The United States is Bankrupt

L.W. Nicholson

1992

Published in:

The Northwest Technocrat, 2nd quarter 1992, No. 327

In 1900, and again in 1915, the U.S. federal debt was $1.2 billion. That debt has grown until, in 1991, it reached $3.5 trillion, an increase of 2,916 times in 76 years. In 1940, the taxpayers paid $1 billion in interest on the $42.9 billion debt at that time. That interest has grown until, in 1987, it was $240.9 billion, an increase of over 240 times in 47 years. The interest payments on the federal debt has become the treasury's 2nd largest expenditure. However, as the chart shows, the growth of both the debt and the interest are growing at an ever faster pace. Some may say that much of this increase is the result of inflation, and there is little doubt that some of it is. The 1940 dollar is now worth about 10 cents, so inflation has increased about 10 times since 1940. However, since most of the increase in debt (and interest) has occurred in the past 10 years, (see chart) inflation, then, could account for less than 10 percent of this increase.

[U.S Federal Debt Chart should go here]

Every segment of U.S. society is swamped with debt. And the White House admits that this year's deficit will be over $300 billion. When all the ``Off Budget'' expenditures are added, the total may be well over $400 billion. At this rate, the federal debt is now increasing by $1 trillion each 2 1/2 years. Since 1960, taxpayers have paid about $15 trillion in interest alone to the owners of the debt. The political leadership has run out of money; they have run out of ideas, and they seem more interested in saving an antiquated financial system than in rescuing U.S. citizens from economic disaster. Canada is in a like condition.

Unfortunately, the federal debt is only part of this country's debt. To the federal debt, add the debts of the states, counties, the municipalities, then add in all the corporate and private debts -- and the grand total that U.S. citizens, as taxpayers or as consumers, must pay is now about $14 trillion -- and increasing at more than $1 trillion per year. The yearly interest on this total at 8 percent is $1.12 trillion. To put it another way, the interest per capita, per year, is $4,480. It is now necessary to borrow more just to pay the interest.

It is almost unbelievable that U.S. citizens haven't been kept informed of the magnitude, and the rate of growth of their debt, plus the obvious impossibility of its ever being paid. This information is not secret from those who are willing to find it in any public library. Try the Statistical Abstract of the U.S.; it shows the federal debt for each year. Anyone can look for themselves to prove a point.

Since all efforts to reduce the expansion of the nation's debt have failed for the past half-century, one can only conclude that the job can't be done. Therefore, all U.S. citizens should now be considering the results, and the implications, of their country's imminent repudiation of its debt structure. Financially, both the United States and Canada are bankrupt. The sooner this is admitted the more time will be available to prepare for this major crisis. When the interest can't be paid without borrowing to make the payments, even a nation must see that its financial system is in a process of collapse. That is what is now occurring in the United States.

The collapse has already started; the S&L bailout is one important indication, and the failure of more than 1,000 banks in the past 6 years is another. Other indications include the inability to finance the repairs of the nation's infrastructure, the financial difficulties of the states and cities, increasing crime, the shortage of money to build new jails, the lack of money for nuclear and environmental cleanups, less money to provide health care for the poor or to slow the increasing poverty rate. These and more are examples proving that major changes in financial operations are unavoidable. One should ask: Does one's patriotism require that these problems be ignored? Is it one's duty to refuse to consider solutions?

How quick North Americans are in supporting a foreign war while being so slow in solving their own problems at home. How quick they are to assume that the cause of poverty and hunger in foreign lands results from inefficient social operations, while at home poverty and hunger are assumed to be the result of laziness. If, and when, North Americans become willing to start over, to rethink many of the things they thought they already knew, when they realize that these problems are not subject to political manipulation, when they become determined to get to the bottom of their own problems at home and are willing to accept only factual information (which has been available for more than a half century), they will then learn that any system, or method, that doesn't work should be replaced with one that will. They will also learn that any system, or method, that has any chance of working in this highly technical society must be based on scientific knowledge.

In the study of the fundamentals of social operations, one will discover many things and will see them in an entirely new light. For example, one will realize that any government is, and was, created to enhance the welfare of the people who created it; otherwise, what was the point of its creation?

People must grasp a new reality: Governments were not established for the purpose of adding to people's responsibilities, but to relieve them of responsibilities which could be better handled as a group. PEOPLE WERE NOT CREATED TO SERVE GOVERNMENTS, GOVERNMENTS WERE CREATED TO SERVE PEOPLE.

Much the same must be said of an economic system. It too was created by Man, not by nature. The only reasonable excuse for its existence is to increase the efficiency of our monetary operations, and when it becomes an interference, its usefulness is over.

The world's present economic system was developed over many centuries of time; it probably was started before recorded history as a barter system. It grew piecemeal as we added to it and refined it until today it has become highly complex, quite restrictive and inefficient as a social control technique. And it now exists, with slight variations, all over the world. This economic system was developed by man for his own benefit, and those who did most of the ``developing'' carved out as many advantages for themselves as possible. So, the system is not designed to provide equal benefits for all. One of the chief responsibilities of those who benefit most from the system is to censor any idea that an alternate system is possible. As a result many North Americans are unaware of the approaching financial collapse or of the solution offered for this past half-century by Technocracy Inc.

As Technocracy has pointed out for many years, an economic system based on commodity valuation, can't operate if there is no scarcity, because commodity valuation is determined by the relative scarcity of commodities. North America, with its modern technology, can eliminate scarcity; but since the 1930s the United States and Canada have maintained scarcity by artificial means: by the destruction of ``surplus'' farm products, by paying farmers to produce less, by producing merchandise designed to become obsolete, and by foreign gifts and wars. By dodging the inevitable, the United States and Canada have, so far, been able to maintain an economic system based on price.

This Price System was designed in an age of scarcity, and scarcity must be maintained if it is to operate. Theoretically, scarcity could be continued indefinitely, if the growth required never depleted the natural resource base, if the environment could heal itself at an ever faster pace, and if the costs didn't become prohibitive. However, the costs have already resulted in a $14 trillion debt that is growing faster each day -- and the interest rates continue to grow accordingly. The Price System can no longer afford to maintain itself and is in a process of collapse. If we can't come up with a better design, we will go down with it.

Will North Americans willingly discard this Price System, the only economic system they have ever known? Not likely, if they can help it! It is quite probable that they will allow conditions to deteriorate until they become intolerable, until many more people can't afford to live and pay interest payments at the same time.

At that late date, will it be possible to salvage civilization on this Continent? That can only be determined by future events; it could go either way depending on the intelligence that can be brought to bear on the problem. The ``law'' of self-preservation is strong; it is possible that, when a do-or-die situation occurs, a widespread movement may be expected. If the direction then taken is correct, there is a good chance. That is, if the point of no return hasn't already been passed by that time. In any case, the best chance for North American survival is a prompt investigation of Technocracy.