Debt Bubble Revisited
I wrote the following piece as a newspaper column in 2004 -- 11 years later, the bubble has expanded and no one seems to care.
* * *
The Giant Debt Bubble
Stephen
Roach, chief economist at the Morgan Stanley banking group, presented some
alarming facts about the U.S. economy recently before an audience of fund
managers. In order to finance the national debt (which exceeds $7 trillion), America
has to import $2.6 billion in cash every day, an amount equal to 80% of the
entire world's net savings. The debt was about half the size of the economy 20
years ago. Today it's at 85%.
The
dollar has hit new record lows against other currencies from the yen to the
euro. Household debt is at record levels. Americans are presently spending a record
portion of their disposable income on their interest bills. Under these
circumstances, Roach predicts a "spectacular number of personal
bankruptcies" in the near future.
America
is sitting on a giant debt bubble, spending money like a bunch of drunken
sailors, seemingly oblivious to the catastrophic consequences of the bubble
bursting.
The
cost of government is now over $20,000 per household. As a token of their
appreciation for being elected to office, Congress has recently passed the 2005
omnibus spending bill (H.R. 4818).
Six
years ago there were less than 2,000 pork projects in appropriations bills. In
2005, more than 11,000 pork projects will be appropriated, costing over $23
billion, exceeding the 10,656 pork projects of fiscal 2004.
Some
of the 11,000 pork projects for 2005 include:
- $6.3 million – Wood utilization research (several western states)
- $3.5 million – Bus acquisition (Atlanta, Georgia)
- $3 million – Grape Genomics Research Center (Davis, California)
- $3 million – Center for Grape Genetics (Geneva, New York)
- $2.5 million – Horse Springs Ranch (New Mexico)
- $2.3 million – Animal Waste Management Research Laboratory (Bowling Green, Kentucky)
- $2 million – Kitchen relocation, North Star Borough (Fairbanks, Alaska)
- $2 million – Replace buses (Chapel Hill, North Carolina)
- $1.8 million – Eider and sea otter recovery (Alaska)
- $1.75 million – Parents Anonymous
- $1.5 million – Transport naturally chilled water from Lake Ontario to Lake Onondaga
- $1.5 million – Wood products wastewater repairs (Canton, North Carolina)
- $1.5 million – Anchorage Museum (Anchorage, Alaska)
- $1.25 million – Train-to-Mountain (Washington)
- $1.2 million – Alternative salmon products (Alaska)
- $1 million – Trailways Station revitalization ((Georgia)
- $1 million – B.B. King Museum Foundation (Indianola, Mississippi)
Apparently
drunken sailors aren't the only ones who spend like a bunch of drunken sailors.
Congress has a debt ceiling it has imposed upon itself that must not be exceeded.
However, whenever the national debt approaches the limit, Congress simply
raises the ceiling and continues its merry spending habit.
In
a democracy, people tend to elect politicians who promise to give them
something. Then the politicians appropriate vast sums of money to pay off the
voters who elected them. In the process, the federal government spends much more
than it takes in, building a massive debt that must be paid by future
generations.
Our
collective greed will be our downfall unless we sober up and get our financial
house in order. If the giant debt bubble bursts, all we can do is clean up the
mess and start over from scratch.
I've
started over from scratch a couple of times in my life -- it's a long, hard
road back to daylight.
* * *
In August of 2015, the U.S.
National Debt exceeds $18 trillion, which is more than $57,000 per citizen and
exceeds $154,000 per U.S. taxpayer.
The solution is simple -- less
government and living within our collective means.
___________
Quote for the Day -- "Blessed
are the young, for they shall inherit the national debt." Herbert Hoover
(U.S. President 1929 - 1933)
___________
Bret Burquest is the author
of 11 books. He lives in the Ozark Mountains with a few dogs and flourishes in a
debt free, modest existence.
___________
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