Economists, business executives, and small business owners continue to warn Washington about the dangers of runaway deficit spending. If it continues, it could cost Americans their freedom.
The national debt is well over $16.5 trillion and growing, and it seems that it’s only a matter of time before the United States slips into a deep recession or depression. Additionally, the Social Security program may soon go bankrupt, stock markets could crash and wipe out retirement accounts, and inflation may drive up the cost of goods and services.
Steve Hess, a longtime executive and taxpayer, outlines the country’s problems in plain English. His ultimate goal is to get people to act so that future generations don’t have to carry the burden of repaying governmental debt and rebuilding the nation.
Taxpayers must act to fix things, and they must encourage their friends and neighbors to get involved—before it’s too late.
Because of out-of-control spending by the Federal Government, America is rapidly heading in the direction of an economic collapse similar to the Great Depression of the early 1930’s, and what we are all witnessing now in Greece. This collapse will result in a lower standard of living and a loss of freedom. This problem is the result of many years of poor financial management by our representatives in Washington D.C. as our government continues to lose over a trillion dollars a year, and has amassed a national debt of over $16.5 trillion2, and growing. In fact, by the end of Mr. Obama’s presidency, the debt could be over $20.0 trillion. History shows that runaway debt will bring a nation to its knees as happened with Argentina, France, the Soviet Union, the Roman Empire, and currently with Greece.
Historically, the U.S. Government has tended to borrow from its own citizens, which resulted in interest payments staying here in the U.S. Today, more than a third of our nation’s debt is held by foreigners, including $1.2 trillion owed to China, and $1.1 trillion owed to Japan3. Huge amounts of interest payments go overseas.
It can be debated at length as to who in government was responsible for this mess. There is no lack of people to blame including the Democratic and Republican parties, the current members of Congress, and those of the past. Perhaps we, the voting citizens, are also to blame since we have not been paying close enough attention to where our taxes are going and where its being wasted. Maybe we have not been holding our representatives accountable and have been too complacent.—The truth of the matter is we work hard at our jobs. We try to make ends meet. We have kids to raise. We have to save for college. Many of us are looking for a job. We don’t have time to be looking over our shoulders to make sure Washington is doing the right thing.
In any event, here we are today with a potential tragic loss of our world position as the ‘wealthiest nation’, and a loss of our liberties.
Why Should You Care?
If someone keeps borrowing money to the point it becomes obvious they will not be able to pay it back, people will stop loaning money to them. Even if they are able to find someone to loan them more money, the interest rate they would pay would be extremely high.
This describes our government. As the U.S. Government keeps losing money and increasing the already gigantic national debt, at some point the government’s creditors will become suspicious about its ability to repay the debt. At that point, even if the government is able to borrow more money, the interest rates will be much higher, causing more borrowing to pay the higher interest payments. So how does that affect us and the generations to follow? There are a number of ways:
• If you anticipate receiving Social Security during your retirement, know that it is in jeopardy of insolvency. It is likely that the seniors of today will be taking out more than they put in, and future generations are going to get less than they are putting in. • If you have children, they will be asked to pay down the untenable government debt that has been amassed, negatively impacting their standard of living. • Your buying power may be greatly reduced as inflation drives up the cost of goods and services. • If you have savings such as a 401(k), your nest egg could take quite a blow if the stock market crashes as a result of another big recession or depression. • If you work for a living your federal taxes may increase significantly. • There will be layoffs resulting in higher unemployment. • If you are dependent on any form of government assistance, you could lose the benefit. When the government eventually figures out it has borrowed too much and cannot borrow any more, it will have to choose a course of action to finally deal with the problem. One solution would be to simply print more money to give to its lenders. This course of action would cause the lenders to lose all confidence in the U.S. and would most certainly cut off all borrowing possibilities for years to come. Printing more money would also result in runaway inflation which would cause the price of commodities like gasoline and food to skyrocket.
Steve Hess started his career as a CPA with Arthur Andersen & Co. in San Jose, California. He spent twenty-five years in financial executive positions with several Silicon Valley startup companies. He was involved in raising venture capital, bank financing, long-term planning, initial public offerings, and mergers and acquisition transactions. He currently lives with his wife Lee Lee Hess, in Conway, Arkansas.