April 1, 2025 | Are States & Provinces Destined to Default by 2034?

You have to wonder why we have the most incompetent people in government, perhaps in history. While there is not a single leader in Europe who I would even want to have a drink with or shake hands, we see the same on the LEFT in the United States. No matter how often they want to rob anyone who produces and works for a living, they seem incapable of learning from experience. What is this? The triumph of hope that Marxism will work one day?

The mayor of Seattle, founded on November 13th, 1851, of this fictional land they call the Emerald City, admitted that the city collected $47 million less in payroll taxes last year as large companies continue to flee this Marxist waterhole. According to the Seattle Times, he said that the expected the tax per head to bring in over $400 million in revenue instead brought in only $360 million in 2024, leaving a deficit of $47 million payroll tax deficit that is added to a $260 million budget deficit pushing Seatle over the dge.

Retailers understand that they sell less if they raise prices without improving quality. The LEFTIST Marxists REFUSE to look at human nature because they are too busy stuffing their pockets. DO NOT BUY DEBT from Seattle. We are sliding into a Sovereign Default once again, as in the 1840s, which was a period known as the Hard Times because of the Sovereign Defaults of the States. That was set in motion by Andrew Jackson, founder of the Democratic Party, who shit down the central bank and that led to every state allowing banks to issue their own money. That led to fraud and Wildcat Banking. It was 1866 when the U.S. Government levied a 10% tax on the bank notes of state and private banks, effectively forcing them to retire their currency. Jackson also demanded only gold for the purchase of federal land, which also undermined the private currency.

While everyone points to the Federal Reserve and the Federal Debt, the Feds also have the authority to create money. The states DO NOT!!!! While in theory the Feds can monetize their way out of a debt crisis, states CANNOT! We have just witnessed here in Seattle the mindset of Blue states and how dangerous they have become when we look forward in time. Recent analyses that we have undertaken up to 2023 have revealed that several U.S. states face significant fiscal stress that could elevate their risk of default.

As seen in Seattle, states are confined to adjusting budgets and raising tax revenues. Key factors contributing to risk include high debt burdens, unfunded pension liabilities, structural perpetual budget deficits, weak economics as the great migration from high-taxed states to lower-taxed states dominates post-2020, and the demographic trends of reduced population. Young girls are told to enjoy life, and the world has too many people, so we see the birth rates collapsing throughout the West. The states that are often highlighted as having elevated default risk:

Pension Liabilities: Illinois, Kentucky, and New Jersey have the worst-funded pension systems.

Debt Load: Connecticut and Massachusetts lead in per-capita debt.

Economic Volatility: Alaska, Louisiana, and Hawaii face sector-specific risks (oil, tourism).

Demographics: Illinois and West Virginia struggle with population loss and shrinking tax bases.

We are told that default is unlikely. However, the states’ tools to avoid default, namely tax hikes, have reached their limits. People and companies are migrating. While they like to say no state has defaulted since the Great Depression, the city of Detroit suspended its debt payment in 1937 and finally made good with the devaluation thanks to inflation in 1963. This was NOT confined to the United States. Canada also defaulted on its national debt in 1931. By 1937, they were also concerned about a widespread default by the provinces.

The Democrats are still in denial about the cause of losing the election to Trump. They are not reforming or surrendering their WOKE agenda. This is what guarantees that we are headed toward a massive state default on debts. We are looking at a complete default by 2034.

As I wrote recently about how states are trying to seize power from municipalities, this is also about lining their pockets with more money.

Martin Armstrong April 1st, 2025

Posted In: Armstrong Economics

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