Ashley McKathan
6977 Eagle Rd.
Andalusia, AL 36420
No. 47
“Debt”
Dear Covington County
Lawyers And Other Friends:
Considering the small size of the fortune I have amassed in my life, I would be the first to admit that I am no economist. Thus, I am not greatly qualified to discuss our national budget with anything akin to expertise. However, since it is true enough that “fools rush in where angels fear to trod,” forgive me if I presume to delve into the topic in a small fashion. If I say anything patently foolish in the process, just consider the source and be as kind as you can. Here goes:
There is an amazing website out there showing information about our country’s present indebtedness. This is the location: https://usdebtclock.org/ . Nobody’s busier than a good lawyer, of course, but if you can spare a moment, have a look at it. The thing shows our country’s total liability as it increases second by second. In that regard, the government’s expenditure of nonexistent dollars appears in real time on the computer screen. Our national liabilities are thereby shown as they increase at something akin to the “speed of light.”
When I was a kid (Oh no, here he goes again!) the national debt was very small. For example, in 1965 it stood at (what now seems to be the measly sum) of $317,273,898,983.64. (Source: The Street, Feb. 26, 2019). Now that seems like a drop in the bucket. Currently, we owe around $26,144,231,405,610.00. That is a massive amount of money. In fact, it is mindboggling. Moreover, during the time I wrote the preceding sentences, the figure I employed therein became outdated and the debt became a whole lot more.
What this means is that in a normal world, our currency could probably be considered worthless. That’s bad. One of the reasons the South lost the Civil War, for example, had to do with the collapse of the currency it printed. People came to realize a Confederate dollar was just a piece of paper. There was nothing backing it up. When that fact became apparent, Confederate money would no longer buy anything. If you can’t pay for munitions any more, you thereupon lose your war.
The same thing happened in Germany at a point after World War I. Paper money became a joke. People had to take wheelbarrows to push their salary to the house when they received it. That’s right: Some would actually get a wheelbarrow full of paper money to spend. Thereupon, they spent it as fast as they cold. Why did they spend it? Because, though it was worth little, it would very quickly become worth even less!
In our own country, government debt grows and grows. Reducing our spending a little for a few years would be good, but it would not be a magic bullet. As Patricia Cohen, one economics writer for The Times, has noted:
“The national debt. . .is the cumulative amount of money that the federal government has borrowed to make up for all [the] deficits in previous years.
“Even if the size of the federal deficit, or “shortfall,” shrinks from one year to the next, the total national debt will still increase because the government is still borrowing money (just not as much as it did the year before). The government could even have a budget surplus one year—where it takes in more money than it spends—but still have a sizable national debt that has built up over time.”
So, friends, economically, we’re in a world of hurt. As the debt increases, our ability to repay it decreases. If the debt gets large enough, too much money must be spent on repayment and less and less on the needs of the nation. In fact, the debt can get so big that default becomes inevitable. After that, borrowing more is not something that can be counted on any longer. At such a point, a real depression becomes likely, if not inevitable.
What’s the solution? Austerity is certainly an option, but, at this juncture, it might be difficult. When we stop spending on other things in order to pay debt, the frantic output of money in support of the citizenry also stops. How would those in need respond to being cut off? Not well, I suspect.
So, what’s the answer? What should our elected officials to to save our country from economic ruin? As you might surmise, I’m not smart enough to say. I don’t have the solutions, though I certainly fear we’re in real trouble. Doubtless, however, less liberality in spending would be wise.
Is there any silver lining to all this? Well, maybe: If the debt bubble ever bursts, then, certainly, our creditors will be in a world of hurt just as we are. Of our creditors, to which nation state do we owe the most? It’s Communist China. Thus, if we ever default, the biggest harm we will do is to our biggest enemy. Therefore, I expect they are as worried as Americans are!
Finally, I would be remiss if I did not ask, “What does the Bible advise us with respect to all this? Here it is: “The rich ruleth over the poor, and the borrower is servant to the lender.” Proverbs 22:7. Accordingly, excessive borrowing is not in keeping with God’s will in the first place. Debt makes us subject to the rule of others, being our creditors. The Bible further says, “Be not thou one of them that strike hands, or of them that are sureties for debts. If thou has nothing to pay, why should he take away thy bed from under thee?” Proverbs 22:26-27. So, debt often leads to poverty inasmuch as, when we cannot repay, that which we have can be seized and removed from our possession. I have no doubt about it: Our crazy deficit spending is not in accord with God’s will or His word.
God’s word is always so very wise. Consulting it beforehand would have shown the error of our huge deficits prior to the time we made them. Perhaps some of our lawmakers should take scripture seriously before embarking on the next round of mega borrowing. What do you think?
With best regards, I am,
Sincerely yours,
Ashley McKathan
The Encouragement Corner 