Let’s Print More Money!
April 15, 2019
I wish we could demand politicians take a financial literacy test before they run for office.
When I was a kid a hundred dollars (or if we were cool, 100 bucks) was a lot of money. When I was 8, my new Schwinn bike cost like 17 dollars. My mother bought my grandfather’s 3 year old Chevy for $100.00 (and she probably overpaid.)
If I did the chores I was supposed to, my mom gave me an allowance of two bits (OK, 25 cents.). With that, I could buy 5 packs of baseball cards, get the gum, and if luck was going my way, find a mint Mickey Mantel rookie card in one or all of the packs. Life was good!
How times have changed.
Today a decent bike costs over $300.00, and a 3 year old Chevy is probably at least $20,000. It makes me sad when I go online and find kids carping about a $20.00 weekly allowance — with no chores attached!
Now I’m trying to wrap my head around a trillion dollars. It has 12 zeros and looks like this: 1,000,000,000,000.00. When I was a kid, we laughed at such an absurd number.
Our country is 22 trillion dollars in debt. The debt is growing so fast, we have a “debt clock” to track the increase each second of every minute.
How did we get here?
It’d be a lot easier if I could just blame the Democrats. Certainly, profligate spending seems to be in their DNA. President Obama never met a dollar he didn’t enjoy spending (unless it was on the military.).
Till recently, it was the Republicans who had a reputation for being tight-fisted. But somewhere along the way, that changed. For at least the past 2 decades, Republicans have thrown up their hands and joined the competition for seeing which party can most quickly spend our country to the brink of unsustainable debt.
And so we face a big, huge, unfathomable number — $22 trillion in debt.
New liberal economic theory advocated by people like Bernie Sanders, and his economic advisor, Stephanie Kelton, see that debt and ask, “so what?”
Stephanie Kelton is a professor at Stony Brook University, and in a bit of traditional economic heresy, she argues that debt doesn’t matter to a country when it can just print more money. It’s a new theory called “Modern Monetary Theory” or MMT.
The truth is MMT isn’t really new at all. Lots of socialist countries have destroyed their currency with schemes that sound a lot like MMT. Venezuela is happy to print money — they just print more zeros onto their existing bills. They’ll experience about a 2 million percent rate of inflation this year.
The answer to Stephanie Kelton’s and Bernie’s so what question is that when you borrow money - whether individual or government - you make a pledge to repay that money plus interest.
Theoretically, we could carry the 22 trillion of debt on our books forever if it weren’t for the interest payments due those who loaned us the money. And yes, I said “us” because you and I owe the money.
When the politicians you and I vote for borrow money, they pledge that we, along with our children and grandchildren to follow, will repay that money along with all the interest due.
Bottom line, each man, woman, and child in the U.S. owes about $67,230 against the federal debt. A family of four owes about $268,920 or about 3 and a half times the average household income. Ouch!
But the worst part is the interest due on these loans. This year, we’ll pay about $470 billion on the federal debt or about 10% of total federal spending. That’s close to an average $6,000 from every American adult who pays federal income tax. That’s just interest! And the debt clock keeps ticking up.
So what’s the answer? There are lots of things Washington could do to slow the increase. Raise the retirement age by 3 years for those under 40. Do the same for Medicare. Stop benefits to illegal immigrants (a $150 billion annual savings.) Freeze spending at current levels for 3 years.
But the truth is, most politicians don’t see the problem at all, and no amount of reform will fix a problem the financially ignorant don’t know exists.
The real problem is a lack of financial intelligence and will to do anything about the problem. Thus, my wish we could require politicians take a financial literacy test before they can run.
Given what we know of our politicians though, you can be certain that before long those least qualified to pass such a test would be put in charge of it. Bottom line is that there probably is no solution so long as the socialists can buy votes by promising “free” stuff, and we taxpayers keep paying for it.
Or we could demand schools return to teaching history, logic, and economics in a way that actually comports with reality. That too is a pipe dream unlikely to happen; at least till America goes bust and no one is left with the money to bail us out.
John Philip Sousa IV is an entrepreneur, political activist, author and accomplished business person. John has worked in the financial services industry for over 40 years, built a highly successful marketing company, ran for congress at age 24, and in 2016 created and led the successful movement to draft Dr Ben Carson into his candidacy for President of the United States. John is author of John Philip Sousa, A Patriot’s Life in Words and Pictures and Ben Carson, RX for America.