Tuesday Topic: COVID-19, One Year Older and Deeper in Debt

The size of the debt is not the issue in itself.  Debt can be strategically used to fuel future growth and opportunities if there is a plan coupled with accountability for the funds to ensure they are spent responsibly in support of the strategy.  However, running a business or entity where expenses, cash outflows, and future liabilities far outpace revenues indefinitely is like trying to defy the laws of gravity.
The execution of the governments' fiduciary duties is a more pressing question.  How prudently are the funds being spent and who is monitoring those spending internal revenues (taxes) or borrowed funds?  It is also concerning the Government Accountability Office has not been able to issue a clean financial statement opinion....ever (source).  Being unable to have a clean financial statement opinion does not bode well for publicly traded companies.

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Matt Johnson
CFO
Premier Bank
Omaha, NE
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Original Message:
Sent: 03-08-2021 14:23
From: Barb Rehm
Subject: Tuesday Topic: COVID-19, One Year Older and Deeper in Debt

A year ago this week, we realized the coronavirus would change our lives. We weren't sure exactly how, but we knew we'd have to adjust our behavior and our businesses. While I hope we're through the worst of COVID-19, we're not in the clear yet. Congress is expected to finalize a $1.9 trillion package designed to deliver aid to people, businesses, and state and local governments. (The Wall Street Journal is out Monday with a concise summary of the bill.) As you no doubt know, there was a ton of debate over the size of the government's relief package, with Democrats supporting a bolder strategy and Republicans favoring a more targeted approach. Since the Democrats have more votes, the package is big. And that leads me to the main story I want to share with you today: "The National Debt is Big and Getting Bigger. Does it Matter?" This American Banker story is excellent – deeply researched and well written. It doesn't take sides; it just lays them out for you and explains the intricate relationship between debt, interest rates, and inflation. I'm a risk-averse person by nature so I see $28 trillion and think "Holy Cow, this is unstainable and stupid." But I know plenty of people with more knowledge on this topic disagree.

What do you think? Does the $28 trillion in national debt worry you? Why? Please share your thoughts.

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Barb Rehm
Senior Managing Director
IntraFi Network
Arlington VA
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