America's Debt Time Bomb

Added to blog 3/23/11
America's Debt Time Bomb
By John F. Ince, AlterNet. Posted December 1, 2005.


**Added by Reva Kussmaul
**As you can see, this article was written over 5 years ago and we’ve gone into even more debt. Personal debt as of 3/23/11 is $16,152,057,921,939.
It seems as if we’re running right alongside the government into debt and not really changing our ways. I’ve been saying for years, it’s time for a personal revolution and I’ll say it here.
Are you willing to get and be debt-free, live more simply, give up the big cars, go to Starbucks less, eat out less and home more, etc.? You get my point but are you willing to make the change in yourself?
That’s the question we must ask and the work we must do. Nothing, NOTHING outside of us we change for the better until we get on-board personally and change us.
We are what we think about and as long as we continue complaining and bemoaning something “out there” including and especially the government out lives will continue to be ridden with debt.
This is not meant to be a doom and gloom article. It’s meant to be yet another wake up call. We’ve been woken up many times since 9-1-1 and we keep hitting the snooze button thinking if we just get 10 more minutes someone will change it for us - think again.
This can be an amazing opportunity to begin to see things differently - or not. We are all at choice, what’s yours’?
It really is a prosperous Universe and it’s about time we see it that way and live as if it’s the Truth.
I’m in - care to join me?
Prosperously,
Reva

America's Debt Time Bomb
By John F. Ince, AlterNet. Posted December 1, 2005.


Every day that we fail to address our exploding debt we increase the chances that the country will be facing an economic crisis of major proportions.
America's exploding debt is a ticking time-bomb. No one can say for sure what might trigger a crisis and when the bomb might explode, but this much is for sure: America's current level of borrowing is unsustainable.
America's debt crisis is reflected both in our exploding national debt and our astounding level of borrowing from foreigners (foreign countries**), as measured in the current account trade deficit. Every day we fail to address these problems, we increase the chances that the country will be facing an economic crisis of major proportions. Yet few Americans are aware that anything is amiss. The mainstream media covers the issue intermittently, but because the debt increases incrementally, the issue lacks the sort of "crisis" banner that motivates editors and reporters. The lessons of history are clear: a nation's heavy borrowing from abroad is usually a precursor to decline. America's debt is also a moral issue, because we are in effect stealing from future generations. By borrowing so heavily today, we are hollowing out the foundation of America's economic future.
There are two components of America's debt time-bomb: the national debt and the current accounts trade deficit.
The national debt: When President Bush took office in 2000, the projected surplus for the U.S. government for the next decade was approximately $5 trillion. By fiscal year 2005 the surplus was entirely gone and the annual domestic deficits were at record levels, somewhere in the range of $350-450 billion depending on whose estimates you use. This is the most radical reversal of government finances in U.S. history. Today the national debt is approximately $7.9 trillion, and growing by over a billion a day. As of 3/23/11: $14,251,322,265,000 and growing by the second** - www.usdebtclock.org
The current account trade deficit: In the last 25 years America has gone from the world's largest creditor nation to the world's largest debtor nation. Today we rely upon foreigners to finance over 40% of our national debt. In fiscal year 2005 our current account trade deficit is on track to be almost $700 billion, which represents over 6% of our GDP. As 3/23/11: $663,133,140,000 and growing by the second.** When America borrows from abroad to finance its domestic deficits, we give foreigners a claim to the financial assets of this country through either interest payments or a share of profits. Essentially America has been borrowing from abroad to finance our military buildup and war in Iraq. Should we continue to run current account deficits comparable to those now prevailing, the net ownership of the U.S. by other countries and their citizens a decade from now will amount to roughly $11 trillion.
Confiscating Assets
The integrity of our nation is being compromised by the fiscal irresponsibility of our policymakers. In the process, the stability of our currency and economy is being jeopardized. We should all be concerned because
1) The market value of everyone's financial assets will be reduced dramatically if we stand by and do nothing;
2) The costs of things we buy will rise dramatically if the government inflates the currency;
3) Policymakers (on both sides of the isle may)** will use the exploding national debt as a pretext for cutting social programs.
The unraveling happens in countless invisible acts that most Americans will never be aware of until it is too late. If the U.S. Treasury does "monetize" the debt to reduce its real value, it would be tantamount to the government's "confiscating" the financial assets of its citizens through intentionally inflationary policies. This course of action would have profound implications not only for the sustainability of the global financial system, but all for individual investors. In the words of former Fed Chairman Alan Greenspan, "In the absence of the gold standard, there is no way to protect savings from confiscation through inflation." As Harvard economist John Maynard Keynes explained: "By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens."
Since the terrorist attacks on the World Trade Center on September 11, the debate over America's priorities has been framed in patriotic terms as a need for strong measures to protect the nation from future attacks, whatever the cost. The wars in Iraq and Afghanistan have been linked to this "war on terrorism" and funding for these initiatives has by and large sailed through Congress without substantive debate or questioning. Yet it hardly makes sense for a nation to go into debt to pay for wars and a military buildup, at the expense of other more fundamental and abiding national needs.
While military expenditures go unquestioned in Congress, funding is being cut for education, environmental protection, sustainable energy programs and many other programs that arguably will have a more profound effect on the strength and economic competitiveness of our country. Increasingly the battleground of modern international conflict will be in the global marketplace, rather than in the military sphere. China's economy is growing at an impressive pace. Its need for energy and other resources will ultimately place its national requirements on a collision course with those of the U.S. and other Western nations.
Sooner or later, America must begin paying off its debts, and its binge of borrowing must come to an end. If our leaders continue to ignore the problem, we will all suffer the consequences.