Here’s the situation: an infinitely increasing amount of debt AND a dollar with an infinitely decreasing value. Either borrow more money to repay the money we’ve already borrowed, say Treasury Secretary Timothy Geithner and others in power, or economic calamity will befall the nation.
The national debt ceiling has been raised 74 times since Congress created it in 1917, supposedly to keep lawmakers from spending the country into oblivion. The original limit was $11.5 billion – that’s $11,500,000,000.
Today the national debt is $14.3 trillion – that’s $14,300,000,000,000 – or approximately 1,240 times more debt in less than 100 years. President Obama wants trillions of dollars more added to the debt ceiling, and Republican leaders are working on an agreement with the president to raise the ceiling. Meanwhile, the Federal Reserve has an official inflation target of 2 percent.
Assuming the Fed hits its inflation target – a huge “if” – this means if we received one dollar on January 1 of this year, on January 1, 2012, the dollar would be worth 98 cents. In January 2013 it would be worth 96.04 cents. And so on. The Fed has also manipulated interest rates to virtually nothing. Saving a dollar in a bank is hardly better than stuffing it in a mattress.
The Federal Reserve was created in 1913 with a mission to promote stable prices. Since then price inflation has cause the dollar to lose more than 95 percent of its value. If we adjust the national debt for inflation, in current-money terms the debt ceiling has grown approximately 62 times larger since it was created. Can anyone seriously say the Fed has accomplished its mission? Or that a federal government that has 62 times as much real debt as it had less than 100 years ago has stayed within its bounds?
But there is method in this madness. By devaluing the nation’s currency, dollars borrowed today can be paid back with cheaper dollars tomorrow. Ever-cheaper dollars make ever-more borrowing easier. This is what the people who go into government want – no limits on their borrowing, which means no limits on their spending, which means no limits on their power.
They do not care that we – and our children and grandchildren – will have to pay for their ever-higher debts with ever-shrinking dollars.