Wednesday, November 9, 2011

Part II: The internal threat to the United States

Part II Internal threat to the United States: Financial

With a rise in debt comes a corresponding rise in the interest that becomes due on that same debt. Once you reach a certain level, just paying the interest becomes a real problem. At that point attempting to reduce the level of debt to lower the interest becomes almost impossible without draconian measures. This has happened to countries in the past and is happening in Greece today.

One serious problem we in the United States face today is the skyrocketing costs of government programs and pensions. This problem is fixable and IF dealt with properly, would go a long way toward reducing the pressure on the need for borrowed money.

Another problem we face is the takeover of the productive areas of the economy (Private ownership) by government. The Health Care system (Including private health care insurance) is a classic example. As a larger percentage of the economy becomes government run, we can expect a less efficient allocation of national resources with a corresponding drop in standard of living for the average American. What is more important, as government takes over more of the economy, the ability to pay for government programs and pensions become weaker. This can only make the debt that much larger with a corresponding rise in interest payments. So why is this a threat to the United States?

Just look at Greece. How stable is the government of Greece today? Look at the violence and unrest that is occurring in Greece today that is a result of attempts to get the debt and spending under control. Please try
to tell me that this cannot happen here. What is far more troubling is that Greece is a relatively small economy. The economy of all of Europe is also in a similar situation, although Greece is the most vulnerable. The United States is one of the largest economies in the world. We are not as far along in debt as Greece. We do have the advantage of the fact that the U.S. economy is much, much larger. Americans are human just as much as everyone else. Given a similar situation, we would see similar reactions in this country as we are witnessing in Greece today. If we allow what is happening to Greece happen to us, we would also impact the entire world in a very negative way.

This threat is not just to the United States. I am a firm believer that many conflicts and wars are caused by conflict over scarce resources. I believe that it was no coincidence that the greatest war in mankind’s history (World War II) was immediately preceded by the greatest economic downturn in mankind’s history. (The Great Depression) If we do not get the debt and spending under control, we can become (either directly or indirectly) the cause of the next Great War. By we, I am speaking of the United States AND Europe’s economic (debt) problems.

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