by Marvin Byrd – LPC, December 2019
Ever wonder why no matter how hard you work it feels impossible to get ahead? People will tell you, it is all up to you, that it’s because of your spending habits, and lack of hard work and sacrifice. This, of course, is true, but the environment that we live in today is fundamentally different than it was in the 70’s, it is exponentially more difficult. People in the 70’s could expect to purchase a home in California for 2-3 times their annual income. Not only that, but they were often still raising a nuclear family with two kids on that same one income. Like my father, they were doing it on jobs that didn’t require an education, such as working in a grocery store. That reality is gone and here is what happened.
In November of 1980, there was just less than $1 trillion in US national debt. The M2 money supply, which is generally regarded as the total amount of US dollars in circulation, was about 1.6 trillion. This can be seen on usdebtclock.org. After severing all ties to an actual commodity, gold, we realized we could borrow as much as we wanted. We did so through 30-year bonds. This meant the people at that time were able to enjoy the fallout of the wealth immediately, while the taxpayer 30 years in the future would carry the debt. Through the use of something called fractional banking, and the federal reserve creating all wealth out of debt through US bonds, the debt began to grow faster than the M2 money supply. Now we have approximately $23 trillion in debt and only $15 trillion in the M2 money supply. This means that there is more debt in existence than money!
So what? All of this debt has to be carried by someone, and it is. Through a system called fractional banking, this national debt gets turned into personal debt as it enters circulation. It is carried by all the people struggling with their student loans, all the people struggling with credit card debt, car loans, medical debt, tax debt, and any other type of debt. This means that while there might be more money in circulation there is exponentially more debt. This ratio creates scarcity and is a form of economic slavery as mathematically more people are required to be in even more debt. To further compound this problem, people who earned equity in a time where this ratio was more favorable often have that equity tied up in real property, stocks, and other things that are secure against inflation. This is a major reason why in California in the 70’s you could reasonably by a home for 2-3 times your annual income, and now it is 6 times or more.
The only force that balances this out is inflation. But with people creating mechanisms to secure their wealth against inflation and US bonds being designed to shield against inflation, this means that the problem can only grow at an exponential rate. Because US bondholders get to be repaid with inflation taken into consideration the amount of that liability will start to skyrocket at the rate we are spending. If we aren’t able to get our spending under control, the most likely scenario is a USSR style economic collapse, where there will be money to go around, but you need a wheelbarrow full of it to buy a loaf of bread. As Ron Paul points out, inflation is the hidden tax.
The libertarian party is the only truly fiscally conservative party and wants to minimize government spending. We understand that it is unethical to burden future generations with debt they did not earn. We support any policies which restrict government spending to a minimum necessary level. In a Senate hearing on October 30th, there was a bi-partisan conversation between Republicans Rand Paul and Cathy McMorris Rodgers, and Democrat Margaret C. Hassan as well as others about “zombie programs”. After a little research, they found $300 billion in annual spending from 1000 programs that are no longer authorized yet continue to get funding! Many of these programs are ones that people have simply forgotten about and are likely no longer are as relevant as they might have been in the 70’s when they were created. Examples of spending where authorization has elapsed was the Inter-American foundation that was created in the 60’s and last authorized in the 70’s. In the hearing, they cited examples of where money was being spent in these zombie programs, including a clown college in Argentina, providing welfare in Brazil, and funding the Haitian film industry. The full hearing can be seen here: https://youtu.be/Y-ylV1PDLOI?t=496. In times of debt crisis, these types of programs are wasting money abroad that would certainly be more useful back home where so many people are struggling financially.
#stopgovernmentspending #endthefed #bitcoin