Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

The Ideological Battle Behind the U.S. Debt Crisis

  by    0   3

The U.S. national debt is at 34.7 trillion dollars. If you laid that many dollar bills end-to-end, it would wrap around the Earth 134,599 times. That’s enough to travel to the sun and back 17 times. Suffice it to say, we’re in a pickle.

America is slowly approaching the precipice of debt default. This is no minor dilemma. A default could cause approximately 8 million jobs to be lost. In other words, the bill would come due.

For many politicians, the debt crisis is not a pressing concern. At least not enough to take measures to fix it. The Biden administration passed a 1.2 trillion-dollar infrastructure bill in 2021, adding 256 billion dollars to the budget deficit over the next ten years. Biden has also forgiven 167 billion dollars in student loans during his tenure, which was financed through increased government spending. Despite already being one of the most indebted countries in the world, politicians continue to dig the U.S. into an even deeper hole. The problem is not simply a monetary one. There is an ideological battle underlying our descent into debt.

The ideas that have caused America’s current debt crisis were birthed during the Great Depression. In 1932, Franklin D. Roosevelt issued a series of spending measures that were intended to stimulate economic activity in what was called the “New Deal.” FDR spent over 950 billion (inflation-adjusted) dollars on the program while being touted as an economic “savior.” The deal was promoted as what released America from the bonds of the recession. In reality, it made the problem worse.

A study conducted by two UCLA economists found that the New Deal actually extended the Great Depression by seven years. By artificially increasing wages while unemployment remained rampant and below projected recovery rates, FDR’s program harmed economic health. Simply pumping money into the economy wasn’t the fix-all solution it was advertised to be.

This is no surprise. Simply increasing the amount of money in the economy does not increase the total amount of goods and services. It only increases the demand for a stationary supply, which necessarily results in a price increase. Instead of stimulating true economic development, unrestricted government funding has led to an inflationary trap. And yet we keep spending, suppressing the symptoms while worsening the underlying problem.

Another flaw of increasing government spending is its inefficiency relative to private markets. Look no further than the Pentagon’s $640 toilet seat. Government officials don’t have the proper incentives to spend money wisely. Instead, their wasteful spending is bankrolled by tax dollars, debt, and increases in the money supply. Between 2020 and 2022, the money supply alone increased by over 40%. Consequently, inflation burgeoned to 7% and 6.5% in 2021 and 2022 respectively.

Government spending is a slippery slope. Once a private entity becomes dependent on a public sector paycheck, it will keep coming back for more. In return, politicians get more control over the lives of their constituents. The decision to increase taxes, the money supply, or the national debt to fund more spending is rooted in an ideology of increased government intervention.

The thinkers who originated Western political philosophy believed that government was meant to protect life, liberty, and property, and nothing more. The modern American regime has drastically overstepped these bounds and instead spends trillions of dollars on niche issues while citizens pay the price in the form of inflation, higher taxes, and debt.

At the heart of the issue is the belief that politicians can spend your money better than you can. But this couldn’t be further from the truth. Political leaders only have to cater to the current populus to stay in power, and thus have a heavy tendency to overspend in the present and let future generations pick up the pieces. But the bill is coming due. Experts estimate the U.S. has approximately 20 years to change its spending policies or it will have to default on its debt. We are descending into an economic crisis of our political leaders’ design. While excessive spending appears beneficial in the present, the American people always pay the price.

Download SchiffGold's Why Buy Gold Free Report

Get Peter Schiff’s key gold headlines in your inbox every week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

Related Posts

Invisible Hand as Conservationist: The Power of The Market to Protect the Environment

While the efficiency of the free market is very often accepted in the realm of industry, the environment is often used as an example of the government’s necessary role in the economy. Public goods are used as an example of the problems with market allocation. Short-sighted business owners are apparently unable to see or account […]

READ MORE →

As Inflation Rises, Prepare for Crime

Inflation breeds desperation, and desperation breeds crime. As central banks in Europe and Canada cut interest rates, and expectations remain that the Fed will wait to cut until at least September if it cuts this year at all, our endlessly-wise global central bankers, the benevolent all-knowing stewards of the global economy, can’t seem to agree […]

READ MORE →

Three States Start Summer with Sound Money Policies

Earlier this year, four states took steps toward strengthening sound money by lifting or reducing taxes faced by holders of physical gold and silver. Only a few months later, three other states have actually implemented new sound money policies, and by doing so, they have improved their citizens’ economic standing.

READ MORE →

Charter Schools Showcase the Power of Educational Freedom

Public schools are losing students to charter education, and government officials are doing whatever they can to bail them out. On March 6th, Colorado House Bill 1363 was proposed. The legislation included several anti-charter school reforms, including decreasing funding and allowing public schools with declining enrollment to prohibit new charter schools within the district. However, […]

READ MORE →

China’s RE Crisis: A New Experiment in State Intervention

The real estate market is responsible for anywhere from 20% to over 30% of China’s GDP (depending on who you ask). And with the latest meltdown that began with the implosion of Evergrande, the situation just keeps getting worse, inspiring a slew of government interventions beyond the scope of what would be possible in a […]

READ MORE →

Comments are closed.

Call Now