For a very long time, cancer has been referred to as the silent killer — out-of-sight, gradually, gradually, and then all of a sudden.
In conjunction with our federal government, our hybrid public-private central bank (The Federal Reserve Bank or The Fed) is acting in a similar manner, gradually-but-relentlessly allowing the buildup of our national debt to the point where it not only taxes surreptitiously every citizen via inflation but also, in the long term, will kill both our national currency (the US Dollar) and The American Dream of successful socio-economic advancement and higher living standards for future generations.
The Convention of States has targeted, rightly, public sector budget deficits and resultant debt accumulation as focal points for concerted political and economic policy action. Probably, there will have to be major legislative and institutional changes that accompany these moves. As our past and current Congresses have proven incapable — repeatedly — of addressing these issues, a Convention of States is the only remedy.
The major causes of our burgeoning national debt are our annual budgetary deficits.
Unfortunately, our deficits and debt have been the consequence of a rare bipartisan effort by both major political parties. Very, very few of our national representatives have argued against this phenomenon. Annual deficits have increased from less than $500 billion (2015) to almost $1 trillion (2019) and then sky-rocketed, alongside the Covid pandemic, to over $3 trillion (2020).
Alongside this, a longer-term buildup of national debt has occurred, from less than $6 trillion (end-of-Clinton presidency) to $10 trillion (G.W. Bush) to ca. $20 trillion (Obama) to ca. $27 trillion (Trump — including $3 trillion for Covid)!
Debt is usually compared to GDP, the total value of goods and services, which is about $22 trillion.
In the past, the relationship of national debt to GDP has only grown, of necessity, during wars and recessions. This has now changed.
The debt/GDP ratio has grown every year since 2002 and during 3 of 4 economic expansions!
The present Biden Administration is now proposing a further $6.5 trillion plus in various plans and programs, spread differentially over 1-10 years. The proposals come during the course of the present economic expansion.
Federal revenues have long since ceased to cover federal expenditures, with The Fed's printing press making up the gap. The US Treasury sends I.O.U.s (Treasury bonds) to The Fed in exchange for newly minted Dollars.
The Fed now holds (end-2020) 21% of all US Government Debt. Foreign investors now hold 34%.
The largest foreign investor is The Peoples' Republic of China (almost 20%, including 3.6% held by Hong Kong, which the PRC now controls). Annual interest rate payments to them now total $22 billion — more than $60,000 owed by every US citizen.
By the middle of the next decade, we will owe more than $1 trillion for the annual interest payment due to all holders of our national debt - assuming the historical average rate of 2.2%. If this interest rate rose by 1%, we would owe $2.3 trillion! By 2050, interest payments on the national debt will approach 10% of the total value of our goods and services (GDP).
This represents resources that otherwise could be invested productively and used to increase living standards. It represents an unwise and unnecessary burden for future generations of American citizens.
Things get worse: why should foreign investors continue to believe that all this debt (fundamentally, these IOUs) represents accurately the underlying strength of the US economy's goods and services?
Whether or not they should, some do not. For many years, China and Russia have been buying gold surreptitiously. They hope to launch a gold-backed currency to challenge and gradually undermine the Dollar as the major international reserve currency.
If this fails, they and other nations wish to substitute Special Drawing Rights (SDRs) issued by the International Monetary Fund, as the new, primary form of international reserve currency (that is, they hope to substitute SDRs or a gold-backed currency for Dollars as the main form of payment utilized to settle international transactions of goods and services).
If either of these two approaches should come to fruition, the living standards of every US citizen would be substantially and adversely affected and our ability to act as an unencumbered national sovereign would be lessened substantially.
It is imperative that We the People succeed in convincing our states to convene a Convention of States to address this urgent threat to our economic (and, eventually, military and geopolitical) future — a threat conceived by our own, irresponsible budgetary recklessness, perhaps furthered by the political and financial fecklessness of our own national representatives. Do your part and sign the petition today.
