National Debt Surpasses $22 Trillion
Feb. 12 (UPI) — The gross national debt surpassed $22 trillion for the first time in U.S. history, according to data released by the Treasury Department on Tuesday.
The Treasury Department estimated the national debt reached $22.01 trillion, up $30 billion from the previous month.
National debt stood at $21.974 trillion as of Dec. 31, representing an increase one year after President Donald Trump signed a tax reform bill in which a lower corporate tax rate lowered Treasury revenues.
Michael A. Peterson, CEO of non-partisan budget watchdog the Peter G. Peterson Foundation, also issued a statement noting the United States has added $1 trillion in debt in the past 11 months.
“Our growing national debt matters because it threatens the economic future of every American. As we borrow trillion after trillion, interest costs will weigh on our economy and make it harder to fund important investments for our future,” Peterson said.
In its budget and economic outlook for 2019-29, the Congressional Budget Office predicted the federal budget deficit will exceed $1 trillion each year beginning in 2022.
“Over the coming decade, deficits fluctuate between 4.1 percent and 4.7 percent of gross domestic product, well above the average over the past 50 years,” the CBO said.
Three Ways to Avoid
Death of Dollar – and America
Three Ways to Avoid
Death of Dollar – and America
Little remains of the vast edifice of family, community and
faith relationships that once unified and anchored the American way of life.
These things have not disappeared from the horizon. They are still important,
but they have deteriorated. There is no more consensus about what they mean,
and they no longer serve as anchors of certainty.
One final anchor remains that does unite Americans. This
anchor survives despite everything. Now, even this seems targeted for
destruction.
The Last Anchor That Unites Everyone
It seems almost irreverent to affirm, but this last anchor is
the American dollar. Money is not supposed to be a social anchor. Other more
immaterial things—moral, principles, social bonds—should play this role.
However, today money bridges the seemingly unbridgeable chasms that polarize
the nation in a way nothing else can.
It is not just money. What unites Americans across the
board is the dollar, which is accepted everywhere either in its physical or
virtual form. No one questions its dominant role. As the world’s reserve
currency, it keeps global trade running while everything else falls apart. When
the other anchors fail, the dollar is always there to spend ways out of a
crisis.
Calling the dollar the last anchor does not mean that money
should or does run everything. The dollar is much more than a simple unit of
currency. It has immense symbolic importance since it is attached to notions of
national sovereignty, power and the American way of life. The dollar sustains
the myth of an America that will never fail. Thus, its fall is unimaginable to
many Americans who cannot visualize the country without it.
A Culture of Intemperance
However, there is a darker side to the dollar. It
facilitates the frenetic intemperance of a culture that
rejects limits. People want everything instantly and effortlessly, and the
dollar is ever-ready to supply the means to buy fleeting happiness. The
government offers its dollar subsidies to keep people dependent and happy. So
many others seem willing to sustain this frenzied lifestyle by contracting debt
of all types—private, corporate and governmental.
And the dollar is the ideal instrument for this frenzy. It
is stable, flexible and plentiful. What sustains the dollar is the world’s
willingness to buy U.S. Treasury bonds as a stable investment. There seems to
be no limit to the frenetic appetite for these debt dollars worldwide.
However, the dollar cannot solve the nation’s problems no
matter how many trillions are thrown at them. Like any currency, the dollar is
only as strong as the society that sustains it. With the decline of America’s
institutions, it is inevitable that the dollar too will face a decline—perhaps
radically and dramatically.
This dollar decline could happen in three different ways,
especially in these erratic times.
The Post-2008 U.S. Is Unprepared for New
Economic Crises
First, it can be destroyed by overconfidence. The grand
myth holds that the dollar cannot be destroyed because it has never been
destroyed before, despite several close calls.
There is no logic to this affirmation. All things temporal
can be destroyed, especially if they are neglected. However, the argument does
carry some weight in a culture that is run on emotions and feelings.
The fact is that the dollar is surviving on borrowed time.
The 2008 crisis provoked world finance leaders to use every tool in their
toolboxes to fix the crisis. Programs of zero or even negative interest, quantitative easing and other
vehicles have all run their course with limited effects. Overconfident
Americans need to take notice of dangers on the horizon.
Risks still abound in today’s global economy with trade
wars and political tensions. Many economic observers say that should a major
crisis hit the world economy, the financial systems could go down. And there
are very few new tricks that can be employed to stem the grave damage since the
root causes are not being addressed.
The mantra that the dollar is indestructible is hardly
reassuring.
The Very Real Debt Threat
The second factor that could cause the dollar’s decline is
debt in all its forms, especially American sovereign debt. When the world no
longer wants to buy American debt, the crushing burden of high interest rates
will have disastrous consequences for the nation.
The present governmental debt shows no sign of diminishing.
People have gotten used to the idea of annual $800 billion deficits. It will be
the new normal over the coming years as no Senator or U.S. Congressman wants to
take things off their shopping lists or face the firestorm of public opprobrium
for urging fiscal restraint.
Also, corporate debt now stands at nearly $9 trillion. The quality of
investment-grade bonds has deteriorated with many in or bordering on junk
category. This debt could trigger defaults, bankruptcies, burst bubbles of
immense proportions, all of which will weigh heavily on the dollar.
Similarly, personal debt has climbed back to pre-2008
crisis levels.
Indeed, ours is a world awash in debt of all sizes, types,
and nations. As the world’s reserve currency, the dollar cannot escape the
reverberations of a world financial crisis when major players default.
Sidelining the Dollar as the World’s Reserve
Currency
The final threat is more deliberate and targeted. As the
preferred unit of currency in commodity markets, the dollar is under direct
attack today through a new European Union mechanism called a Special Purpose Vehicle (SPV).
Everyone knows that no currency (or even basket of
currencies) can replace the dollar as the world’s reserve currency. However,
the European Union, China, Russia and Iran are seeking to create a
clearinghouse that will run circles around U.S. sanctions against the Islamic
Republic of Iran. They are setting up a credit system that will allow the
barter trading of commodities without the use of American dollars.
In this way, the dollar can come to be challenged and
sidelined by many major countries in international trade, and potentially even
losing its privileged status.
The Collapse of the Postwar Order
Any of these three ways can drag down the U.S. dollar from
its post-World War II throne. This would be disastrous since it would hasten
the collapse of the postwar order with no replacement save chaos and
disorder.
However, the greatest catastrophe would be for American
society. The collapse of America’s last anchor will increase the fragmentation
and polarization of the nation. All these three ways are avoidable if America’s
political leaders would apply themselves energetically and without further loss
of time toward addressing the root causes of the threats the nation faces. It
would involve the need for great restraint, sacrifice and new national
priorities.
The real problem facing America today is much more a moral
problem than an economic one. Society needs anchors, especially moral
anchors to unify the nation. When those anchors are gone, the nation is left
rudderless in a sea of chaos.
John Horvat II is a scholar, researcher, educator, international speaker,
and author of the book Return
to Order: From a Frenzied Economy to an Organic Christian Soceity--Where We've
Been, How We Go Here, and Where We Need to Go. He lives in Spring Grove, Pennsylvania, where he is the
vice president of the American Society for the Defense of Tradition, Family and
Property.
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