Symptoms
Understand the Illness, not just the Symptom
The trade war escalated to the next level last week. Is it simply chaos from leadership or might there be something more to it? Is there a plan or at least a general direction?
“We’re gonna tariff everyone” is what we’ve been hearing since the US election last fall. Day by day there seems to be little or no method to the madness, but over the longer period you can start to see there is direction.
“The tariffs are a symptom of a bigger problem. The problem is the US has too much debt, it’s out of control” according to Keith Dicker (1), a Canadian smart money thought leader.
Let’s break this down:
· The illness (problem) is excessive US government debt
· Three treatments for this illness are higher taxes and lower interest rates
o higher taxes, collected by the government
o lower interest rates, lowering debt service costs for the government
o reduced government spending
· How do you apply these treatments?
o Start a tariff-based trade war, for the taxes and interest rates
o Start DOGE, for the spending reduction
· We see the symptoms (tariffs, DOGE) while they attempt to treat the illness (debt)
US government debt is at 122% of GDP/person. (2) Why is that excessive?
· Debt/GDP ratios above 77% can hinder economic growth (3)
· Since 1820, 98% of countries that hit 130% debt/GDP have defaulted (4)(5)
Canadian government debt, at 108% of GDP/person, is nearly as bad as the US.
We need to remember Trump didn’t create the problem in the US just like Carney or Poilievre didn’t create the problem in Canada. Debt growth is decades old in both cases. They are attempting to solve a problem not of their creation, one that will persist beyond the Trump era.
I’m not a fan of Trump’s tendency to use sledgehammers instead of scalpels to address problems, but at least the US has some initial direction in trying to do something about their excessive debt. Canada isn’t doing anything about it yet.
To Be Prepared, I encourage you to:
· Always dig past the headline chaos into the underlying facts. Don’t get stuck on the symptoms, keep going until you diagnose the illness
· Use your vote and voice, encourage governments to increase GDP and reduce debt
· Use your investments to increase GDP
1. Loonie Hour podcast #182, 4 April 2025
2. tradingeconomics.com/country-list/government-debt-to-gdp?continent=g20
3. worldpopulationreview.com/country-rankings/debt-to-gdp-ratio-by-country
4. https://www.lynalden.com/does-the-national-debt-matter
5. reddit.com/r/CryptoCurrency/comments/nnwpl1/since_1821_98_of_countries_that_hit_130_debtgdp/?rdt=49783