In case you haven’t noticed, this isn’t written by Mare, but by her husband, Lance. In fact, the subject of the national debt would probably be of little interest to her (at least for a blog post). But since my plans for a blog are a little more down the road, I thought I’d hijack her’s to express a few thoughts:
Whenever the main stream media speaks about the US national deficits and debt, they throw some pretty big numbers around: “billions”, “trillions”, and when talking about the derivatives market, “quadrillions”. In fact, these numbers are so huge we can’t really even comprehend them. They’re so gigantic, they remind me of how astronomers, when measuring the vastness of our universe, use the speed of light (186,000 miles per second) to determine distance. The closest star (Proxima Centauri) is a little over 4 light years away – that is, it takes more than 4 years for the light from that star to reach earth. In one single second, light can travel our equator seven and a half times. Just try to imagine how far it is to Proxima Centauri! Have you imagined it yet? Well, if you’re like me, it’s kinda like trying to grasp our current national debt of $15,359,918,000,000 – and counting.
I’ve heard all kinds of visual aid descriptions of our current national debt, well over $15 TRILLION: stacks of dollar bills to the moon, truckloads of $100 dollar bills, how long it would take to reach if spending $1 million dollars a day. But none of this seems very real to me. It doesn’t really mean anything.
Before I go on, le’me tell you a true story.
It occurred on the night of May 28, 1977, during the Memorial Day weekend, in one of greater Cincinnati’s most popular restaurants, the Beverly Hills Supper Club. About 3,000 guests and over 180 employees were packed into the large entertainment facility, when a fire broke out. The fire was identified in an unoccupied room fairly quickly. Fire extinguishers were used. The fire department was called and arrived within 3 minutes. So, how was it that 165 people died and over 200 hundred were injured? It seems there were a number of factors:
- Overcrowding – about 25% over capacity.
- Inadequate fire exits – about 35% less than the law required and many of those were inaccessible or not clearly marked.
- Faulty wiring – Wide-ranging code violations.
- Lack of firewalls – This allowed the fire to spread and to draw oxygen from other areas of the complex.
- Poor construction practices – The club had been built piecemeal with inadequate roof support, no common ceiling space, and highly flammable components.
- Extreme safety code violations – There was no sprinkler system or audible automatic fire alarm, and some doors were locked.
- Poor regulatory oversight – The local fire department is thought to have known of the deficiencies, but had not ordered them to be corrected.
So, what’s a fire that happened 35 years ago have to do with the national debt? We’ll return to that. But, for now, let’s get back to the topic.
In the past, I’ve attempted to slice and dice our national debt in a way that I can grasp. But there’s a web site that already does that: usdebtclock.org. If you click on this link, go to the bottom row, second box from the right, titled “Liability per Taxpayer”. If you pay taxes, like I do, this is YOUR SHARE of our national debt, including unfunded liabilities. YOUR SHARE is currently well over one million dollars! How’s that for making it real? You may be saying to yourself that just CAN’T be right! How can that happen? If someone gave you a cart blanche checkbook on someone else’s checking account, it wouldn’t take you long to figure out how it happened.
“A man in debt is so far a slave.” –Ralph Waldo Emerson
Am I an alarmist? Imagine you were sitting in the Cabernet Room of the Beverly Hills Supper Club almost 35 years ago, enjoying the humor of Jim Teter and Jim McDonald, and looking forward to John Davidson’s headliner act. In walks Lance. I gently tap you on the shoulder and say, “Excuse me, but a fire has broken out in the Zebra Room. Will you please proceed to the exit?”
How would you respond? Would you quickly put down your glass of merlot and drop the fork on the plate, on your way out of the building? Or would you respond with, “I don’t smell any smoke. The waiters are still serving food. Everybody’s having a great time. You’re an alarmist!”
Folks, I don’t know about you, but I smell smoke, even as far back as the Enron and Worldcom bankruptcies, and, more recently, of Bear Stearns and MF Global. Do you see these as merely isolated incidences – like someone smoking in the bathroom?
I even feel the heat: REAL unemployment is over 20%, TRUE inflation is running closer to 6% (see ShadowStats.com), the continuing housing crash, rapidly increasing debt monetization and the Euro debt crisis. The Euro debt crisis? The United States is the largest debtor nation in the history of the world!
“It is poor judgment to countersign another’s note, to become responsible for his debts.” –The Bible
Now, let’s look at the factors affecting the U.S. economy:
- Overcrowding – The U.S. dollar’s status as the world’s reserve currency and the perception of it as a “safe haven” is causing a “flight to safety”, creating an extremely “crowded” market. If market sentiment for the dollar changes (whatever the reason), the rush to the exits could leave many trampled under foot.
- Inadequate fire exits – The United States isn’t the only country printing (devaluing) its currency. The entire world is pursuing the same course. Even the once trusted Swiss Franc is being devalued. Savings accounts are paying negligible nominal interest rates. With real inflation running at 6%, savings accounts are DECREASING the purchasing power of dollar investments by 6% a year. If we even have any capital, where do we put it? Stocks? Bonds? Real estate? Would you consider “hard” assets?
- Faulty wiring – The outright lying and fraud of the media, economists, politicians and corporate executives is becoming so blatant it can make your head spin.
- Lack of firewalls – The separation of powers in both government and corporations is disappearing. Executive Orders from the office of the president are growing exponentially. Inbreeding among corporate board rooms are common place.
- Poor construction practices – The creation of the privately held Federal Reserve Bank in 1913 was a poor foundation for our economic system. “If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.” –Thomas Jefferson, Letter 1802 to Secretary of the Treasury, Albert Gallatin
- Extreme safety code violations – Richard Nixon’s executive order to “close the gold window” in 1971 severed all ties to even the pretense of a gold standard. “No State shall… make any Thing but gold and silver Coin a Tender in Payment”. –U.S. Constitution, Article I, Section 10
- Poor regulatory oversight – Ever hear of Bernie Madoff? MF Global? How ’bout the abolishment of the Glass-Steagall Act?
So, whether we are evaluating the Beverly Hills Supper Club tragedy or the U.S. economy, complacency seems to reign.
Tic-Toc. Tap. Tap.