Financial Chickens Coming Home to Roost!

That flapping you hear in the distance is the chickens coming home to roost. We have lived selfishly, forgotten God, broken rules of common sense, spent money we did not have (to impress people we do not like), and lived as if there were no tomorrow—but there is a tomorrow, and it will be a bleak tomorrow.

Daddy told me, “Son, don’t spend more than your income.” Daddy was an Austrian-school economist with a sixth grade education! He parlayed his meager education to a comfortable life as owner of two gas stations and a drug store. He died without owing a dollar and left mother comfortable for life. He had more wisdom than the Ph.Ds. that have been destroying our economy through mistakes, misjudgments, and malfeasance–especially malfeasance.

I am convinced the glory days are gone forever. America has seen her best years. For the first time in history young couples are not enjoying the standard of living their parents did. In fact, most people in North America have seen their standard of living fall. The standard of living is closely tied to the quality of life we all experience. Americans no longer lead in the standard of living. We are now fifth in the world. And going down, down, down.

However, to keep everything in perspective, it is a fact that the average American lives a life that would make the kings of Europe 300 years ago salivate with envy. Think indoor plumbing, hot showers, medical care, dental extraction, communications, transportation, lifespans, entertainment, etc.  But we aren’t living 300 years ago and we have become captivated with the “good” life that will continue to drastically decline.

Americans have no confidence that Social Security will “be there” when they reach retirement age—and what may be there will be only for the neediest. They see middle class incomes going down and no jobs as secure. In my opinion, their fears, concerns, and pessimism are justified.

Our national debt is over 18 trillion dollars! That was trillion, not billion. It is difficult for us to comprehend such numbers, but let me try. If you had started, at the birth of Christ, spending a million dollars each day and faithfully spent one million dollars per day, it would take you until 2704 to spend one trillion! And our official debt is more than 18 trillion dollars! That means every  U.S. taxpayer owes more than 1.1 million dollars and climbing! That is $56,000 owed by every American citizen.

As the national debt continues to swell, the economy will continue to be sluggish, the tax burden will continue to spiral, and the middle class will continue to shrink.

But here’s the “rest of the story.” We owe far more than 18 trillion because there is more than 221 trillion dollars of debt that is “off the books” according to National Public Radio! That debt consists of unfunded federal pension obligations—government employees, military, Medicare, Medicaid, and Social Security. There is no profit in detailing how we got in this deep well; we all know how we got there. The question is: how do we get out? (The first rule to follow, according to Daddy, is when you find yourself in a deep hole, stop digging.) How do we pay off our debts and get out of the hole? The answer is: painfully and slowly!  Paying off the national debt will be like making payments on a dead horse.

When a person, family, business, or a nation owes more debt than can be serviced, no one will lend them more money. Of course, individuals would be in prison for fraud, but governments don’t go to prison—and not enough politicians do. But then, Illinois does have the record of governors in the pokey. Four of the last seven Illinois governors have made or are making license plates!

Governments usually do one of two things when they get into a “mess” such as we are in. They repudiate all obligations or print worthless money day and night. The first will not be done because it would result in riot, rebellion, and revolution—literally. So, to the printing presses!

Think of the reaction if retired military men, welfare recipients, and Social Security beneficiaries were told, “No more money!” They would storm Capitol Hill and the White House and might bring back the guillotine, used so efficiently (and ruthlessly) during the French revolution–but with more justification!

No, the politicians’ answer to our horrendous debt will be to run the printing presses. Then inflation and interest rates will race each other for the moon. Our national debt will be paid off with worthless dollars. You have always wanted to live in a million dollar house, and you will—the same one in which you now live. Of course, it may cost $100.00 to purchase a newspaper and there will be few newspapers available.

While pessimism is not my nature, I see a dark cloud on the horizon. Informed Americans should make plans for some very difficult years ahead.