National debt nears 8 trillion dollars

 

September 10, 2005 – According to the U.S. National Debt Clock[1] at 4:10:26AM GMT on September 10, 2005 the U.S. National debt was $7,952,537,118,520.87.  Divided by the population of the United States, each citizen’s share of the national debt is $26,765. 14.  These figures are increasing daily.

 

The national debt is different than the national deficit.  The deficit is the fiscal year difference between what the United States Government takes in from taxes and other revenues, called receipts, and the amount of money the Government spends, called outlays. The total debt is the accumulation of annual deficits.[2]

 

When the U.S. Treasury borrows money to keep the government operating, it is borrowing debt that creates a larger national debt so that it can pay on previous debt as well as the new debt.  To understand this process, a comparison to personal credit card debt can be made.  Many Americans have experienced the pain of running up a large credit card debt that they cannot afford, only to transfer the entire balance to a new credit card offering low interest on the transferred balance.  This would be a smart move if the cardholder took advantage of the lower interest rate to pay off the credit balance, but many do not.  

 

Instead, the new line of credit frees up the old line of credit, which quickly gets borrowed by the cardholder.  Before long, the credit card debt is doubled, and the cardholder is in an even deeper hole.  Often the cardholder will do the balance transfer shuffle for as long as there remains a credit card company willing to extend to them a new line of credit.  However, unless deranged, the cardholder will eventually begin to be plagued with the realization that they are approaching a financial dooms day.  That day comes when there is no remaining lender that will extend any more credit to the borrower. 

 

When that day comes, the day of fiscal reckoning, the cardholder is most often financially bankrupt.  They have no ability to make even the minimum monthly payments on their debt.  As their payments become past due, the phone calls from the collection agencies begin at home and work.  The ability to borrow any money, even at high-risk interest rates, will no longer exist.  Selling their personal property, filing for bankruptcy protection, or both will be the only options remaining for the debtor. 

 

Tough times and tough choices await the borrower for sure.  Downsizing and selling off assets is most often required to survive the onslaught of bill collectors and attorneys assigned to collect the debt, interest, and penalties.   Millions of Americans have experienced this sort of financial debacle.  For them, the game ended once they could borrow no more money to shuffle their debt.  But what would the outcome look like if the borrower had an endless line of lenders and an infinite line of credit?  What if there was no immediate threat of being cut off? 

 

For many who use credit, they would simply keep borrowing money to pay on their existing loans, while continuing to purchase goods and services with credit.  Without any fear of being cut off, the average borrower would simply borrow and spend more and more, ignoring the enormous debt they were accumulating.  The amount of debt would become irrelevant in the scheme of things.  It would just be a growing number with no real meaning or value.  If spending happened to be curtailed, the borrowing would still need to continue simply to make payments on the existing debt.  Remember, this level of debt makes even paying the monthly minimum charges impossible.  Without an end in sight or a final due date, a necessity to repay the full amount borrowed in a predetermined timeframe, the debt would become worth less than zero because it would never actually be paid off.  It would be have no monetary value whatsoever.

 

The federal government has spent and continues to spend borrowed money just like the individual cardholder described above, creating an insurmountable debt burden that should alarm even the most carefree spenders.  Debt is debt whether personal or governmental, but it should not be overlooked that government derived debt is ultimately personal debt.  It’s your debt and it’s my debt plain and simple. 

 

Despite the debt burden that has already been heaped upon the taxpayer’s shoulders, the federal government in the last five years has smashed all records of spending money it does not have on things it cannot afford.  But unlike the average household that recognizes that sooner or later, their debt will need to be paid, the Democrats and Republicans in Washington DC smirk at the notion that someday this type of spending could destroy America because we will not be able to pay for it. 

 

In the last seven days, the federal government has approved approximately 50 billion dollars for the victims of Hurricane Katrina.  In 2002, it handed out close to 5 billion dollars to the families of 9/11 victims.  In virtually every bill introduced by Congress that involves spending money, some Senator or Congressman is slipping in some pork barrel spending at the taxpayer’s expense. And they aren’t shy about it either.  Last year when the President went to Congress for 200 billion for the War in Iraq, included in the appropriation bill was funding for a new baseball stadium for the Washington Senators, a new major league baseball team. 

 

Of course the Democrats and Republicans wanted to “support the troops” so what choice did they really have?  They couldn’t vote “no” just because of some little pork projects slipped into the appropriation bill, could they? No, being the champions of all that is righteous and good, the Congress had no choice but to support the Washington Senators and Major League Baseball if they wanted to support the troops in Iraq.  If this isn’t extortion, corruption, and fraud, I don’t know what is.

 

Focusing on the rapid and disturbing expansion of the federal government and the arrogance of the men and women of Congress who actually believe they have a constitutional right to spend any amount of money they deem important, it appears that the only reprieve the taxpayer might hope for is the breaking of the debt bank by having our nation’s debt called in by foreign banks who are holding the ever decreasing U.S. Dollar.  It is with regret to predict that what America must experience if it wants to reign in Washington DC is what Clyde Prestowitz, writing for The Australian, called an “Economic September 11”.[3]

 

Make no mistake about it.  An economic 9/11 could happen as fast and as surprisingly as the actual terrorist strikes on September 11, 2001.  All that is required is for the Central Banks of Asia, which are holding far too many U.S. dollars considering its declining value, to decide to dump the dollar and invest elsewhere.  When this happens, and it should if our national debt continues to mount with no meaningful collateral to secure it, we will experience an economic collapse that will make the Great Depression of the 1930’s look like a bounced check fee. 

 

If our nation experiences the looming economic doomsday and somehow survives, those people who remain must dust off the Constitution of the United States and force at gunpoint if necessary, the federal government to confine it’s activities to those things specified in Article I Section 8 of the Constitution.  It will be best to return the U.S. Dollar back to a commodity backed currency also.  Returning to the gold standard or silver certificates demands fiscal responsibility and conservative spending – something that even the Republican Party can no longer manage.  It is only the Libertarian Party that is willing to eliminate the national debt and protect the value of the U.S. dollar by returning it to a commodity-backed standard.  Think about that next time you vote. 

 

Today, terrorism is not the greatest threat facing America.  It is our national debt and the decreasing value of the U.S. dollar that will destroy more of us faster than any terrorist could wish. Furthermore, if and when an economic 9/11 strikes our country, Americans will have nobody to blame but themselves.  We will not be able to blame the Central Banks of Asia.  If they dump dollars, it will just be smart business on their part.

 

According to Prestowitz, big American market movers are hedging against the U.S. dollar. Warren Buffet, head of investment giant, Berkshire Hathaway is betting 21 billion against the dollar, and currency speculator, George Soros is also betting big time against the future of U.S. currency.  The writing is on the wall and what it says is an ominous warning indeed. 

 

It is time for a revolution of sorts in America.  The longer the people wait to restore common law by forcing the federal government to officially end the permanent state of national emergency it has been hiding behind since March 9, 1933 if not as far back as the Civil War, a state of national emergency that has allowed the federal and state governments to violate the people’s unalienable rights in the name of common good and public safety under the color of law…

 

… The longer we wait to end our relationship with the Federal Reserve Banks, banks that on June 10, 1932 then Chairman Louis T. McFadden of the House Banking and Currency Committee called “private credit monopolies which prey upon the people of the U.S. for the benefit of themselves and their foreign and domestic swindlers and rich and predatory money lenders"…

 

… Yes, the longer we wait to stop trading debt notes that are nothing more than fancy IOU’s and return to a sound, commodity backed currency controlled by the U.S. Congress, the more difficult our pending battles will be.