Henry Paulson Warns: U.S. Debt Crisis Is Closer Than You Think

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The former Treasury Secretary of the United States, Henry Paulson, Hank Paulson. you remember Henry Hank Paulson, he was the Treasury Secretary. Financial crisis, George W. Bush, he came out yesterday and the story came out and it got a little bit of attention. But I’m watching. I’m watching the financial press kind of push it aside. Give it the Heisman.

Basically, what he did is he pointed out that there’s a 10,000 pound gorilla in the room and nobody’s paying attention. Who else points to that 10,000 pound gorilla all the time? Yeah, that would be me. Rand Paul, Thomas, few, few and far between Judy Shelton. There’s a few. He came out. He came out. just did an interview on Bloomberg Wall Street Week.

talking about the US Treasury market. US Treasury market is, and again, I’m gonna repeat this, I’m sorry if you know, okay, it’s where we borrow money. Where we borrow money, we issue debt securities, bonds, bills, notes, anything, anything, a war right now, social programs. We don’t generate enough in tax revenue. What is that?

every single year. That is called the budget deficit. Okay, that’s covered by issuing treasury securities. We borrow money. Now, who lends us the money? We’ve talked about this here on the program. Talked about a lot of countries, many countries that we buy energy from. That was the old, you know, petrodollar deal that was put in order, but it was also, you know,

countries that we had trade deficits with. China.

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China, we talk about our trade deficit, that we would send them more money because we were buying their stuff. What would China do? What China do? They turn around and they lend that money back to us. They would buy our debt. They haven’t been doing that. Okay. Their position has been cut in half. Basically, basically what Paulson is saying at this

point in time about hitting a wall.

about hitting a wall. He is saying that right now we have to, we need to come up with an emergency plan. An emergency plan. I talked about this this past week. Talked about this this past week. was saying, telling CNBC someday I’m gonna come in here and you’re gonna look at that board where it says, you know, it said 4.3 % 10 year and it’s gonna say six or higher.

We have to, we have to roll over almost a third.

third of our debt, what I mean by rolling over. Let’s pretend, pretend you have a big credit card debt and you can’t pay it off. You can’t pay it off and then you go out and you get yourself, you find yourself a balance transfer deal with another credit card. So you transfer, I got low balance, low interest rate, of time. You transfer that balance over to the other one. That’s what we constantly do.

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We’re constantly rolling over our debt again and again and again. And there’s a lot that has to be rolled over this year. A lot.

Anyway, anyway, he compared our current scenario to 2008 and explained why he believes the next crisis could be harder to contain. during the 2008 financial crisis, the government still had fiscal room to maneuver, but a US public debt crisis does not offer such luxury. In a public debt crisis, debt is already unsustainably high.

This makes markets whose confidence, borrowing costs surge and issuing more debt becomes impossible or self-defeating. The very tool used to fight the crisis becomes unavailable.

Again, after he made the statement, you know, he came, I believe economy means most resilient major economy in the world able to withstand uncertainty. you know, again, it’s kind of covering his butt after this. And yes, we’re a rich country. But again, what are we gonna do? We’re sell Yosemite? Let’s be honest here. Here’s something that nobody’s talking about. saw, we’ve been watching the dollar as of late.

It’s falling off a cliff.

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It is. For the dollar to move as much as it has over the past couple of weeks. know, 115 over almost 119 in comparison to the euro. Sure, could, could, Fed could deal with this real simple. They would have to start buying. They would have to start buying our debt. With what? Well, with

Made up money. That’s how you deal with it. That’s fail safe.

That’s it. China’s not buying it. You know, we’re, know, Europeans aren’t going to, they’re not buying it. This one’s not buying our debt. That one’s not buying our debt. yeah, you can force, can force some of the too big to fail banks to buy some more. I guess you could do that. Europe messes around with that. Sometimes we talked about that during the European financial crisis. but the reality is the fed would have to print a, how shall I put it? A shit ton of money.

Which will do what? Can? Long as it’s inflation. It’s just going to destroy our currency and our buying power. But that’s what we do. That’s what we do. Anyway, Watchdog on wallstreet.com.