By Ryan Binkley
Ryan Binkley, President and CEO of Generational Group, recently had this column on the looming threat of the U.S. national debt published in The Dallas Morning News. Here it is in its entirety for our readers.
How do you know you are in a bubble? Most people don’t, of course, until the bubble bursts. But it is becoming increasingly clear we’re in one now: a debt/currency bubble the likes of which the United States has never experienced.
A common thread in all economic bubbles is a suspension of belief: It’s different this time, you hear, as asset prices and debt levels soar.
Recently, the U.S. Treasury Department issued a report showing that, for the first time in history, the U.S. national debt exceeds $31 trillion. At the same time, the latest World Economics ranking of nations’ debt-to-GDP ratio shows the U.S., with a debt-to-GDP ratio of 119%, now in fifth place in a ranking of countries with the highest ratio — behind only Japan, Greece, Singapore and Italy. Lebanon comes in just behind the United States at 115%.
Let that sink in for a minute. To be sandwiched between Lebanon and Italy is not something you’d expect to see from the world’s largest economy, and it hasn’t always been this way. The growth of our nation’s indebtedness over the past several years is staggering. According to economic data from the St. Louis Fed, the piling on of debt began during the 2008 financial crisis and hovered around 100% of GDP until the COVID-19 crisis, when it is estimated to have ballooned above 130%. In the year 2000, by contrast, the U.S. ratio was only 55.6%, and for much of the 1970s, into the 1980s, our debt-to-GDP ratio was in the low 30s.
These were the days, you might recall, of the Gramm-Rudman-Hollings Deficit Reduction Act, when those in power cared about deficit reduction. When a prominent debt clock was hung in New York’s Times Square. Reducing the burden on future generations dominated the national debate.
Today you hear little about the level of debt we are leaving for future generations, as politicians on both sides of the aisle worry more about the next election cycle than economic cycles.
Why does it matter? Primarily because a large public debt saddles a government with bigger and bigger future interest payment obligations, particularly as interest rates rise (the World Bank, for example has estimated that the debt-to-GDP ratio of more than 77% is the point where the crushing impact of this debt becomes a significant drag on an economy). Like a business drowning in bank loans, there’s little revenue left after paying interest on the debt for growth, investment or expansion.
You might say, yes, all true, but the U.S. dollar is the world reserve currency. That’s not going to change. We can print money forever. Indeed, such thinking has taken hold in both political parties in recent years.
But this is dangerous and flawed thinking. A quick glance at history shows us this dominance can be fragile.
The British pound sterling was the world’s reserve currency for much of the 19th century and into the 20th, until the deficit spending necessitated by two world wars nearly bankrupted the U.K. by midcentury. Years of economic decline followed, and after World War II the dollar had replaced the pound as the world’s leading reserve currency.
My point is this: The U.S. has only been the primary world reserve currency since the mid-20th century. And no party lasts forever. Just as gravity is an immutable law, there will come a time when our ability to simply print more money will end, and we will come crashing down beneath the weight of our free-spending ways.
Can we fix this? We can. My faith in the ability of our nation to right our ship never falters. But we must begin now.
This is not a Republican or Democratic issue. It is about the future of our economy and our great nation. For every wasteful entitlement or unemployment benefit that encourages people not to work, there is a lobbyist-created loophole or tax shelter benefiting the biggest of businesses. And it is the middle and working class, along with business owners, who are hurt most — those who depend on robust economic activity for jobs, income and livelihood. In other words, for their shot at the American dream.
If you read history, you know this: The crew of the Titanic saw the iceberg long before the ship hit. By the time the senior officers tried to correct their course, it was too late. There just wasn’t time to steer so mammoth a structure away from the coming danger.
We are staring at the iceberg now, but there is still hope to avert disaster. We must start righting the ship of our great nation, take our responsibility of stewardship seriously and do the right thing for future generations.
We thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.Jay Dinnison, Owner of Sharpe Mixers
After attending a conference with GE, I decided that the value they bring would be worth the expense and as soon as I started working with them, I realized that was the right decision. When we started to get LOIs, Fred Zweifel took the lead on the communication and supported negotiations throughout the process, which got tricky as we moved forward. I learned that it can be common for companies to make a great offer then work to erode that price with their discoveries, but Fred and the GE team kept that from happening.Caroline Connelly, CEO, OptoTest
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
I wanted to take this opportunity to thank you for all that you have done for us. Not only did you take care of all the aspects of the sale but took extra care to make sure we knew what it looked like every step of the way. I will definitely recommend your company to anyone that is in a position to or looking to exit their business.Shane and Johanna Kline, Owners of Vision Upfitters
Through the sale process, Generational brought in several interested buyers and we closed in about 6 months. I am so glad I accepted that invitation to the conference and could not be happier with the whole process. The team at Generational coupled with their knowledge and guidance was so valuable that in the end, I know I could never have done this on my own!JoAnn Ellis, Owner of Fondren 5 Star Kennels
I decided to attend the conference and hopefully receive some guidance on how to structure an exit plan of my business. Upon arriving at the conference, I was so impressed with the presentation given by Generational Equity that I set a future appointment that week to discuss the possibility of selling my business with their Senior Managing Director David Robinson.JoAnn Ellis, Owner of Fondren 5 Star Kennels
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).Bil MacLeslie, CEO, ipHouse
T.D., thank you so much! You are a great leader! I love how you are using your gifts and talents to better others. You are clearly a GREAT COACH! This 3 day session undoubtedly changed the future of our business, and very well may have been the sole catalyst to save my company, my health and my marriage! A genuine “thank you” from the bottom of my heart.Bryan D. Horn, Owner, Over Under Clothing
I am pleased that I was able to work with Andrew Byrd throughout this experience. From the first meeting we had in Minneapolis I felt that I was in good hands. His knowledge and expertise is second to none. He guided the process consistently throughout. I feel lucky that I was pared with Andrew and could not be happier that I chose Generational Equity to handle this major life event. Thank you Andrew and GenEq for everything!Eric Erlandson, Owner, Action Fastenings, Inc.
Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.Pete L.
Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.Bil MacLeslie, CEO, ipHouse
I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Terry D. Wickman, President, Keytroller
Thanks to you, the entire GE team and especially Michael Goss for driving a great valuation, coaching me and driving the process across the finish line. Please let me know if there is anything I can do to support GE going forward.Tom Currier, Former President & CEO, Rackmount Solutions
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
We were represented by Michael Goss with Generational. The due diligence was grueling and exhausting, but Michael propped us up and kept us motivated throughout the process. Debi and I continued to ask each other how we could possibly make it through this process without the assistance of Michael. Michael's professionalism and knowledge is absolutely amazing, and we are so blessed to have had him by our side as we made our future dreams come true.Bob and Debi Lee, Owners of BL Technology, Inc and BL Tl Services, LLC
I need to say an immense thank you to Don Ho for his stellar work ethic, attention to detail, and tireless effort. Also thank you to the whole crew at GE! Without you, Don could not do such a phenomenal job. We were shooting for closing and funding before the end of 2020, due to the uncertainty of the political landscape and taxes. I am happy to report we closed last week and will be funding tomorrow.Dr. Caty J. Catron PhD, RN, VA-BC – Owner, Vic The Picc, LLC
Michael worked tirelessly, He followed every lead meticulously and urgently to make sure nothing was missed.Robert Evans, President and CEO of Mealtracker Dietary Software
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.Jay Dinnison, Owner of Sharpe Mixers
The professionals at Generational Equity then helped develop a roadmap for enhancing the value of the firm and an evaluation report. This was completed by June 14, 2021. We then developed the Confidential Information Memorandum and put Taylor Studios, Inc. on the market by July.Betty L. Brennan, President, Taylor Studios
Generational Equity’s professional staff helped me every step of the way. Their network and professionals are the only reason I sold my company this quickly. For me this is a once in a lifetime sale and I was unfamiliar with the process. I was able to lean on them with questions and concerns.
The most important contribution I think Ahmad made was with his personality and work ethic. He is sincere, efficient, and very hard working. He was available to me at all times, whether it was for specific detail of the negotiation or just to talk through the bigger picture. He listened, advised, and recommended, but never forced his idea or opinions. In the time we worked together, he became a valued colleague and also a friend.Salvo Stoch, Founder and CEO of Sleeping Partners
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.Robert Evans, President and CEO of Mealtracker Dietary Software
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.Andy Graham, Vice President, Modern Heating & Plumbing
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.Larry Moore, Owner, A Company Portable Restrooms
We had the pleasure of working with Mr. Ahmad Behjati Managing Director, M&A, for Generational Equity during our acquisition of Papa's Dodge in late 2021. Generational Equity and Mr. Behjati represented and marketed Papa’s Dodge. As our primary contact, Mr. Behjati was professional in every facet of this acquisition process, conveying valuable advice most times and assisting us in every step of the process.Rick Greene of Dobbs Equity Partners LLC
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.Terry D. Wickman, President, Keytroller
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