Stop Pulling the Wagon

Mad Max Beyond Thunderdome

(Warner Bros. 1985)

As I am writing this the country of Venezuela is in chaotic economic collapse with government troops confronted by angry and desperate mobs of hungry people in the streets.  Stories are coming out of the country of people eating their own pets and long lines for a loaf of bread that now costs a huge pile of the hyper-inflated, devalued currency – when bread is even available.

Venezuela was a country with huge oil reserves, rich in natural resources and a vibrant hospitable people.

How did this happen and could it happen here in America?

In short, what happened was Hugo Chavez and his promise of a Socialist Paradise.

Nationalization and/or Government control of many/most productive industries and destruction of the “middle class”.  Affiliation with Communist Cuba and the Soviet Union.  Alienation from the United States and eventually most of the more moderate countries in Central and South America.

Once inflation, followed by hyper-inflation set in, what has followed was assured.

COULD THIS HAPPEN IN AMERICA?

Lets see how we are doing.

As of Feb. 11, 2019 the total U.S. Public Debt was $22,012,840,891,685.32

Source:  U.S. Government site:  https://treasurydirect.gov/NP/debt/current

America is now over 22 Trillion Dollars in debt.   According to public reports the Treasury Department is in the process of “borrowing” another 800 Billion Dollars for the balance of this year

Just the yearly interest on this debt is $364 Billion Dollars.  With projected annual interest by 2028 of  $761 Billion.

Source: https://www.thebalance.com/interest-on-the-national-debt-4119024

If the above numbers do not frighten you, they should.  The government does not even have the money in current funding to pay the interest on the debt.  So they borrow money to pay interest and keep on spending.  “Creative Accounting”.

Our Nations Debt has more than doubled in the last 10 years!

If the debt continues to grow, and I doubt there is the discipline in our country to stop it from growing, at some point in the not too distant future, just the interest on the debt could exceed current annual Federal Tax revenues.  

The word “unsustainable” is one of those words that we hear but the full potential impact of the word does not really register in the minds of the average citizen.  And if confronted with it most folks don’t want to deal with it. The effect can be catastrophic.  

While individuals, corporations, even cities can file for Bankruptcy, the Federal Government cannot.  The only option they have is to print money.   That means inflation and often leads to hyper-inflation.  From the Romans to Post World War I Germany to Zimbabwe to happening right now in Venezuela, governments throughout history have tried to use inflation to escape debt.

I don’t see a solution on a national scale.  So much of government spending is on “auto-pilot” with built in increases year by year.  There is no desire or will to slash spending on a government level and if such a plan were put forth it would have no chance whatever to pass congress.

Just my opinion based on observation but I believe as individual citizens we need to make plans for survival for ourselves and those we care about if the wheels come off the Government Wagon.  A word to the wise.

Bob Bandy