Will China Really Supplant US Economic Hegemony?

Kenneth Rogoff

Thousands of Chinese travellers rush to buy their train tickets at the railway station in Beijing

CAMBRIDGE – As China and the United States engage in their latest trade tussle, most economists take it as given that China will achieve global economic supremacy in the long run, no matter what happens now. After all, with four times as many people as the US, and a determined program to catch up after centuries of technological stagnation, isn’t it inevitable that China will decisively take over the mantle of economic hegemon?

I am not so sure. Many economists, including many of the same experts who see China’s huge labor force as a decisive advantage, also worry that robots and artificial intelligence will eventually take away most jobs, leaving most humans to while away their time engaged in leisure activities.

Which is it? Over the next 100 years, who takes over, Chinese workers or the robots? If robots and AI are the dominant drivers of production in the coming century, perhaps having too large a population to care for – especially one that needs to be controlled through limits on Internet and information access – will turn out to be more of a hindrance for China. The rapid aging of China’s population exacerbates the challenge.

As the rising importance of robotics and AI blunts China’s manufacturing edge, the ability to lead in technology will become more important. Here, the current trend toward higher concentration of power and control in the central government, as opposed to the private sector, could hamstring China as the global economy reaches higher stages of development.

The possibility that China might never supplant the US as the world’s economic hegemon is the flip side of the technology and inequality problem. Everyone in the West is worrying about the future of work, but in many ways it is a bigger problem for the Chinese development model than for the American one. The US needs to struggle with the problem of how to redistribute income internally, especially given highly concentrated ownership of new ideas and technology. But for China, there is the additional problem of how to extend its franchise as export superpower into the machine age.

True, it is highly unlikely that President Donald Trump’s huffing and puffing and bluffing will bring about a large-scale return of manufacturing jobs to the US. But the US has the potential to expand the size of its manufacturing base anyway, in terms of output if not jobs. After all, today’s high-tech factory floors produce far more with far fewer workers. And the robots and AI are coming not just in manufacturing and driverless cars. Robo-doctors, robo-financial advisors, and robo-lawyers are just the tip of the iceberg in machine disruption of service-sector Jobs.

To be sure, China’s rise is hardly a mirage, and its heady success is not built on population size alone. India has a similar population (both around 1.3 billion people), but for now, at least, it trails far behind. Chinese leadership must be credited with doing a miraculous job of lifting hundreds of millions of people out of poverty and into the middle class.

But China’s rapid growth has been driven mostly by technology catch-up and investment. And while China, unlike the Soviet Union, has shown vastly more competence in homegrown innovation – Chinese companies are already leading the way in the next generation of 5G mobile networks – and its cyber-warfare capacity is fully on par with the US, keeping close to the cutting edge is not the same thing as defining it. China’s gains still come largely from adoption of Western technology, and in some cases, appropriation of intellectual property. Trump is hardly the first American president to complain on this score, and he is right to do so (though starting a trade war cannot be the solution).

In the economy of the twenty-first century, other factors, including rule of law, as well as access to energy, arable land, and clean water may also become increasingly important. China is following its own path and may yet prove that centralized systems can push development further and faster than anyone had imagined, far beyond simply being a growing middle-income country. But China’s global dominance is hardly the predetermined certainty that so many experts seem to assume.

Yes, the US faces vast challenges as well. For example, it must devise a way to retain dynamic technological growth while preventing excessive concentration of wealth and power. To be a hegemon, however, does not require being the world’s largest country – otherwise, England would never have ruled much of the world as it did for more than a century. China might lead the digital future if the US drops the ball, but it won’t become the dominant global power simply because it has a larger population. On the contrary, the coming machine age could be a game changer in the battle for hegemony.

Kenneth Rogoff, Professor of Economics and Public Policy at Harvard University and recipient of the 2011 Deutsche Bank Prize in Financial Economics, was the chief economist of the International Monetary Fund from 2001 to 2003. The co-author of This Time is Different: Eight Centuries of Financial Folly, his new book, The Curse of Cash, was released in August 2016.

 Gold Tests Resistance – Again

Just when everyone was getting used to gold sitting around and doing nothing while tech stocks provided non-stop thrills and chills, the metal took off this morning on the “news” (read “Tweet”) that Trump is aiming some cruise missiles at Syria.
Now the $1,360 resistance level that has been an absolute brick wall since 2014 is looming once again, and gold-bugs are – once again – wondering where the next resistance lurks if this level is finally pierced.

The correct answer is that the chart doesn’t (or at least shouldn’t) matter in a world where Russia might soon be trying to shoot down US cruise missiles, Chinese and US aircraft carriers are staking competing claims to the South China Sea and trillion-dollar deficits are explicit and unapologetic government policy.

But until fundamentals retake control and precious metals start acting like bitcoin circa 2017, charts like this one are a fun diversion.

Israel and the Search for a Balance of Power

By Jacob L. Shapiro


While the rest of the world was focused on the Assad regime’s alleged use of chemical weapons outside Damascus over the weekend, on April 9 Israel’s air force attacked an Iranian target in Syria for the second time in 2018. The target was Tiyas air base, located about 30 miles (50 kilometers) west of Palmyra. Separately, Israel also hit a Hamas base in northern Gaza.

Israel’s decision to conduct operations in two countries on the same night is unusual, but tactically the operations fit Israel’s modus operandi. In recent decades, Israel has eschewed the large-scale pre-emptive attacks of the 1950s and 1960s, instead focusing on maintaining effective deterrence against would-be challengers. Israel arrived at its deterrence strategy as much because of its reticence to commit large numbers of ground forces to conflicts as because of the weakness of its adversaries. Israel cannot invade Gaza every time Gazan Palestinians plant a bomb on the Israeli border, but it also cannot let such activity go unanswered. The same is true of Iran’s moves in Syria. It is unlikely that a strategy meant for a group like Hamas will work against a much more dangerous foe like Iran, but for now it’s the best choice available.

It is unclear exactly what triggered the Israeli attack in Syria. Israel has enumerated at least two red lines when it comes to Syria: It will not tolerate either the transfer of advanced weaponry to Hezbollah or a permanent Iranian presence on the ground. But whether a violation of one or both of those red lines set off the attack is immaterial. What must be more worrying for Israel is that its first strike on the base in February – whose efficacy the Israel Defense Forces uncharacteristically went out of their way to advertise – seems to have failed to chasten Iran. This weekend’s limited strike likely will be no more successful, which means for Israel, southern Syria has become another Gaza Strip.

Russia, which is providing air support for the Assad regime and by extension for Iranian Revolutionary Guard forces in Syria, expressed its displeasure with the Israeli airstrike, with the foreign minister labeling it “a very dangerous development.” Privately, Russia may be more ambivalent. Russia and Israel have a pragmatically open relationship, which means Israeli red lines are not a mystery to Moscow. Russia has shown a willingness to test the limits in Syria to see just how far it can push regional powers before they respond (consider Turkey’s downing of a Russian jet in 2015 that briefly crossed into Turkish airspace), so Russian support for Iran’s moves at Tiyas cannot be dismissed out of hand.

Even so, if Russia knew what was going on at Tiyas air base, it would also have known that Israel would respond. And this is not necessarily a bad thing for Russia’s interests, its public protest notwithstanding. Russia got involved in Syria because oversupply was depressing oil prices and to recover some pride after its failure in Ukraine. It is staying in Syria because the survival of the Assad regime and of Iran’s forces in the country is crucial to the creation of a balance of power between Turkey and Iran. Russia’s continued involvement is essential so that Turkey won’t overrun Syria and install a pro-Turkey government, but Russia would be equally uncomfortable with complete Iranian domination of Syria. Better for Israel to slap Iran on the wrist than for Moscow to have to rein it in.

Ironically, this is where the U.S. and Russia see somewhat eye to eye. The U.S. has been mired in the Middle East since it destroyed the previous balance when it removed Saddam Hussein from power. The U.S. thought it was creating a Mesopotamian liberal democracy; instead, it got an Islamic Hydra. This forced the U.S. into an uneasy nuclear deal with Iran and a complicated relationship with Syrian Kurdish groups that poses a mortal threat to the U.S.-Turkey relationship. Russia thus far has sought to capitalize on U.S. blundering in the region, in part because the U.S. has been unwilling to soften its position on any of the issues most important to Russia, such as Ukraine or economic sanctions. But unlike on those issues, the U.S. and Russia don’t have diverging interests in the Middle East.

The problem is that it has become impossible to separate those other U.S.-Russia disputes from what’s happening in the Middle East. When the problem was the Islamic State, bygones could be bygones, but with IS off the table – or at least mostly off the table – all the various players are moving to secure their own interests. Turkey has invaded northern Syria and shows no signs of stopping. Iran is building bases and support networks as it seeks to transform the Assad regime into Hezbollah 2.0. Israel can no longer ignore the threat Iran poses, especially since Turkey seems determined to retain as much independence of action as possible, even if it means publicly spurning the United States. If the U.S. wants Turkey’s cooperation, the price will be giving up the Syrian Kurds, and for as long as that drives a wedge between the U.S. and Turkey, a regional coalition against Iran can’t materialize.

All the while, the U.S. watches what is going on and cannot quite figure out what to do with itself. The situation baffled the Obama administration, which promised attacks against Assad one minute and engaged in de facto military coordination with the Syrian regime the next. The Trump administration appears similarly flummoxed, trapped between the brazen brutality of the Assad regime and the limited strategic benefit of doing anything to stop it. The reality that the U.S. struggles to accept is that it has no strategic interest in Syria. This is not the Cold War; it’s a regional blood feud. With no overarching sense of what “success” would look like from Washington’s point of view, the U.S. has been purely reactive on every development in Syria. Perhaps predictably, the U.S. is the last to know it.

Israel, Turkey and Iran all have skin in the game. Russia wants to keep the game going. The U.S. doesn’t know what the game is, but it might fire off some Tomahawk missiles all the same.

 Three Mini-Bubbles Burst. Is One Of The Big Ones Next?  

Financial crises tend to start at the periphery and work their way into a system’s core. Think subprime mortgages (a tiny little niche of a few hundred billion dollars) that blew up in 2007 and nearly brought the curtain down on the whole show.

There’s no guarantee that the same dynamic will play out this time, but stage one – the bursting of peripheral bubbles – has definitely arrived, with three in progress as this is written.

Subprime auto loans

One of the bright spots of the past few years’ industrial economy was the willingness of people who couldn’t afford new cars to buy them anyway, usually on terms that lock them in until those cars are barely roadworthy seven years hence. This trend always had an expiration date (as does everything “subprime”) and January appears to have been it.

Subprime New-Car Buyers Going Missing From U.S. Showrooms 
(Bloomberg) – The American consumers who were stretching themselves to buy or lease a new car are starting to go missing from showrooms. 
Rising interest rates and new-vehicle prices are squeezing shoppers with shaky credit and tight budgets out of the market. In the first two months of this year, sales were flat among the highest-rated borrowers, while deliveries to those with subprime scores slumped 9 percent, according to J.D. Power. 
The researcher’s data highlights what’s happening beneath the surface of a U.S. auto market in its second year of decline after a historic run of gains. Automakers probably will report sales in March slowed to the most sluggish pace since Hurricane Harvey ravaged dealerships across the Texas Gulf Coast in August, according to Bloomberg’s survey of analyst estimates. 
Credit Profiles 
Westlake Financial Services has specialized in subprime lending since its founding in Los Angeles thirty years ago. Subprime loans now make up just 55 percent of its portfolio, down from 75 percent five years ago, said David Goff, vice president of marketing. 
“Subprime losses increased maybe to pre-recession levels a year or so ago,” Goff said in an interview last month. “That caused you to require a little bit more from the subprime customer. And those people, instead of buying a new car, are switching over to a used car.” 
Mortgage refis 
As interest rates fell inexorably over the past 30 years, a mortgage holder could refinance at a lower rate every two or three years and either pocket some extra cash or lower his or her monthly payment. This worked like a rolling tax cut for homeowners and a steady source of zero-risk income for Banks. 
But with interest rates now rising, that gravy train has ended:
Homeowners ditch refinancings as mortgage rates rise 
(MSN) – Refinancings make up a smaller portion of the mortgage business than at any time in the past two decades, posing a challenge for lenders who already fear higher interest rates and climbing house prices could eventually depress purchase activity. 
Last year, 37% of mortgage-origination volume was because of refinancings, according to industry research group Inside Mortgage Finance. That is the smallest proportion since 1995, and the number of refinancings is widely expected to shrink again this year. In 2012, refinancings were 72% of originations. 
While purchase activity has climbed steadily from a post-financial-crisis nadir in 2011, growth in 2017 wasn’t enough to offset a $366 billion decline in refinancing activity. The result: The overall mortgage market fell around 12%, to $1.8 trillion, according to Inside Mortgage Finance. 
What’s more, there are fewer homeowners eligible to refinance because of rising rates. The number of borrowers who could benefit from a refinancing is down about 37% from the end of last year, estimates Black Knight Inc., a mortgage-data and technology firm. At 2.67 million potential borrowers, this group is at its smallest since 2008.
Bitcoin’s journey from nerd novelty to global psychological dominance was truly epic.  
But it ended in 2017, and the slope has been negative ever since. As this is written bitcoin is down by more than half from its peak and the crypto universe market cap is now smaller than bitcoin’s alone was a year ago.  
This of course might not be the end for cryptocurrencies. They’ve had several big corrections during their emergence and could take off on another parabolic run at any time. Still, the latest correction came just as millions of new users were jumping in worldwide, and they won’t recover from those psychic scars easily.

The Low-Key Indicator That The Bitcoin Bubble May Have Burst 
(MSN) – Bitcoin, the poster child for cryptocurrency, is in the throes of a bear market that began shortly after the asset hit a price of just over $19,000 in December. Judging by Google search trends, that’s a state of being bitcoin isn’t likely to break out of any time son. 
Along with the coin’s value, Google searches for bitcoin have plummeted in 2018. Has the bubble really burst this time? 
FOMO Fades 
Fear of missing out — FOMO, as it’s colloquially referred to — was often noted last fall as a major wind beneath bitcoin’s wings. With the crypto conversation migrating from trading desks to dinner tables, everyday folks armed with only a passing understanding of the currency or the technology that underpins it poured money into the asset. 
Awash with demand, bitcoin did what any good commodity would and became more valuable. Since then, whether from profit-taking or panic selling, the price has descended more than 100 percent from the highs. And there seems to be little hope recreational buyers will step in and provide support. 
A look at how the Google search trends chart correlates with a chart of bitcoin’s value over the last year implies that the fair-weather investors who helped propel it into the stratosphere may have moved on.  
So it’s beginning. The periphery is crumbling. 
As for which bubbles make up the core of the system, some obvious candidates are sovereign bonds, Big Tech stocks, and fiat currencies. These are entirely different animals from, say, subprime auto loans, and when they go they’ll take a lot of underlying assumptions down with them. 
Of the three, Big Tech looks closest to the edge. The FANG+ stocks have been rising for so long that they’ve become an uncomfortably large part of the overall stock market. So their fate to an extent determines that of the Dow and S&P. And lately their situation is looking dicy for a variety of reasons.  
First and foremost, they’re all ridiculously expensive, trading at historically outrageous multiples of earnings, cash flow, book value, you name it. Second and much stranger, they’re behaving in ways that are enraging both competitors and customers, so a backlash of some sort is inevitable. Third and stranger still, they find themselves in an environment where the president is completely willing to attack them on their own social media turf while starting trade wars that disproportionately affect tech company products. Add it all up and the unlimited future of just a few months ago now looks like an oncoming storm.  
Tech stocks get battered, helping bash the Dow, S&P 
(CBS) – U.S. stocks tumbled into correction mode to start off the second quarter on Monday, as technology shares got battered on worries sparked by trade concerns and tweets by President Donald Trump and Elon Musk. 
“Today it’s the tech and tariff trade that has the market rattled,” said Nick Raich, CEO of The Earnings Scout. 
The Dow Jones industrial average shed 458 points, or 1.9 percent, while the S&P 500 dropped 2.2 percent. But the day’s biggest loser was the tech-heavy Nasdaq, which plummeted 2.7 percent. 
Retaliatory tariffs imposed by China on a slew of U.S. exports and Mr. Trump’s ongoing criticism of online retailer Amazon helped push equities into a downward spiral. “We’re starting a new quarter on an awfully soft footing,” said Art Hogan, chief market strategist at B. Riley RBR. He chalks up the market’s slide to “tariffs, protectionism and chaos in the White House.” 
The president has for days been assailing Amazon, lately focusing on a “scam” contract with the U.S. Postal Service that has actually been judged profitable for the post office. “It’s a long way to go to say ‘I don’t like the Washington Post’,” said Hogan of the newspaper owned by Amazon owner Jeff Bezos.  
“We import a lot of technology from China,” said Paul Nolte, a senior vice president and portfolio manager at Kingsview Asset Management.  
“What may happen here is we see retaliation from China specific to technology.”

A tech crash would be brutal but survivable. But if the markets lose faith in sovereign debt and fiat currency, that’s the end of the system as we know it. A plausible last act to bring this about might be a tech dislocation that pulls down the rest of the stock market, prompting central banks to respond with massive money creation and universally-negative interest rates.  
Then let’s see what happens to those fiat currencies.

 In The World Beyond Finance, Some Great Things Are Happening  

It’s easy to get lost in the shadows of the coming financial crisis and to assume that the entire world is going to hell in a 140mph Tesla.

The financial crisis is real, and our money definitely is going to hell. But in the broader world, some positive things are happening. Here are two:

Solar Is Eliminating Coal

Even if you don’t believe that the stuff burning coal puts into the atmosphere is destabilizing the climate and disrupting the ocean food chain, just Google “mountaintop coal mining” for all you really need to know about that particular fossil fuel. Coal as an energy source is not that far from whale oil in terms of barbarity, and the sooner it’s consigned to history’s trashcan the better.

And that is actually happening in a big way, thanks to the emergence of solar power. The following chart of solar economics looks like something from the computer industry, which it kind of is since solar panels are similar in many ways to microprocessors. No traditional power source can compete with exponentially declining costs.

For a real world illustration of what this means:

SoftBank and Saudi Arabia are creating world’s biggest solar power generation project

(CNBC) – Saudi Arabia and Japanese telecom giant-turned-tech investor SoftBank expanded their partnership this week, announcing the world’s biggest solar power generation project at a press conference in New York. 
The project was projected to cost $200 billion through 2030. That’s about how long it’s anticipated it will take to build out all 200 gigawatts of the Project. 
By comparison, there are roughly 70 gigawatts of solar capacity in operation, under construction or in development in the United States, according to a list of large-scale projects kept by the Solar Energy Industries Association.

The take-away: Coal, with all its attendant environmental and moral problems, is over, and oil is next. In another couple of decades the fossil fuel era will be firmly in the rearview mirror and its accumulated damage, while a long way from healing, will at least have stopped increasing.

Now For Factory Farming

Insect and bird populations are plunging because vast monoculture farms spray half the planet with pesticides. Billions of pigs, chickens and cows suffer inconceivably in “confined animal” operations where they’re mutilated and crammed into cages or feedlots for their entire lives just so we can have cheap eggs and Big Macs. Meanwhile, millions of acres of former forest and prairie are required to grow the grains that fatten these animals while they suffer.

But in the same way that solar is eliminating coal, lab-grown meat and milk will take a blow-torch to factory farming – on Internet time. A decade hence your cheeseburger and milkshake might be made by people like this:
Meet the startup that makes milk—without cows 
Perfect Day’s plan is to make milk using the exact dairy proteins cows create, but with designer yeast instead of cows—and in a matter of mere days. 
In other words, why buy the cow when you can get the milk for free? 
Well, maybe not free, but certainly far more efficiently—and thus far more profitably.  
In a process similar to how baker’s yeast produces CO2 to make bread rise and brewer’s yeast produces alcohol, Perfect Day’s yeast produces actual dairy proteins (like casein and whey). Food scientists program the genetic code into the yeast, and that yeast starts pumping out the desired proteins. The yeast never makes it into the final product, enabling the final product to be labeled GMO-free. 
Perfect Day has raised millions and has attracted talent from some of the world’s largest dairy companies. They plan to start by selling dairy proteins as functional ingredients for food manufacturers, with other dairy products not far behind. Having personally eaten from their early batches of yogurt, I’m convinced that they’re onto something big. 
The company is part of a group of promising start-ups pioneering the field of “clean” animal products: real animal products grown without raising and slaughtering animals.  
The terminology is a nod to “clean energy,” but in addition to lightening the “food-prints” of animal products, clean milk and meat are also just, well, cleaner. 
We’re warned to treat raw meat in our kitchens with extreme caution because it can carry E. Coli, Salmonella, Campylobacter, and other intestinal pathogens. But when growing clean meat, there are no intestines to speak of. Instead, from a tiny biopsy of an animal’s muscle, we can grow the meat we want to eat without the rest of the animal. 
Just how much meat could we grow? When MIT Technology Review profiled Marie Gibbons—a fellow at the nonprofit Good Food Institute, which is working to hasten clean meat’s rise—they made it clear why venture capitalists like Chau are salivating: by taking a sesame seed-sized sample of turkey muscle, Gibbons just might feed the world. 
“In theory, the growth potential is enormous,” MIT reported. “Assuming unlimited nutrients and room to grow, a single satellite cell from one single turkey can undergo seventy-five generations of division during three months. That means one cell could turn into enough muscle to manufacture over twenty trillion turkey nuggets.” 
The venture capitalists pouring money into clean meat companies are betting that theory becomes fact. One company, Memphis Meats, has attracted capital from billionaires like Bill Gates, Richard Branson, and Jack and Suzy Welch. 
But this isn’t all simply a product of Silicon Valley; even Big Meat has taken notice.  
Just last August, Cargill became the first large meat producer to invest in clean meat.  
In a Fox Business interview, Cargill CEO David MacLennan discussed his new investment, boasting that Memphis Meats “produces chicken or duck in a way that doesn’t use the resources that traditional meat uses. So it’s all about sustainability.  
Call it ‘clean meat’ if you will. It’s a way to produce meat in a different alternative that isn’t as resource-intensive.”

Lab-grown meat, cheese, and milk are where solar was a couple of decades ago: Way too expensive and inefficient to threaten established competitors.

But like solar they’ll go exponential in coming years. Their costs will plunge and their quality will rise until starting a factory pig farm will seem as ridiculous as starting a coal mine seems today.

Farmland will start returning to nature, fewer animals will be tortured slaves and (assuming we avoid a nuclear war) the gold-bugs who get rich during the Great Monetary Reset will inherit a world that, while still very messed up, is in some ways at least moving in the right direction.

The American Dream Is Drowning In Debt

By Michael Scott


Life is good, but it’s being lived on credit and reality will eventually have to dig in.

Nationally, U.S. interest payments on debt could quadruple in a decade to over $1 trillion per year, according to CNN, as tax cuts and record spending contradict each other. That means it will take $7 trillion over the next decade just to service this massive debt.

That’s the macro picture. The micro picture is a mirror image: Individual Americans are drowning in debt, too.

According to a 2017 State of Credit report from Experian the average American debt picture looked like this by the end of last year:

(Click to enlarge) / Source: Experian

“Higher average credit scores and higher debt offer reasons for both optimism and caution heading into 2018,” wrote Experian.

“A decade since the Great Recession crashed into the American economy our relationship with debt, credit and the future is… well, it’s complicated.”

Credit scores may be rising, unemployment may be at a historic low, and the economy may have recovered from the 2008 financial crisis, but wages are as flat as can be and home ownership is lower than at any point since the 1960s, according to Experian.

Against this backdrop, consumer borrowing (not accounting for housing) is on the rise, registering an 8.8-percent jump in November last year to $3.83 trillion. In January, consumer credit rose 4.5 percent, according to the Federal Reserve.

But even with all this borrowing, home ownership is becoming disconnected with the American dream. And the overriding sentiment is that soaring student debt is in large part responsible for dragging this aspect of the American dream down.

Student debt is currently weighing down some 44 million Americans to the tune of over $1.48 trillion. It overshadows credit card debt by $620 billion. And it’s getting bigger and bigger. The average student loan borrower owes in excess of $30,000, while one-fifth owe more than $100,000.

(Click to enlarge) / Source: Student Loan Debt and Housing Report

But non-housing debt is also steadily rising:

(Click to enlarge)/ Source: Investopedia

In the meantime, the American dream of owning a home is vanishing, with more than 80 percent of people ages 22 to 35 blaming student loans for their inability to get a mortgage because lenders are denying them based on an unfavorable debt-to-income ratio.

"Student loan debt holders do want to own a home, that's part of their American dream," CNBC quoted Jessica Lautz, managing director of survey research at the National Association of Realtors, as saying. "It's just really hard to get there right now."

The American Dream is an expensive one, and so is the propensity to further it along by credit.

But it’s far from an individual problem.

Businesses are drowning, as well. The total debt of non-financial corporations at a percentage of GDP has reach 73.3 percent—that’s a new record, according to the Economist.

And the debt problem is a national challenge.

“We're addicted to debt,” Marc Goldwein, senior policy director at Committee for a Responsible Federal Budget, told reporters earlier this year, blaming both political parties.

Borrowing as a share of GDP has spiked for the first time during a non-recession since Ronald Reagan needed to fund the Cold War. Again, the American Dream may be hijacked by a revival of a global chill that has Washington eyeing a major military buildup, and on the home front, we’re drowning out students in debt and chipping away at their ability to effectively lead our future.