The well-known American financial company AllianceBernstein conducted a study that revealed the true size of American public debt, and the results of this study shocked the relevant media. The US financial television channel CNBC has released special material on this subject under the heading “The real level of US debt can be 2,000% (of the size of the American. – Approx. Ed.) of the economy, the Wall Street report said.”

The AllianceBernstein assessment attracts attention not only due to figures that the US media called “shocking,” but also because this “debt diagnosis” was made by a very well-known financial institution. AllianceBernstein was founded by renowned economist and billionaire Zalman Haim Bernstein, and she now manages $ 586 billion of assets, which gives her forecasts a serious additional weight.

Moreover: after a careful reading of the calculations and recommendations of American financiers, it seems that the publication of this study is an element of preparing the public consciousness for the fact that “Bolivar will not stand the two,” and that in order to save the American economy, it will be necessary to cut social support programs and other elements of a “welfare society.” Irony of Fate: Zalman Haim Bernstein spent several years of his life contributing to the implementation of the Marshall Plan, a scheme of American investment in Western Europe to develop Western European economies and strengthen American influence in Europe in the context of competition with the USSR. But this was in the past, and today the company, founded by one of the members of the “Marshall Plan”, is actively hinting that to save the American economy from debt gangrene, a scalpel or even a chainsaw will be needed, and it is not the debt to the holders of American bonds that should be cut, but the American social guarantees.
CNBC reporters explain how AllianceBernstein calculated the real US government debt and why it is important: “AllianceBernstein developed a methodology for calculating (and received. – Ed.). The result is 1832 percent (of GDP. – Ed.), To be precise, – including not only traditional levels of government debt, such as bonds, but also financial debt in all its diversity, as well as future obligations under the so-called (social) payment programs, such as “Social Security”, Medicare (medical security. – Note ed .) and state pensions. After all this comes together, a frightening picture emerges, but this picture requires nuances to understand. It is very important to realize that not all debt obligations are “carved in stone,” and it is important to know where the space for freedom of maneuver is located, especially in government programs, which can be changed either by law or by accounting. ”
Usually, when it comes to the level of US government debt, a figure of $ 22.5 trillion is given, which is equivalent to about 106 percent of GDP. Supporters of the opinion that everything is in order with the state debt in the USA and no crisis threatens, go even further and emphasize that the debt obligations that the US Treasury has to other state agencies and funds should be subtracted from this amount, and then we can talk about debt of only 16.7 trillion dollars, or 78 percent of US GDP. The problem is that this view proceeds from the strange assumption that the obligations of the US Treasury to state structures that pay pensions or medicines or pay various benefits are not necessary to fulfill, and those government bonds that are on the balance sheet of these structures and thanks to which they financed, you can simply “write off” a stroke of the pen without any consequences.

AllianceBernstein chief economist Philip Karlsson-Schlesack does not make such tolerances and takes into account all US obligations as a state, regardless of their form, when calculating the total debt of the United States, and therefore the picture is much worse – it turns out that the total public debt (in all forms) goes wild for 388 trillion dollars.
However, the author of the study immediately rushes to reassure readers. “Although the picture is terrible, such figures do not prove that we are doomed or that a debt crisis is inevitable,”  – Philipp Karlsson-Schlesack writes . And immediately it offers a powerful solution: “A default on US treasury bonds would be catastrophic for the global economy, while changes in (social. – approx.) Policy (albeit painful for those whose future payments are reduced) would hardly were fixed on the economic horizon. ”

It turns out that in order to save investors in American debt obligations, it is proposed to sacrifice American citizens, their benefits and pensions, which will allow us to comply with formal decencies and not undermine the investment community’s confidence in American government bonds.

It should be noted that from a practical point of view this proposal contains one rational and one irrational consideration. The rationality is that a default on US bonds would indeed be a disaster for the American and even global financial markets, not to mention the fact that in this scenario the foreign exchange reserves of many central banks, a significant part of which are invested in US government bonds (they treasure), will turn into dust in one night. It is logical that representatives of the financial sector of the American, and indeed the world economy will strongly resist this scenario.

By the way, even if Washington chooses the default, Russia will be among the few countries that will not receive direct financial damage, because the Russian treasury portfolio was sold in advance because of sanctions risks, which, however, will not free us from indirect the consequences of a hypothetical American default, from which the entire world financial system will suffer. But the irrational part of the AllianceBernstein proposal lies in the implicit belief that the deprivation of funding for social programs will not lead to dire political and economic consequences. Not a single American politician, regardless of party or ideological affiliation, agrees to such a suicidal decision.

The question arises: what to do with these hundreds of trillions of dollars of debt? The answer can be found in statements by President Donald Trump, who even before the election victory said that the US economy is one big “financial bubble” that constantly requires a weakening dollar. If the dollar is devalued (devalued) greatly, it will be possible to pay off debts very easily, which will not save the world financial system from the crisis, and the American economy from deep depression, but it will be possible to pretend that “Uncle Sam” always fulfills his social obligations and honestly pays his debts. As China and Russia are simultaneously buying gold, there are enough people in the world who want to insure themselves against the consequences of using this particular method to solve the American debt problem.

Ivan Danilov, RIA

Tags: ;