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It’s The Economy

It’s The Economy

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 Darrell Castle talks about the economy in general as well as the United States economy specifically, and why American families are struggling financially. Transcription / Notes IT’S THE ECONOMY Hello, this is Darrell Castle with today’s Castle Report. This is Friday the 21st day of November in the year of our Lord 2025. I will be talking about the economy in general as well as the United States economy specifically. You probably remember when Democrat policy advisor James Carville told then candidate Bill Clinton, “it’s the economy stupid.” He was correct and the advice is still correct today. Remember that next week is Thanksgiving so there will be no Castle Report. I will join you again on Friday December 5. Carville was a very effective political operative in those days and was apparently able to convince Mr. Clinton that the people who would elect him or his opponent cared more about their standard of living than they did about any foreign policy issue. They should have cared more about donating their children to the foreign policy whims of whoever was in office but when push comes to shove everyone has to eat. A family of four, and those relationships used to exist, is acutely aware of what food and gasoline cost. I’m a layperson in economics in the sense that I’m not trained in economics but I do have a family with the same economic needs as everyone else. Most importantly I have been a bankruptcy attorney for 46 years which has kept me in the forefront of the economic needs of ordinary people. Tens of thousands of people and businesses have told me about their struggles in cities all over the country and I have helped them find a way through their economic troubles. With all that said let’s look at some of the economic facts that trouble the country right now. When I say, as I do from time to time, that an economic catastrophe is coming with the only question being when it will arrive, why do I believe that. Not much makes sense these days since America is the hottest economy attracting trillions in capital but inflation is still present and it seems that almost weekly another major corporation announces layoffs or store closings. Last week the fast-food chain, Wendy’s, announced that it would be closing 400 restaurants. Amazon announced that it would be replacing about 30,000 employees with robots. The economy depends on federal spending and that is now completely out of control. My fear is that so many irreversible commitments have been made that the federal government is not capable of living within its means and if true that would signal eventual disaster. Fiscal year 2025, which ended on September 30 of this year posted a deficit of $1.8 trillion. Deficit means that the government spent $1.8 trillion more than it received in revenue. It’s simple if you think about it from the standpoint of your family. Suppose you make $75 thousand per year but you spend $100 thousand and you do that year after year. You know what is going to happen eventually and that means you will be in my office to consult about bankruptcy. You can keep the plates in the air for a while by borrowing, pay day loans and the like, and by using one credit card to pay another until there is no more credit limit left on any cards. You can last for a while by just making interest payments on the cards but then you can’t even do that. This problem gets worse and worse until it becomes unfixable and bankruptcy results. That is exactly what the federal government is doing to manage its spending. One of the major warning signs of impending trouble that economists always warn us about is when interest becomes the biggest item in the budget. It doesn’t exceed medical expenses or social security yet but this year, ominously, interest was higher than the massive defense budget. Just as you do with your credit cards the government has to borrow just to pay the interest. In other words, the government is paying debt by incurring more debt which drives the debt and next year’s payments even higher. This all means that annual interest, which now exceeds 20% of tax revenue will continue to increase. The debt is purchased primarily by foreign governments, central banks, large corporations, commercial banks and individual investors. Recently, in an ominous trend, those foreigners have been net sellers of U.S. debt. That means that the financing of the debt falls to domestic investors meaning you and me. People individually, through retirement accounts or through purchase of some investment fund, finance government debt with their savings. It is necessary that individual Americans do well because they have to save to invest in U.S. debt. Unfortunately, this year net savings is on track to be less than $1trillion, the lowest figure in many years while the deficit is on track to be roughly $2 trillion. This all means there are not enough foreign buyers and not enough domestic savers to finance the debt so the only ...
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