Imagine you made $20,000 every year, but you spent $30,000 every year. Would you be allowed to keep borrowing the money every year? When your credit card was maxed out at a $10,000 credit limit and you had no plan to pay it all off, would Visa give you a $20,000 limit? When you have put $100,000 on credit cards and still only make $20,000 a year, would a bank give you a loan for more money? What if you spent it on “good things” like feeding your family or neighbors? What if you used it to buy a house or health insurance for your neighbor? Would the bank increase your credit limit? Of course not, but that is exactly how the Federal government is living now.
For the last three years the Federal government is spending over $3.6 trillion per year. But it takes in less than $2.5 trillion on average. While tax revenues fund about 2/3 of spending, 1/3 of federal spending is from borrowed money. The Federal government has no plan to change that. The borrow and spending habits of the Federal government are endangering your family, your children, the security of the nation and the very freedom of all of us. There is only one outcome from this path and it appears it is too late to prevent a major economic collapse. The only question remaining is will we emerge from the coming economic collapse as a free people who learned our lesson on overspending? The other likely outcome is a nation of people held captive to a dictatorial government controlled by foreign lenders – but not necessarily the ones you would think.
The source of our excess spending is government “stimulus”, wasteful military and federal projects and entitlement programs favored by “Progressive” politicians who make up the vast majority of the Democrat party and a sizable majority of the Republican party. The entitlement programs are really meant to gather votes for the Progressives so they can stay in power for their own benefit. These include unfunded liabilities for Medicare, Social Security, federal worker retirement and health benefits and now Obamacare. The unfunded liability (the amount owed but not saved) is over $127 trillion – the real American debt – or $1 million per household. Some are tempted to suggest that the Federal government simply raise taxes to bring in more revenue so it can then redistribute the money to those “in need”. That will work for a year or two, but even that won’t be enough money. If the Federal government confiscated 100% of the wealth over $200,000 of those who earn that amount annually they would have a one-time windfall of $4.2 trillion. Then no one would ever have an incentive to earn more than that again. That would bring the Federal Debt down to about $13 trillion, assuming the federal spending machine would not use it to buy more votes. The fact is that only by borrowing money can the federal government continue its spending. That is why it is crucial to drastically reform the Federal entitlement programs and other federal spending – it is the only way to save our country.
Future installments here will discuss the largest single-source provider of the lending to your out-of-control government: the Federal Reserve. The Federal Reserve is an entirely private and independent body of unelected officials that refuse to report their accounting details to the American people. They print money to pay these debts which then puts more money in circulation – leading to inflation. At some point, these large government debts that are funded by Central banks must be paid or resolved. Sadly, the history of the planet in the last three centuries shows that private Central bank debt is usually resolved by global war as described in Ron Paul’s book “End the Fed”.
Americans need to embrace the limited government that was established at our founding. It is that limited government, the government that does only what is required, that costs the least and best serves the people that created it. The government is not designed to grow the economy, redistribute wealth or correct “social ills”. The government generally causes more ills than it solves. When we return to a limited government, we will borrow less and maintain a sound currency. If we stay on the current path we will have to sacrifice our freedom and property through taxation and government confiscation to keep the current system afloat. You and your children will be expected to serve the state as it claims it is trying to promote “social justice” when it fact you will be sacrificing your individual liberty and prosperity to feed the Federal Reserve banking machine.