Can America really afford this?

Sadly, that’s one sentence you’ll never, ever hear from the majority of politicians.

Lew Rockwell wrote an excellent piece at his eponymous website today illustrating the fact that the real heart of the problem with our government (if you don’t think there’s a problem with the government, go read some other website – I hear the articles over at myspace are great reading…) is the source of funding – the governments seemingly endless money supply.

I have been in business for a decade now, and with all the companies I’ve worked for, the US government as a client always passes the credit verification process, and with lightning speed. Why? Because the government always pays its bills. Why? Because people believe it has total control over the money supply in this country, and if push comes to shove, it can just print new money to pay its creditors. Sadly, again, this is true.* But it hasn’t always been like that.

It wasn’t until the early 20th century that the US took on a form of central banking by the name of The Federal Reserve. The Federal Reserve is subject to no audits, is not scrutinized by any independent check-and-balance, and hardly nobody questions its function and purpose. But it has run this country into a bankruptcy from which it will never recover. The gross national debt of this country, thanks in large part to the supposed endless money supply, will soon reach $10 trillion. Written out, that number looks like this: $10,000,000,000,000 – a fourteen digit figure. Care to calculate the interest on that debt? It’s staggering. The mind can’t even grasp it.

Oh sure, the government attempts to “set a budget” each year, but what they’re really doing is saying how much they can borrow against the Federal Reserve, and how much interest they’re going to pay down on that debt. Not since 1957 has the principal driving that interest of the gross national debt ever been paid down, and the US has had a continual balance since the inception of the Federal Reserve.

I lament that so many politicians and their supporters don’t ask the simple question we all ask ourselves when it comes to our own finances: “Can I really afford this?” For once I would like to hear a politician other than Ron Paul stand up and say “America ought to stay out of such-and-such for a variety of reasons: foremost, we can’t afford it.” The idea that the government, with its endowed powers to inflict us by being able to print money on a whim, is immune from the side-affects that come from affecting M2 (the money supply) is simply ludicrous.

And take a look at the presidential candidates – hardly any of them have the discipline or knowledge of how money works, where it comes from, and the effects of believing that its supply is endless. Hardly any of them ever ask “Can America afford this?”

I don’t believe in the end-times or any apocalyptic garbage spewed by the mouths of religious zealots, but I do know that the day is coming when the burden of debt that this country carries will implode upon its citizens – unless we figure out a way to pay down our debts and learn to spend wisely. The dollar’s value will eventually crack under the weight of the demands against it – to the point that the paper upon which it is printed will be more valuable than the monetary value represented on its face. When that day comes, many will scratch their heads in disbelief and wonder just exactly what went wrong and why their government has exacted so much of its people for seemingly nothing in return. The problem, again, is that our politicians never stopped to ask themselves that one question: “Can America really afford this?”

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* Are you a member of a bank or credit union that is "FDIC insured"? If so, you're already exposed to the problem. The Federal Deposit Insurance Corporation is a government corporation (if that's not laughable, I don't know what is) that ensures all of your bank deposits up to $100,000. If there is ever a bank run (that is, a bank can lend out more than it has in reserves, so if every customer comes to the bank wanting their cash, the bank is screwed), the FDIC will just print your money and give it to you - but the problem is that this royally messes with the money supply. Putting more currency in circulation inflates the dollar's value drastically. The FDIC is pseudo-insurance.