 trillion just a few years ago. Our debt-to-GDP ratio, the test of a solvent nation, will soon exceed 130 percent, up from around 60 percent in 2009.

Coupled with this uncontrolled fiscal policy is the Federal Reserve’s monetary policy.

The Fed has driven the monetary base as a percentage of GDP from 5 percent to over 25 percent today. This has never happened before, not even during the Second World War. Most importantly, the Fed clearly has no idea or effective plan for reducing this staggering expansion.

These threats are being conveyed with clarity, for anyone interested in not ignoring them, with the valuation of the dollar. The dollar is in a disconcerting fall.

The world that since the end of the Second World War has placed its confidence in the stability of the dollar as the currency of the globe is now looking to find a safer harbor.

There is no longer a belief that our government will be able to pay our debts with dollars that have the same value as those that were lent.

We are on the cusp of losing the integrity of currency. Biden’s first seriously impactful crisis is going to be a dollar crisis — a dramatic drop in the world’s valuation of the dollar.

This will involve a massive search around the world for other places to safely guard assets, instead of investing in dollar-backed investments. China will quietly .....

To read this article in The Hill in its entirety, click here.

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