A certain kind of spending makes our country go round. It is when one American reaches into his or her pocket and trades money for something of value. Commerce among Americans was described by John Kennedy as “A rising tide raises all boats.” America got rich in comparison to the rest of the world by this commerce.
Sandwiched into commerce was government which was initially a small part of the total picture. The total bite of all national, state and local taxes at the start of the 20th century was about three percent. Today it is 30 percent or higher. For that increase Americans got a robust military, roads, hospitals, fire stations and a first rate judicial system. These things make America great.
Sadly, in the midst of these great improvements there are also many do-good projects. We have so many of them that we have out of control spending. We reached a tipping point where our government is making the extra revenue needed out of thin air since America can no longer borrow that much money.
How much? Currently around 40% of all government spending is make-believe money. There is a notion that dollars created out of thin air by our government do no harm. This make-believe money is now the coin of the realm. But consider the problem of owning dollars not backed by anything of value.
A hundred years ago this shift began. The first thing government had to do was stop citizens from understanding the amount of resources being diverted from commerce to government. Foremost was the move away from the Gold Standard by this government. Previously the wealth of our nation could be counted in bars of gold. There was very little wiggle room about budgets and spending when America was tied to gold bars.
In the 1930s America started off the gold standard. This allowed for funny-money bookkeeping where how much money America has depends on who you ask. Further, starting in the 1960s and continuing clear to today our government has been on an incredible spending spree. What fuels this spree?
In 1967 Congress and President Lyndon Johnson confiscated all of the money in the Social Security lockbox. They took all of that money and put in the lockbox government IOUs which said that when each person reaches the age of benefits that current Congress should pay those benefits. Previously, each person saved their own money, but it was stolen and continues to be stolen every payday.
America is now trading on its good name and the value this country had. Yes, I said, had. Regardless of the accounting tricks being used, most citizens know we are further in debt than the yearly Gross Domestic Product so if we took every dollar in circulation, it would not bring our country even. This country is trillions of dollars in debt and, more importantly, is making no move to pay back the debt, only the interest. The interest is a hefty amount but the real debt, only two generations old is beyond the ability of several generations to pay.
Then there are the off-books debts including what the country may owe when citizens reach an age to collect benefits. Those trillions of dollars are not listed in our national debt figure of seventeen trillion dollars. Some say this extra amount could be many multiples of our admitted debt. The government is not even listing these off-books debts and so we go blithely toward destruction believing our government has told the truth.
There is an old joke: a man walks into a bar and says, “Give me a drink before the trouble starts.” The bartender pours a drink. The man gulps that down and says, “Give me another drink before the trouble starts.” So the bartender pours another drink. The man gulps it down and the bartender asks, “When is the trouble going to start?” The man says, “As soon as you realize that I don’t have any money.”
Drink up America, because the trouble is just about to begin.
Dr. Michael Swickard hosts the syndicated radio talk show News New Mexico six to nine a.m. Monday - Friday on a number of New Mexico radio stations and through streaming. Email: michael@swickard.com
