Money Jungle: Deficits and Debt, Credit and Control


I’m writing this on August 1, as President Obama is trying to secure a deal with Congress to raise the ceiling on our national debt (currently hovering around $14 trillion, or 98% of GDP) and avoid possible default on America’s financial obligations. This is the kind of political theate rWashington specializes in.

Of course, longtime readers of this column already know the subtext: America is broke, and has been for the better part of a decade. Osama bin Laden’s master plan to bankrupt the “bleed”Americadry through a series of ill-conceived, poorly-planned and ineffectively-executed military adventures in all of the wrong countries worked so well that we had to blow his brains out just to silence his constant snickering. The national debt has more than doubled (from $5.7 trillion) since 2000, and is projected to exceed $22 trillion by 2015, or 134% of GDP. Anyone who thinks any of this will ever be paid back, or that it’s even possible, is either lying or insane. Maybe both.

Looking at the legendary US Debt Clock website, which belongs on everyone’s list of favored sites, the brutal truth now being revealed to the population is laid bare in cold statistics. On Saturday, July 30 (three days before the deadline) one sees the national debt hovering just above $14.5 trillion. At that moment, our GDP was only $14.8 trillion (a debt-to-GDP ratio of 98%), and the amount of currency currently in circulation was less than $10 trillion. The interest on debt stands at $3.6 trillion for this year alone, which is only slightly less than the total national debt a decade ago, pre-war.

The debt debacle unfolding on Capitol Hill offers the nation’s youth an ideal object lesson in the dangers of a debt-based economy. Not only has theUnited Statesruined its own economy, and helped undermine the financial stability of its allies, but our dependence on foreign countries to sustain our lifestyles has forced us out of the position of global leadership that we’d held since World War II. Just as our addiction to OPEC oil left us unable to check those nations’ continued support of Islamic terrorism (which is essentially funded by the money we send to OPEC, as well as military aid to Pakistan), our slavish dependence on China leaves us impotent to check its expansion into the Western Hemisphere. Centuries of evolved political wisdom faded, like old cotton candy, under the heat of economic expediency.

Let’s make this country-simple: The bailout was a mistake. President Obama laid down like a prostitute for Wall Street, because the underwrote his campaign. He stacked his economic team with people who were directly complicit in the illegal and unethical behaviors that led to the recession, and their time has been spent throwing good money after bad, while working hard to ensure the guilty never face the consequences of their actions, either fiscal or physical. Having demonstrated that you can cheat the system and destroy human lives in the process, while being rewarded for it, Obama eliminated any possibility that Wall Street’s excesses can be reined-in.

Federal finances are in shambles, but under that is a whole matrix of personal and institutional debt that could also collapse if triggered by federal default. Like the abusive spouse who gets a second chance, Wall Street now feels empowered to do anything—and that makes it almost a certainly that our recession is going to get much, much worse. Nearly 15 million Americans are out of work, and millions more labor at jobs that pay poorly, offer no benefits or room for advancement. A majority of citizens are stuck in this cycle of revolving debt, but no one has suggested any relief for them.

No one suggests putting a moratorium on the fraudulent foreclosures that have ruined millions of families, or forgiving student-loan debt, or exempting certain key public workers (like nurses, teachers, cops and firemen) from the federal income tax, or cutting through the labyrinth of paperwork that impedes so many from starting businesses in this country, or containing the artificially-high medical costs that are the primary cause of personal bankruptcy. The only wisdom we’re receiving from our political “leaders” consists of calls for enhanced austerity on one hand, tax hikes on the other—approaches that will only cause economic growth to stall even further. Which means this whole debate will not end with any deal struck this week or next, this year or next. Our nation is in big trouble, but the only people who don’t know are us.; August 1, 2011



2 responses »

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