America reaches a sad new milestone
Editor’s note: As recently as last year, laws have been passed to raise the debt ceiling, which allows the government to spend more by borrowing more money. As Ron Paul points out, this debt is not interest free.
Last week, the national debt reached 35 trillion dollars, a mere seven months after the debt reached 34 trillion dollars. To put this in perspective, the national debt first reached one trillion dollars in October of 1981, almost 200 years after the Constitution’s ratification!
The fact that the government was adding one trillion dollars in debt in little over half a year was not deemed worthy of comment by President Biden, Vice President Harris, and most other US politicians. This is not surprising since the national debt has not been a central issue in DC since the days of the Tea Party movement. The Tea Party’s efforts to focus attention on the debt resulted in a bipartisan deal that made minuscule spending cuts. In fact, most of the cuts were not real cuts. They were just reductions in the “projected rate of spending increase,” meaning the spending still increased but just by not as much as originally planned.
This was not the first time that apparent spending limits consisted of smoke and mirrors. For example, the budget “surpluses” of the 1990s were due to the government’s practice of counting the social security trust fund as both a liability and an asset, not because of bipartisan budget deals.
The Donald Trump-inspired rise of “populist nationalist conservatism” that does not emphasize the national debt means Republicans have less incentive to even talk about the debt — aside from making justifiable, though hypocritical, attacks on President Biden and congressional Democrats’ excessive spending. Similarly, the rise of a Bernie Sanders-influenced “new left” has led even centrist Democrats to stop giving lip service to the cause of deficit reduction.
Many Democrats, including those who have embraced Modern Monetary Theory, agree with former Vice President Dick Cheney that “deficits don’t matter.” Modern Monetary Theory asserts that as long as the central bank can monetize federal debt and keep interest rates low, the government can endlessly increase the amount of debt. This is not really modern, as the Federal Reserve has long been acting as the “great enabler” of the federal debt.
Those who pretend deficits don’t matter ignore the fact that interest on the national debt will soon be the largest item in the federal budget, consuming as much as 40 percent of federal revenue. This is unsustainable. The devaluation of the dollar resulting from the Federal Reserve’s efforts to stimulate the economy and monetize federal debt, combined with increasing resistance to US hyper-interventionist foreign policy, will lead to a rejection of the dollar’s world reserve currency status. When that occurs, there will be a major economic crisis unlike anything this country has seen since the Great Depression.
This crisis could lead to increased support for authoritarianism in both the left and the right. The result will be even greater restrictions on economic and civil liberties and even more belligerent foreign policy, scapegoating those who reject the dollar’s reserve currency status for the country’s economic problems.
However, the economic crisis also can be followed by a society with minimal government and more liberty. The liberty movement is still growing. Those who understand the philosophy of liberty and sound economics must continue to spread the truth about the dangers of fiat money and the growth of government power and government debt. They must also communicate the benefits of the free market, personal liberty, sound money, and peace.
Originally published by the Ron Paul Institute.
Banner Image: Debt cliff. Image Credit – Rilsonav
Ron Paul
Ronald Ernest Paul (born August 20, 1935) is an American author, physician, and retired politician who served as the U.S. Representative for Texas's 22nd congressional district from 1976 to 1977 and again from 1979 to 1985, and then for Texas's 14th congressional district from 1997 to 2013. On three occasions, he sought the presidency of the United States: as the Libertarian Party nominee in 1988 and as a candidate for the Republican Party in 2008 and 2012. A self-described constitutionalist, Paul is a critic of the federal government's fiscal policies, especially the existence of the Federal Reserve and the tax policy, as well as the military–industrial complex, the war on drugs, and the war on terror. He has also been a vocal critic of mass surveillance policies such as the USA PATRIOT Act and the NSA surveillance programs. He was the first chairman of the conservative PAC Citizens for a Sound Economy, a free-market group focused on limited government,[3] and has been characterized as the "intellectual godfather" of the Tea Party movement, a fiscally conservative political movement that is largely against most matters of interventionism.[4][5] Paul served as a flight surgeon in the U.S. Air Force from 1963 to 1968, and worked as an obstetrician-gynecologist from the 1960s to the 1980s.[6] He became the first Representative in history to serve concurrently with a child in the Senate when his son, Rand Paul, was elected to the U.S. Senate from Kentucky in 2010.[7] Paul is a Senior Fellow of the Mises Institute,[8] and has published a number of books and promoted the ideas of economists of the Austrian School such as Murray Rothbard, Friedrich Hayek, and Ludwig von Mises during his political campaigns. After the popularity and grassroots enthusiasm of his 2008 presidential bid, Paul announced in July 2011 that he would forgo seeking another term in Congress in order to focus on his 2012 bid for the presidency.[9] Finishing in the top four with delegates in both races (while winning four states in the 2012 primaries), he refused to endorse the Republican nominations of John McCain and Mitt Romney during their respective 2008 and 2012 campaigns, and on May 14, 2012, Paul announced that he would not be competing in any other presidential primaries but that he would still compete for delegates in states where the primary elections had already been held.[10] At both the 2008 and 2012 Republican National Conventions, Paul received the second-highest number of delegates behind only McCain and Romney respectively. In January 2013, Paul retired from Congress but still remains active on college campuses, giving speeches promoting his libertarian vision.[11][12] He also continues to provide political commentary through The Ron Paul Liberty Report, a web show he co-hosts on YouTube. Paul received one electoral vote from a Texas faithless elector in the 2016 presidential election, making him the oldest person to receive an Electoral College vote, as well as the second registered Libertarian presidential candidate in history to receive an electoral vote, after John Hospers in 1972.