A few presidents ago the National Debt was the most pressing thing that our political leaders and political hopefuls had on their minds. Ronald Reagan in his campaign for the presidency in 1980 told us all about a stack of dollar bills stretching from the planet earth to the moon. This stack of paper money was to represent the one trillion dollar mark in our advance to national bankruptcy. Our National Debt had not yet reached this benchmark in fiscal irresponsibility and Ronald Reagan was to be our knight in shining economic armor who would stop this catastrophe from happening.
Today this stack of dollar bills is probably bumping up against the planet Pluto but we hardly hear a murmur of the once prophesied impending catastrophe. I wonder why? Was the National Debt not really a legitimate problem? Was the Great Communicator merely communicating greatly or grandiosely? What the heck is the National Debt anyway?
The National Debt is the total amount that the government currently owes from all of its past borrowing. I guess that we could safely say that it is the mortgage that our governments, past and present, have borrowed on the United States of America. A budget deficit, on the other hand, is the amount by which expenditures exceed receipts in a single year. Today there is a simple way for the lay person to distinguish between these two things - the deficit is tabulated in Billions and the National Debt is now tabulated in Trillions.
In the two hundred years B.R. (before Ronald Reagan) the entire accumulated debt of all of our previous presidents amounted to 909.1 Billion dollars. So B.R., our country’s National Debt had not yet reached one trillion dollars - that stack of dollar bills had not yet reached the moon. Now, remember, that figure included all the debt accumulated from George Washington through Jimmy Carter. That 909.1 Billion dollars included all the monies borrowed for the American Revolution, the Civil War, World War I, World War II, Korea and Vietnam.
By the time that Ronald Reagan left office in 1988 the National Debt was 2,601.3 Billion or 2.6 Trillion. In just eight years Ronald Reagan had more than doubled what all the previous presidents from Washington through Carter had accumulated in the prior 200 years.
Okay, let’s give Ronnie a break. Let’s kick it up a notch. Let’s go to George H. W. Bush - Number Forty-One, as he is so lovingly referred to today.
Number Forty-One is the Yale graduate who accused Ronald Reagan of advocating Voodoo economics. By the time Number Forty-One left office in 1992 the National Debt was 4,002.1 Billion or approx. 4.0 Trillion dollars. If Ronald Reagan was practicing Voodoo, one must hesitate to ask what Number Forty One’s economic principles were based on. And, you know, these presidents today have a Council of Economic Advisers. The only problem with the Council of Economic Advisers is that when a Council member disagrees with the president or speaks out publicly against a president’s economic policy, he suddenly finds himself in search of a new Council to counsel.
But this is all beginning to sound like Republican bashing. Let’s go to B. J. Clinton. In my neighborhood B. J. stood for something other than Billy Jefferson, but we won’t get into that. So B. J. came into office in 1992 and by the time that he left, the National Debt was 5,606.1 Billion or 5.6 Trillion dollars. So Reagan gave us 2.6 Trillion, Number Forty-One gave us 4.0 Trillion, and B. J. gave us 5.6 Trillion.
Everyone says that what B. J. accomplished was good. Well, when it is compared to what Ronnie and Number Forty-One did, I suppose? Sounds to me like saying; Well, my Grandfather was hanged, my Daddy got the electric chair and now I’m serving life in prison. Guess that I am doing better than they did, huh? - I suppose, but most of us wouldn’t consider life in prison all that much of an accomplishment.
Today we have Bush Number Forty-Three.
Number Forty-Three has the debt up to somewhere between 7 and 8 Trillion. It is estimated that by the time that Number Forty-Three leaves office the National Debt will be somewhere around 10 Trillion dollars - give or take a Trillion. Like some famous politician once said; “A billion here and a billion there and pretty soon you’re talking some real money.” Billions no longer matter, it’s trillions now.
So there you go. And what does this all mean?
I was listening to one economist on the TV the other day and he said;
“Economically, we are like the man who just jumped off the top of a one hundred storey building. The falling man passes the eightieth storey and a guy sticks his head out of a window and screams to the falling man; ‘How’s everything going?’
‘Everything is O.K. so far,’ the falling man replies.”
But, let’s not be pessimistic about this - you know - is the glass half-empty or is it half-full. Let us be “half-full” about all of this. It does no good to be half-empty because we are a lot worse off than half-empty. If we were only half-empty that would mean that we would still have something in our glass. At 10 Trillion dollars in debt we don’t even have a glass anymore. But whatever - let’s be positive.
Some politicians claim that the National Debt doesn’t really matter because it is money that we owe to ourselves. So even when the federal government just pays the interest on the National Debt it is infusing dollars into our economy - like giving a tax cut to the rich. But since Reagan, unfortunately, this is no longer true.
Before Reagan our government’s borrowing was financed by Americans. After Reagan our National Debt became so enormous that Americans didn’t have enough money to finance the Government’s borrowing - so we borrowed from foreign countries. Or would it be more economic to say that we sold our debt to foreign countries. In other words, we sold the mortgage, or foreigners bought our mortgage. Now countries like Saudi Arabia, Japan, China, the U.K etc. own a good part of our mortgage. If in the last few decades, it has appeared to you that your government has been acting like a foreign country, this may be a part of the reason.
But certainly, one day, we will pay off this mortgage and the American people will once again own their country?
This does not even seem to be in the realm of possibility. Politicians talk of balancing the budget as they did in the year 1999 for the first time in many decades. By the way, this supposed surplus that we had, momentarily, was only accomplished by pilfering money from the Social Security Trust Fund. Excess monies had been accumulated in the Social Security Trust Fund because of an increase in the Social Security tax in 1983. An increase was mandated to compensate for the baby boomers.
From that year on, the Social Security had a surplus but everybody from Reagan to Clinton used the Social Security surpluses for other general fund spending purposes.
Balancing the budget - or having a year in which the government does not produce a deficit by spending more money than it receives - only manages to pay the interest on the National Debt. A balanced budget pays nothing on the principal or the debt itself. In order to pay down the debt itself, the government must create a surplus - spend less money than what it takes in every year. And then use those surplus monies to buy back Debt (treasury bonds).
Is this a possibility? Seems not. I have never heard a politician in my lifetime talk of paying down the principal on the National Debt. The political answer to the National Debt seems to be like our policy towards gays in the military - don’t ask; don’t tell.
So, I was thinking, why don’t we sell all of our mortgage to foreign countries and then claim bankruptcy. The only way these countries could get their money is if they have a bigger army than ours.
Or maybe these foreign countries who own our debt would forgive our debt like the World Bank sometimes does for under-developed countries - or like we did after World War II for a number of countries. But, of course, this is all ridiculous - we’re the richest country in the world, remember? Well, if we are the richest country in the world, why don’t we just pay everybody off?
Because we don’t have the money. So we are the richest country in the world but we don’t have the money to pay our debts - our mortgage anyway. I have many friends who are rich in a similar manner. How can we be rich and, at the same time, be the biggest debtor nation in the world? Are we rich, or aren’t we?
But don’t despair, I have more realistic solutions to this problem than depending on the charity of the rest of the world. I wouldn’t expect or hold my hope out for a European Marshall Plan for the U.S.A. either folks. My solutions are dynamic and they don’t involve raising taxes.
Today we have approximately 200 million working people, or tax paying people in America. These 200 million people pay about 1.2 trillion dollars in taxes each year. If we can increase the working population of the United States about 10 times its present number and we tax them all at the present rate, we would have a national income of 10 or 11 trillion a year. So then, if we could get our government to put one trillion aside each year, we could pay off the National Debt in about 10 or 11 years. I admit, this solution has its problems but, come on - is the glass half-empty or is it half-full? This would take care of any Social Security short fall also, I might add.
My second idea is even better. We don’t need any new taxes or new workers. This idea is a classic.
We simply continue with Number Forty-Three’s borrow and spend policies. As all of us economists know this can do nothing but increase the rate of inflation - but that’s good. If we can get the inflation rate to rise faster than the rate at which Number Forty-Three and his successors can borrow, one day we will have more pieces of paper with pictures of dead presidents on them than we have debt to pay.
This is that same idea that they told you about a few years ago. Remember they said; Buy yourself a big house that you can barely afford now, and pay off your balloon mortgage – twenty years later - with cheap, inflated money from your naturally escalating high paying job.
The Germans tried this print-more-money idea after World War I. It worked real well. They had a few minor problems. Like trying to figure out how many wheelbarrows full of paper money it would take to buy a loaf of bread. But so what, I mean, look at Germany today? They’re doing all right.
So there you go - is the glass half-empty or is it half-full. What me worry? Just call me Alfred E. Newman. To tell you the truth when I look at the past illegal immigration rate and the true rate of inflation over the last few decades, I think that my two suggestions are the government’s plan - or has been anyway. In 1974 I bought a Chevy van for $3,400, today a similar van sells for $34,000. I think that the inflation rate has been somewhat greater than the presently claimed 2.2%.
My advise to the next two generations of Americans is - buy wheelbarrows.
I have one other idea.
When the government spends more than it collects every year - it borrows. It prints up Treasury Notes and Bonds etc. Then it has the Federal Reserve - its personal banker - sell them to Americans and foreigner investors and foreign countries, at a specified interest rate. This is what makes our National Debt. This puts the government in a catch-22 situation. It can’t raise taxes - nobody likes that. It can’t charge tariffs on products coming into the country and put the cost of our government onto foreign countries and foreign manufactures. It could do this, especially when one considers that we now import 80% of what is sold here domestically - but it can’t, because we believe in “free trade”. Besides, most of our imports are from American based companies who went over seas to avoid paying taxes and hire cheaper labor in the fist place. Raising tariff rates would spoil their whole plan. So then how else could the government earn some money to pay its bills?
It could rent out rooms at the White House - but that is how we finance our political campaigns. So what can the government do?
Well, how about just printing up so much money every year and buying back some reasonable portion of our debt, without going through the debt making process of selling Treasury Notes, Bonds and Bills etc. via the Federal Reserve?
The first thing that everybody yells and screams about this idea is that it is inflationary. Yeah? And borrowing and creating more debt via the Federal Reserve and selling our country to China is better and un-inflationary? I suggest that we pass a law allowing only a certain percentage to be printed up in this manner - taking into consideration GNP and Inflation and the predictable population and economic growth.
The second problem with this idea is that it is against the Constitution. Yeah! So who gives a flying flip? This hasn’t stopped the last five or seven administrations from doing anything. Why should it stop us on anything as important as this? Besides, the Constitution on this particular point could very easily be reinterpreted - we wouldn’t even be forced to change anything or seek a Constitutional Amendment.
The next complaint with this idea is that when the American people and the other nations of the world find out about this shenanigans they will lose faith in our government.
I don’t think so - no one understands economics anyway. And if you think that will be the case, don’t tell them. As the debt miraculously goes down gradually every year, just tell everybody that it is because of good business management on the part of that particular administration - cook the books; or just add it to the total of taxes collected, nobody will know the difference; or tell everybody that it is a miracle. Everybody believes in miracles these days. When the press investigates and discovers that what is happening is economically impossible - just lie to them, like we do on everything else. What is the problem here?
As for the American people? What the heck do they care? They’re too busy trying to make a living to start trying to comprehend economics - least of all the Federal Reserve System. And need I point out that at this point in world economics – if the U.S. currency fails – the entire world economy fails. U.S. dollars are now used around the world in place of Gold. The U.S. dollar is today’s gold.
The bottom line is this: Printing money and skipping the Federal Reserve will no doubt create some inflation. But, using that money to buy back Treasury Bonds (Debt.) will be anti-inflationary. On the one hand, we are printing money to put into circulation, but using it to take money out of circulation by reclaiming debt on the other. If it is done properly - with due diligence - the one will cancel out the other and America will one day be debt free and it will cost nobody anything. This will not be a loss or gain - it will simply be a monetary transfer. We will transfer a bunch of one type of paper for another type of paper. If it is done right, nobody will know the difference. And if we want to add an additional check on inflation, when we start buying back our treasury bonds from the Federal Reserve with our “free paper”, temporarily raise the required reserve security demands. In other words, if the banks are required to hold 10% in reserve - raise that requirement to 12% or whatever. Then as time goes on and we see that inflation is under control, lower the requirement.
The last criticism that I can think of is that this idea would be putting trust in our government to do the right thing and keep things under control. In other words, somebody has to be sure that they don’t print up too much money every year. So set up an oversight committee - with the Federal Reserve Board, if that will make you happy. They will not like the basic idea in the first place - but they will just have to deal with it. As it is now, they (the Banks) are the only ones who profit from this National Debt business - so they like it; but if the debt is allowed to continue growing, it will mean possible bankruptcy for them and everybody else. As it is now the only hope for the world economy is continued projected economic growth, coupled with reasonable inflation. Today we have inflation and debt. With this suggestion we will still have the inflation - but we will eliminate the debt. And it is the Debt that will eventually kill us, not the inflation. The world can live with a controlled inflation - it has for centuries. And if this is done correctly we will have no more inflation than what is currently being created. Besides, there aren’t any good choices here; you can trust your government or you can trust the Federal Reserve and the International Banking community.
As I said earlier, facetiously, Germany did this but failed and bankrupted their country after World War I. But the Germans wanted to bankrupt their currency. They didn’t want to pay off their war debts and the smart money wanted to turn the middle class against the occupation government. So they simply printed up paper until it filled wheelbarrows. They did not use due diligence and have proper controls. They didn’t care. What they did was not a accident. It was a planned bankruptcy. You can be sure that the big boys in German currency had all their cash in something other than the Mark. Of course, there is the possibility that our National Debt is also planned. The design of the plan being to keep the general population thinking that they are broke, so that they won’t be suggesting any “free” social programs for the “welfare” state. I mean, you must have noticed that no matter how large the National Debt, we always have enough money for another war.
Books by Richard Edward Noble. Click on covers below for more info and purchasing instructions.
Classic Tragic Novel
Don't Laugh - This Could Have Been Your Life
Funny stories and some strange characters.
Monkey Dishes and Cocktail Fawks
My Harrowing days in the restaurant business. Great Read.
It's a Long Story
Long Short Fiction - Great stories!
Bloggin' Be My Life
"Bloggin' be My Life" contains a selection of some of my more popular Hobo Philosopher blogs.If you enjoy reading this blog, you should love Bloggin' Be My Life.
It's All About Love
It's All About Love is ... all about love. This is the 2nd book of poetry from The Bard From Chelmsford off Arlington. Every poem in this book comes with a prose introduction. If you enjoy poetry this is a simple choice. Have fun!
A Little Something
Traditional poetry from The Bard From Chelmsford Off Arlington with some poignant prose introductions. If you enjoy any type of poetry, you will enjoy this volume. Thanks.
Talking To Myself
This is my third book of poetry.
Bits and Pieces
The Hobo Philosopher - My first book using the Hobo Philosopher brand. Featuring a variety of writing styles and ideas. Look for the Thoughtful Hobo on the cover.
A Baker's Dozen
The Hobo Philosopher: My Second book of Fiction, Creative Non-Fiction and Short Stories. All varieties of short stories - lots of laughs!
Cat Point - and Them Dang Oyster People
Cat Point is the sequel to "The Eastpointer." Both books contain humorous tales about life in a fishing community on the Florida Panhandle. Lots of laughs.
Won 1st Place award for humor in 2007 from Florida Press Association. More wit, wisdom and humor from the yet to be world famous author, R.E. Noble
A Summer with Charlie - Lawrence
Fiction - Salisbury Beach, Lawrence, Mass. Featured in Merrimack Valley Magazine July /Aug. issue 2010
Travel, Humor, Commentary on migrant farm work and illegal immigration still very pertinent today.
"Just Hangin' Out Ma"
Thank God for the Street Corners of Lawrence, Mass. Anecdotes and humorous escapades about growing up in an industrial mill town in the 40s,50s and 60s.
This is the sequel to "Just Hangin' Out, Ma"
That Old Gang of Mine
This is # 3 in my Lawrence Hometown series. The series is about growing up in the 40's, 50's and 60's in an industrial mill town. Sorta like a Huck Finn goes to vist Uncle Ralph, the bus driver, who lives in a big, rundown city. Lots of fun.
Come On-A My House
This is # 4 in my Lawrence Hometown series.The old homested at 32 Chelmsford ST is pictured on the cover..
Down By The Old Mill Stream
# 5 in the Lawrence My Hometown series.
Standing on the Corner is # 6 in the lawrence My Hometown series.
The old Howard Playstead on Lawrence St.
Eat, Drink and Be Merry
# 7 in the Lawrence my Hometown series.
Honor Thy Father and Thy Mother
Classic tragic novel written from child's perspective. Deals with abuse, poverty, unemployment. Pulls no punches.
Noble Notes on Famous Folks
Humorous, satirical notes on everybody from Constantine to Bill Clinton. Inspiration: Willy Cuppy.
America on Strike
History - documented survey of labor strikes in America
Mein Kampf - An Analysis of Book One
Who are the American Nazis - the Liberals or the Conservatives?
MY NAME IS RICHARD EDWARD NOBLE. I AM A FREELANCE WRITER AND I HAVE PUBLISHED 12 BOOKS:"THE EASTPOINTER" - SELECTIONS FROM AWARD WINNING NEWSPAPER COLUMN - "A LITTLE SOMETHING" - POETRY WITH PROSE -"HONOR THY FATHER AND THY MOTHER" - A NOVEL ABOUT GROWING UP IN THE NEW ENGLAND MILL TOWN OF LAWRENCE, MASS, "HOBO-ING AMERICA" - A WORKINGMAN'S TOUR OF THE U.S.A. - "A SUMMER WITH CHARLIE" - THE STORY OF A YOUNG SAILOR'S LAST DAYS AT SALISBURY BEACH, "NOBLE NOTES ON FAMOUS FOLKS" - HUMOROUS ANECDOTES ON FAMOUS FOLKS IN HISTORY,
"AMERICA ON STRIKE" HISTORY BOOK - A SURVEY OF LABOR STRIKES IN AMERICA; "A BAKER'S DOZEN" A BOOK OF HUMOROUS SHORT STORIES; "JUST HANGIN' OUT, MA" - GROWING UP IN THE 40'S, 50'S AND 60'S IN LAWRENCE, MY HOMETOWN, "TENEMENT DWELLERS" - SEQUEL TO JUST HANGIN OUT, MA; MEIN KAMPF - ANALYSIS OF BOOK ONE - HISTORY. CAT POINT - AND THEM DANG OYSTER PEOPLE - SEQUEL TO THE EASTPOINTER
All 12 BOOKS ARE AVAILABLE ON AMAZON.COM, BARNES AND NOBLE AND OTHER INTERNET SOURCES OR FROM NOBLE PUBLISHING. ALL 12 OF MY BOOKS ARE NOW ON KINDLE AT BARGAIN PRICES TOO. IF YOU WOULD LIKE MORE INFORMATION ABOUT DISCOUNTS AND SPECIAL OFFERS E-MAIL ME. MY EMAIL IS ON MY PROFILE PAGE.