If Adam Smith, father of modern economics, were alive today in America, he’d have a heart attack.
We are facing a national debt crisis that’s unprecedented in size and scope: $12.3 trillion (link warning: may cause sudden depression). Each citizen is responsible for about $40,000 of it. Well, we all know that most Americans do not have that kind of money, or any amount close to it, saved up anywhere. If our government does nothing drastic to avoid this death march, then it’s “perpetual debt” we and our future generations shall suffer through:
…Soon, U.S. defensive capabilities will indeed be undermined if U.S. debt is downgraded, as the costs of outfitting our vast, volunteer armed forces would necessarily skyrocket. Such a development would be severely destabilizing, with aggressor nations seeking to supplant the fallen U.S. giant as it withdraws from the world stage. In this sense, the ballooning debt is a threat to national security.
There is no question that the U.S. has begun to far exceed even the basic limitations outlined by Smith, creating what the economist termed “perpetual debt.” Something’s got to give, as the current state of affairs cannot long endure…
It’s almost laughable that Treasury Secretary Tim Geithner doesn’t think the U.S. would lose its AAA bond rating:
Treasury Secretary Timothy Geithner on Sunday said the U.S. wasn’t in danger of losing its triple-A bond rating, in the wake of a warning from Moody’s Investors Services about U.S. treasury-bond rating.”Absolutely not,” Mr. Geithner said in an interview with ABC News’s “This Week” when asked about the prospect of the U.S. losing its top rating.
“That will never happen to this country,” he said.
Perhaps he has too much faith in a spendthrift America? Many investors and financial analysts certainly disagree. So do American taxpayers. Yet nothing is being done to correct the path. In fact, Secretary Geithner’s main job these days isn’t to advise the president about financial and monetary policy, but rather he spends a lot of time calming the fears of other countries that’s bought our debt. And sometimes he’s even had to beg them to buy.
If history is the best teacher, then we have been very poor students.
