Despite widespread economic prosperity, at least in terms of the government’s favored economic measurements, the government itself has continued to expand its deficits. And the total debt continues to balloon well past the $20 trillion mark, bringing the U.S. debt-to-GDP ratio past one. While many economists have pointed out that the government should be shrinking its deficits in times of economic growth and low unemployment, it has recklessly continued to do precisely the opposite. This may not bode well for what is likely to occur during a true economic downturn.
Shervin Pishevar, who ranks among the most successful tech venture capitalists in the world, has long been deeply concerned with the country’s current fiscal and monetary policy. Shervin Pishevar believes that both the Federal Reserve and the government itself are acting in a highly irresponsible way. And this, he says, could lead to economic disaster.
Shervin Pishevar has long warned that demographic change, coupled with a shrinking consumer spending base due to slowly deteriorating income prospects for the middle class, may be conspiring to create the conditions for a permanent economic slowdown. Shervin Pishevar believes that this could adversely effect tax revenues just as the government is continuing to expand its spending, including out-of-control entitlements, to record levels. The disaster, he says, will be that the government will follow the path of least resistance. And that is always to print its way out of its financial crisis.
Pishevar has long stated that what cannot go on will not. He says that unsustainable debt levels have now completely ensured that the majority of the more than $200 trillion in American outstanding debt obligations, including unfunded future entitlement liabilities, will not be paid. This is simply because they cannot ever be paid. At least not in today’s dollars.
The obvious way that the government is going to make these untenable debts workable is through debasing its currency. And, unfortunately, this will ultimately be the only politically acceptable route to go down. Anything else would immediately elicit a political backlash. This, says Pishevar, means that the U.S. dollar is in for a serious fall.