Our “National Debt” is a crisis and is putting our troops in situations that aren’t especially healthy for them or us. I recently talked to someone who was on a U.S. warship. I was told how a Chinese submarine made it past the outer perimeter, surfaced, and opened its torpedo bay doors. The big question is what is our response to a nation that does something like this when we owe them so much money? What other types of incidents like this are happening without the “American Public” knowing about this. I contacted the Whitehouse press office to get a response. I was told to send an email. I still haven’t received a response in over 3 days. I also sent an email to my Senator, Senator Wyden, to ask him the same question. I still haven’t received a response. Since I watch Glenn Beck and I trust him as someone who speaks truth, I also contacted Senator DeMint. I haven’t received a response from him either, but since I’m not represented by him specifically I really don’t expect a response. I will not speak negatively about these people, but I will relay the course of events.
While on Yahoo I was able to talk to a couple of sailors, who’s screen names I will not mention, and they are just as concerned about the danger that our troops are being put in because of our “National Debt”. I happened to stumble on someone who claimed to be a military intelligence officer and I tried to ask questions. I think that since I’m new I kind of botched the whole talk, but I think there is something to be said about our conversation. When I asked about our response to nations like this I was refused comments by this individual. I will not relay the whole conversation, but I will say that the person seemed shook up and went from just having an open conversation with me to clamming up really quick.
Since I am not getting a response from any government official that I’ve tried contacting, I will assume that I am on the right path due to the conversations that I have had. I want to make sure that what I write and what I say are as accurate as I can possibly make them because credibility is very important to me, especially since most of you have never met me or seen me.
Fact, I talked to a U.S. Sailor who claimed to be on a U.S. warship in international waters. Fact, the Sailor stated that he witnessed aggression by a Chinese submarine. Questions, what is our response and how do we handle actions like this with nations that we owe money to? Question, are the entitlement programs such as Social Security, Medicare, Obama Care, Welfare, Food Stamps, and other programs worth putting our soldiers at risk? You may say how does this put us at risk? I say to you, based upon what I was told by this Sailor we did nothing. How can we be a world power and when necessary show strength when other nations show acts of aggression to us if we owe them money which means that have to sit on our hands.
Let’s use an analogy. We’re the kid on the school yard that protects others from the bully of the school yard. When the bully comes up to mess with you, you’re supposed to show him that you’re not going to take what he’s trying to dish out. If you back down, let’s say you owe him $20, when he comes after you, what are all the rest of the kids going to say and think? The rest of the kids are going to have less faith that you can protect them plus the bully might just leave the other kids alone and just pick on you to show the other kids that he’s the real power and not to cross him. Although you have strong moral character, you won’t fight back because if you do the bully might go to the principle and say you stole $20 from him. Even though you’re strong enough and willing to stand up and protect the rest of the kids of the school yard, you have to back down to protect yourself. So, I’m sure you’re thinking “man, I should have never taken that $20 because now I don’t have the money and I’m being humiliated in public”.
How did we get in debt? Who owns our debt? Are we really still a world power?
We all know that during WWII that our “National Debt” raised to 120% of GDP (that’s the Gross Domestic Product or how much the country produces each year). During WWII the government issued war bonds to be paid back to the public. When this was done this allowed the country to spend more money and with the war going on it allowed the government to continue to buy military hardware and send troops overseas to fight the war (http://zfacts.com/p/318.html ). Any graph that you look at or any site that you research on will tell you that we were paying off the “National Debt” under Truman, Eisenhower, Kennedy, LBJ, Nixon, Ford, and Carter (http://en.wikipedia.org/wiki/United_States_public_debt ) . When President Reagan came in with our “National Debt” totaling 1 Trillion dollars, he instituted something called “Reaganomics” which cut taxes and increased government spending. This is where our problems started for our current day in age. President Reagan was attributed with the most prosperous time in America. People had jobs, Wall Street was making money, and everyone was happy. The problem lies in the fact that he raised our debt over 3.2 Trillion under Reagan, 1.74 Trillion under H.W. Bush, and 3.75 Trillion under W. Bush totaling 9.2 Trillion Dollars and we haven’t even received the grand total bill from Obama. Some people will argue that Supply-side Economics is what sent us spiraling out of debt, but since I’m not an economist I can’t make a statement one way or another. I can look at the numbers and see how we got into debt. Another interesting state is the projection of Debt to GDP that shows in 2007 we are at 62% and by 2011 we’re expected to be at 100% of GDP. Don’t worry though Japan is still doing well at 130% of their GDP. In order to pay your bills at home you are required to keep the total of your bills below the total income of the household. Our government expects us to follow these principles or we pay the consequences of seizure of our property. What happens when the government can no longer pay its bills?
Ok, so we know how we got to where we are, now who owns the debt? As of July 2010 according to http://en.wikipedia.org/wiki/United_States_public_debt#Foreign_ownership China is now our largest buyer of our national debt at 20.8% or almost 1 trillion dollars, Japan at 20.2% with 821 Billion, then the UK at 9.2% 374 Billion, and our friends labeled as “Oil Exporters” including Saudi Arabia, UAE and other countries that we buy our oil from at 5.5% or 223.8 Billion dollars. That’s just our foreign debt though, what about the Federal Reserve, which I’d like to remind the readers, is not a Federal Agency. The Federal Reserve owns 49.37% of our “National Debt”. The tricky part is how we get our money from the Federal Reserve anyways. It works like this. The Federal Government doesn’t have enough money to pay for everything so they go to the Federal Reserve and take out a loan to print more cash. In exchange for getting money from the Federal Reserve we issue bonds at an interest rate that we give in exchange for the money that directly to the Federal Reserve. When the bond matures the Federal Reserve gets its money back plus a percentage of interest that was tied to that bond (So, every dollar you have has interest attached to it). So the real question is, how much of that 49% debt to the Federal Reserve is interest for bonds? That will be a question I’ll answer another time.
Are we still a “World Power”? I think the answer is no. Do we think we still are a “World Power”? Yes! When a nation allows itself to fall into debt to other nations they allow the other nation to have say in their policies or they run the risk of being asked for their money back. I think the answer to the original question of what do we do when a nation that we owe money to shows aggression towards us as a nation is, we do nothing. What can we do? If we decided to take action, that nation will retaliate with a request for all their money due immediately. Do we have the money? The answer is no, our current year’s deficit is in the trillion dollar range. So, when a country that we owe money to shows an act of aggression all we can do is submit a petition for them to cease while they laugh in our face. I think the reason the military intelligence officer clammed up so quick is because if we are doing something, it’d be so covert that if we got caught, it might jeopardize our nation in ways that we can’t fathom at the moment. So, because of our debt, our entitlement programs, and our politicians who tax and spend more than what we have, our troops are being put in situations that are unsafe and unnecessary.
The fact of the matter is we’re putting our soldiers in unnecessary harm by being in debt. What are the solutions? We’re going to have to cut back government, keep tax rates at the level they’re at, and realize that we’re not as rich as we thought we were. I think the biggest problem is that we act as poor people who just won the lottery and then are in a homeless shelter 5 years later. We also need to realize the government creates waste and red tape. I was homeless for about 5 years due to a workman’s comp. injury. I traveled from city to city and would work when and where I could, I even traveled with a magazine crew for a few months and got the opportunity to go to Mexico on a vacation. While I was homeless I got to see how the government really works. The facts are if you want to remain homeless and in the system they’ll help you, but if you want a job and to get on your feet, sorry we can’t help you. In some cities there weren’t even any services for the homeless, so if you went to a place like the United Way to get help or the Salvation Army they wouldn’t help you unless you were a drug addict. The success rate of a drug addict is 10%, so you always have 90% coming back and our drug use rate is going up. Those agencies get government grants to keep them open to help people, but you only get help if you want to continue to suck the system dry. I recently was laid off. While my wife and I were in the food stamp office. Because I was out of work we were able to get over $500 in food stamps when while I was working we barely had $150 to support 3 people including at that time a 9 month old baby. Also, in our school districts we force them to spend all their money that they get and if they don’t then they get less money the next year. This is irresponsible money management because we’re penalizing our schools for being fiscally responsible. This is our problem. We create these entitlement programs that make us dependent on them, everyone uses entitlement programs if they know it or not, and we’re like drug addicts who need to be weaned off our drug of choice.
Currently a large chunk of the American public doesn’t even pay any Federal Income Tax. I would say either take their right to vote away or create a flat tax. Every American has the responsibility to pay for their government no matter what party you associate with (Many years I’ve refused to file my taxes even though I knew I would get it all back). I have had the opportunity to talk to voters over the years and I always hear from home owners, “why do the people who don’t even pay taxes get to vote on whether or not I have to pay taxes, it doesn’t affect them?” and that makes sense. I think that so much of our problem lies with the fact that those who don’t pay any tax are the ones who have the biggest say. Just like the politicians, those who don’t pay tax say “I’m not paying for it, so why not” or “it’s my money anyways”. The truth be told, if you don’t pay taxes, you shouldn’t get any access to any government program because you haven’t even paid into the system. Let’s just be honest.
While talking to my Dad we had a discussion about how much debt we’re in and how it’s really depressing. I made an analogy that our nation act’s like poor people who just won the lottery. I’m sure you could look up many stories about this too. These people win millions of dollars; they lose their friends, family, and end up with only the shirt on their back after 5 years. Those people that they thought were friends decided to make themselves million dollar buddies and their families figured they were entitled to the money. Very few success stories come out of people who win the lottery, but those are only the ones who decided to be smart or knew how to deal with money in the first place. In order to be rich, you must first be responsible and part of being responsible is saving money.
Finally, if we don’t stop this spiral, we’ll never get anywhere. If you would prefer to live under the rule of another country, move there. If the nations that we’re in debt to decide to call in their loans, they own us. If we decide to fight them, we risk WWIII. We’re in a catch 22 here and if we don’t get out from under this brick soon, we’ll be squished.
If we don’t have the money what happens? Could we declare bankruptcy? What would happen if we declare bankruptcy? These are questions that I will answer in my next article.