American Gothic: the Visigoths and the Federal debt

See if you can guess what the people listed below have in common:

• Erskine Bowles, Democratic White House Chief of Staff
• Sen. Alan Simpson, R-WY
• Kevin Warsh, Federal Reserve Board, 2006-2011
• Former OMB/CBO Director Peter Orzag, Obama appointee
• Sen. Michael Bennett, D-CO
• Stan Druckenmiller
• Geoffrey Canada of the Harlem Children’s Zone
• Admiral Mike Mullen, 17th Chairman of Joint Chiefs of Staff
• Former President Bill Clinton
• Michael Pakko, economist at The Federal Reserve Bank of St. Louis
• Richard Kogan of the progressive Center of Budget and Policy Priorities

Answer: at one point or another, all these people either wrote papers, gave speeches or worked on negotiated solutions regarding fiscal deficits, entitlements and “generational theft”, which refers to the Federal debt passed on to future generations.?There has been little progress so far.?See below for a look at inflation-adjusted Federal debt per capita since 1790.?After the surge in government spending required to defeat the Axis powers during WWII, each American was responsible for $30k in Federal debt in today’s dollars.?Today, that figure is 3x higher, and rising.?When we compute the debt burden on the working age population, it looks even worse.

If reasonable people cannot figure out how to fix debt and spending composition issues in a sustainable way, the Visigoths will try to do it for them, and with more economic disruption and political turmoil. Read our latest report below.

https://am.jpmorgan.com/us/en/asset-management/institutional/insights/market-insights/eye-on-the-market/american-gothic/

Michael Cembalest, JP Morgan Asset Management