Sunday, August 11, 2024
Laramie, Wyoming
It’s Sunday. You know what that means. Another Private Briefing, this time with an old friend.
For new readers, Private Briefings are long interviews we do with other analysts and experts (some who’ve been in our network for a long time, others who are meeting for the first time). We don’t always share their views or investment conclusions and strategies. But that’s not the point.
The point is to talk to smart, experienced, and interesting people about what they see going on in the world, and in financial markets. It keeps us on our toes and opens our eyes up to risks or opportunities we may be missing. It’s always good to challenge your assumptions and your thinking.
The conversation below is with my old friend Addison Wiggin. We go back many years, having worked together on The Daily Reckoning with Bill Bonner and Strategic Investment (a newsletter I edited for five years and which many of you would be familiar with). Addison is deeply concerned about consumer debt, the violent trend in American politics, and the risk of a drone war with China.
Enjoy our conversation below!
Dan
[Originally recorded on Thursday, August 8, this transcript has been lightly edited for clarity and brevity.]
TRANSCRIPT BEGINS
Dan Denning: All right everybody, welcome back to the show. This is Dan Denning from Bonner Private Research and I am again here in Laramie. And today, for today's Private Briefing, it's my pleasure to welcome back an old friend who I've known for quite a long time. He's worked with Bill on some major projects over the years. He's here today to talk about his newest project, which we'll get to in just a minute. But first of all, Addison Wiggin from Maryland. How are you?
Addison Wiggin: I'm good. I'm speaking to you from Baltimore. And as you say, we have a long history. And hopefully many of your readers do already know who I am because I'm a co-author with Bill on two projects. It would be nice to think that we've gotten out there and let people know what we've worked on.
Dan Denning: Well, we're going to talk about one of them because you've just re-released a version of it. It was a book that you and Bill released in 2005 called Em
pire of Debt: The Rise of an Epic Financial Crisis, and you have released a new version of that, which I want to get to in a minute.
But before I ask you about why you've released another edition of the book in 2024, I wanted to bring some statistics to your attention and ask you a question about them. The Congressional Budget Office publishes a monthly report about the status of the government's finances, and unfortunately for people like me, that's required reading because it tells us where we are in this epic financial crisis. So the CBO monthly report for June just came out, and this is a Thursday when we're recording. So year to date, the government's deficit is $1.3 trillion. It's on track to be $1.9 trillion.
When you guys first wrote Empire of Debt, total federal debt was $7.7 trillion. It was 60% of GDP. Today it's over $35 trillion. It's up 354% since then, so it's now closer to 130% of GDP. And here's the interesting one that jumped out from today's report, that in the last 12 months, the interest expense on that federal debt is up 40%.
So the largest growth rate of any of the line items in the federal budget is in the amount of interest we pay on that $35 trillion in debt. Given the fact that the federal debt is now 354% higher than it was when you and Bill released the first edition of Empire of Debt. What's the main idea of this newest edition of the book and where are we at in this epic financial crisis?