“Deep in Debt, Caught in a Net.”
This old English proverb concisely describes the financial condition of many Americans. Household debt is rising at an 8.8 percent annual rate, home mortgage debt at 14.2 percent. Total debt in the United States doubled from 1998 to 2002, from $16 trillion to $32 trillion and may double again in the next five years.
There is a fly in the ointment of economic recovery: a dollar that just won’t seem to stop its fall. The impression that this trend portends something ominous is bolstered by the inverse relationship of the dollar’s value on international exchange and the price of gold. As the dollar has fallen in the last year, gold has risen. Meanwhile, US government officials repeat the refrain that they support a strong dollar. It seems that market forces have other ideas in mind.
I write this dutifully and joylessly in the manner of someone taking out the garbage or performing some other unpleasant task that’s been done before but which must be done once more.
The Republicans have done it again. With their new Medicare bill, they’ve made government even bigger. This is not new to us here. We’ve been saying that for years. The Republicans have been expanding the size, scope, and power of government ever since they first got their mitts on power in 1861.
Critics accuse libertarians of reveling in government failures. Yes and No. No one is pleased to see the destruction caused by government policies, whether small scale, as when a tighter regulation causes business failures, or large scale, as when wars destroy life for millions.
The Washington Post’s Jonathan Weisman recently scored a front-page story about President Bush that would have galvanized DC conservatives three years earlier if the same words had been written about President Clinton.
Before there was the Federal Reserve there was the second Bank of the United States (1817–1836). Since the late nineteenth century, historians and economists have lauded this institution for its salutary control over the currency, its regulation of the state banks, its prudent stewardship of the government’s funds, and its example of a fruitful private/public partnership in the field of central banking.
Debt is an institution in American government, long established and widespread. A cursory glance at debt statistics will quickly show that there has been a lull in the truth about debt, namely, that it cannot grow indefinitely at the rate at which it has been growing—at least not without a serious revaluation of the dollar, something we are already in the midst of seeing.
This dreadful election season will spew forth many promises by politicians to “lead us into the future.” I can hardly think of a worse fate for any society than to be led into the future by the political class of gangsters, marauders, looters, and liars. Fortunately, they haven’t the capacity to lead whole societies anywhere. They are outclassed and outrun by trends in the world economy that are beyond the ability of the political class to control or direct.
