Your Debt, the Nation’s Debt – Is there a Difference?

Your Debt, the Nation’s Debt – Is there a Difference?
Your Debt, the Nation’s Debt – Is there a Difference?

“People don’t want to hear the warning, they don’t want to hear the truth,” says Ronald Reagan’s former budget director, David Stockman.

Everyday our Nation goes deeper into debt. And to many of us, this is not a concern. Our lives keep going as we’ve always known them. Each of us may experience minor financial catastrophes, but in the grand scheme of things as we know it: if we work, we’ll make money; if we save, we’ll have security; and if we borrow money, we’ll pay it back.

The cycle seems simple, and to free market economists (and capitalists) it is simple, but unfortunately our nation has leveraged too much fake money to let the simplicity stand.

The warning signs of a major economic fallout are there, loud and clear. Right now, our National Debt is 18 trillion, which is 8x greater than our GDP. When David Stockman began his position of budget director in the Reagan Administration, the National debt was only 2x the amount of our GDP.

If your personal balance sheet revealed a debt ratio 8x greater than your income, you’d likely sweat bullets. You might react by dipping into your retirement savings, or maybe seek professional advice. But, you’d definitely realize there was a problem.

A False Sense of Security

“Wall Street has become like a Casino – they reward gambling, “says Stockman. In his book The Great Deformation, Stockman reveals how Wall Street, Washington, and the Federal Reserve have developed reckless fiscal habits that threaten the principles that America was built upon. Stockman ardently states that, “Wall Street is addicted to cheap money, and because of that they’re destroying the savers in America.”

Wall Street isn’t the only cheap money addict, Washington and the Fed are too. They just print money if they have too. “There is nothing magic about money printing and zero interest rates. It forces households and businesses to borrow more and spend less.”

Unfortunately this type of accessibility to liquid capital has created a false sense of security for every American. According to Washington, the answer to poor financial behavior is to stimulate the economy with more money. This reaction lulls everyone into falsely thinking that our economy is immutable. And it’s this very reaction that perpetuates illusory interest rates and ultimately a very, very shaky economy.

You’re in Debt $154,000

Each tax payer currently owes $154, 317 in national debt. If the economy keeps going at this pace, we are looking at an economic depression so severe, it will make the Great Depression seem like a drop in a bucket.

Hyperinflation could result making food, water and clothing quadruple in price. Imagine paying $25 for a loaf of bread, or $18 for a carton of eggs. We’ve seen hyperinflation happen in Eastern Europe within the last 20 years, what makes any of us think that we are immune to the same outcome?

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