Americans have been in shock watching the images of buildings in flames as the government of Greece implements austerity measures to stop the bleeding caused by decades of irresponsible financial policies and its socialism. Americans have always felt insulated by the world’s problems. We have felt that we are more independent and financially stable than our friends across the sea.
This week Fox News reported that the United States now has a debt ratio of 70 percent of its Gross Domestic Product. Furthermore, Dale Hurd of CBNNews.com has painted a dark future of our own republic if we do not change our spending priorities. He points out several scenarios — none of them pleasant — if we fail to fundamentally change the direction our country is going.
Hurd points out in his column that the “federal debt as a percentage of the Gross Domestic Product now stands officially at around 60 percent. But with the course the country is on, it will hit 150 percent in 10 years, and 300 percent by 2050″ (emphasis added). In less than a year it has gone from 60 to 70. He goes on to compare our situation with the one in Greece, which began to spiral when its debt reached 115 percent of GDP. We will reach and surpass that number in less than ten years. Because Greece is a member of the European Community and its currency is tied to the Euro like most member countries, other countries have (at least) a short term incentive to bail the country out in order to protect the value of their money. Those countries are, in fact, doing just that. Who will bail out the United States? Considering the disdain by other countries towards the US, one should not have any hope that others will come to the rescue. Also, the US is just one of many countries on the path to financial ruin. It is safe to assume there will not be others available to help the United States.
The columnist quotes Anne Vorce of the Committee for a Responsible Federal Budget, who said she is not sure when America will enter economic crisis, but noted that “The problem is you don’t know when you reach a tipping point until you reach it, but we’re well beyond normal peacetime historical experience already.” Daily the US seems to be adding to its financial responsibilities, with new conflicts in the Middle East in which we have taken sides and our continued providing of foreign aid to countries as we sit on the brink of ruin.
What I found most disconcerting about the article was the words by Hurd about the future of the United States of America. He said we only have to look to our friends in Argentina to find a disturbing window of the future. “Before World War II, Argentina was one of the most prosperous nations in the world. With a strong industrial base and thriving middle class, it attracted immigrants much like America. But within 15 years, Argentina went one of the richest nations to one of the poorest. Argentina President Juan Peron, who some historians say was a fascist, fomented class warfare and bashed business, banks and the wealthy. He made labor unions his allies and unleashed massive social spending that the nation couldn’t afford.” This sounds eerily familiar as we have a sitting President with certain obvious “corporatist” inclinations and disdain for those in the entrepreneurial (most of whom are middle income) class.
So what does the future hold? Experts point to several possible scenarios, none of which offer much to be hopeful.
- Long term economic stagnation. The United States has already had the longest period of near ten percent unemployment since the Great Depression. Real unemployment is closer to 18 percent and the Administration seems to add new policies daily that separate people from opportunity.
- On the opposite end — and the worst case scenario — we have a government that goes into default. This sci-fi scenario would have other countries in the world no longer interested in floating our note and, as I write this, the financial industries are seriously discussing lowering our nation’s credit ranking. This would lead us to paying higher interests and some countries no longer floating our notes.
- Another possibility is hyperinflation. On a single day in 2009 the US Government pumped $1.4 trillion into the money supply in order to offset the high cost of bailouts. We are now seeing staggering price increases at our local grocery store.
Our current situation is driven by decades of ignoring the rule of law. Our constitution makes it clear where the government can spend and we must remind our leaders of those strict guidelines or literally face ruin.