American Government Debt is Immoral

[CPA2]

Bernanke Running Amuck
by Martin Weiss

Fed Chairman Bernanke is running amuck, and for the first time since the birth of the U.S. dollar, our government is egregiously abusing its power to print money.

Specifically, from September 10, 2008 to March 10 of this year, he has increased the nation’s monetary base from $850 billion to $2.1 trillion — an irresponsible, irrational and insane increase of 2.5 times in just 18 months.

It is, by far, the greatest monetary expansion in U.S. history. And you must not underestimate its sweeping historical significance.
How the Fed Is Trashing History
And Threatening Our Nation’s Future

Precisely 217 years and 50 weeks ago, Treasury Secretary Alexander Hamilton established the dollar as America’s national currency when Congress passed the Coinage Act of 1792.

Since that memorable date, the United States has suffered through one pandemic, two great depressions, 11 major wars, and 44 recessions.

Four U.S. presidents have been assassinated while in office.

Hundreds of thousands of businesses have gone bankrupt; hundreds of millions of Americans have lost their jobs.

In the wake of these disasters, there were, to be sure, monetary and fiscal excesses. But never did the U.S. government resort to extreme abuses of its money-printing power! Never did it make that unforgivable blunder!

Until now.

Now, all those years of suffering and sacrifice — all that history of leadership and discipline — have been trashed. All for the sake of perpetuating America’s addiction to spending, borrowing, and the wildest speculations of all time.

 

[stinkcat_14]

Is government debt necessarily immoral? Absolutely not! It might possibly be immoral, but that would depend on the individual situation. Also, there is nothing inherently immoral about the Fed engaging in monetary policy.

 

[Art321]

I do believe that this debt is frankly unfair to future generations. It will be my generation and the next that will have to pay the HUGE debt off simply because of the people in office didn’t take their roles seriously. I believe I have a right to be angry!

 

[CPA2]

I do believe that this debt is frankly unfair to future generations. It will be my generation and the next that will have to pay the HUGE debt off simply because of the people in office didn’t take their roles seriously. I believe I have a right to be angry!

What Fed Chairman Bernanke is doing is also immoral. He is stealing from you by reducing the value of your savings.

 

[kimmielittle]

I do believe that this debt is frankly unfair to future generations. It will be my generation and the next that will have to pay the HUGE debt off simply because of the people in office didn’t take their roles seriously. I believe I have a right to be angry!

 

[CPA2]

Is government debt necessarily immoral? Absolutely not! It might possibly be immoral, but that would depend on the individual situation. Also, there is nothing inherently immoral about the Fed engaging in monetary policy.

Stealing is immoral. By the way, your share of the debt is $40,000. Pay up.

 

[CDNowak]

In the wake of these disasters, there were, to be sure, monetary and fiscal excesses. But never did the U.S. government resort to extreme abuses of its money-printing power! Never did it make that unforgivable blunder!

Until now.

Now, all those years of suffering and sacrifice — all that history of leadership and discipline — have been trashed. All for the sake of perpetuating America’s addiction to spending, borrowing, and the wildest speculations of all time.

They haven’t had the ability to do so all that long, not even 30 years. Prior to that the US had to have the gold to back every dollar printed.

Is government debt necessarily immoral? Absolutely not! It might possibly be immoral, but that would depend on the individual situation. Also, there is nothing inherently immoral about the Fed engaging in monetary policy.

The extent of the Debt and unfunded liabilities has reached the point where it is no longer merely irresponsible, but perhaps one of the greatest moral issues of our day. The Unfunded liabilities are nearly 8 time the GDP. The Debt is nearly 90% of the GDP. The federal budget is not even 2/3 funded (the 40% or so unfunded feeds the debt.)

 

[CPA2]

They haven’t had the ability to do so all that long, not even 30 years. Prior to that the US had to have the gold to back every dollar printed.

The extent of the Debt and unfunded liabilities has reached the point where it is no longer merely irresponsible, but perhaps one of the greatest moral issues of our day. The Unfunded liabilities are nearly 8 time the GDP. The Debt is nearly 90% of the GDP. The federal budget is not even 2/3 funded (the 40% or so unfunded feeds the debt.)

Good points!

 

[GodLovesTheSpek]

Eventually the spending will stop. Unfortunately, as history has shown, the road there isn’t pretty and the aftermath is usually extremely deadly.

 

[stinkcat_14]

Stealing is immoral. By the way, your share of the debt is $40,000. Pay up.

Who is being stolen from? The government borrows the money, if they do not pay it back, then that is stealing. Everyone has been paid back so far. As to my share of the debt, what makes you think that I haven’t paid my share many times over?

 

[Art321]

What Fed Chairman Bernanke is doing is also immoral. He is stealing from you by reducing the value of your savings.

Oh gosh. I just don’t know what to say.

 

[CPA2]

Who is being stolen from? The government borrows the money, if they do not pay it back, then that is stealing. Everyone has been paid back so far. As to my share of the debt, what makes you think that I haven’t paid my share many times over?

You are being robbed, by Larry Edelson

Since March of 2009, the value of every dollar you have saved, invested or set aside for retirement has plunged 15%. A greenback that was worth $1.00 just seven months ago is now worth only 85 cents.

Back in the late 1970s, even smaller, slower declines in the dollar came with a massive surge of inflation, gutting your buying power.

Now, it’s happening again. The falling dollar is already making energy … food … clothing … and most of the products you buy more expensive:

Just in the last seven months, gold has surged 14%, crude oil is up 96%.

Raw materials needed to manufacture most products you buy are also rocketing higher. Copper is up 88%. Aluminum is up 38%. Nickel and Cadmium for the batteries in your cell phone and computer are up 93% and 18% respectively.

Cotton is up 45% and wool is up 24%, which can only drive the cost you pay for clothing higher. Food imported from overseas is already soaring: Coffee and tea are up 26% and 42%. Oranges are up 41%. Sugar is up 71%. Olive oil is up 14%.

And as the dollar continues to dive against foreign currencies, you can expect all your other expenses to rise as well.
Hard to believe when everyone is talking about deflation? Well think again: In the entire history of the U.S., there has never been a period when Washington spent as much money as it is doing now without major inflation rearing its ugly head.

And what if this disturbing trend continues? What if the dollar begins plunging even faster? **How will you make ends meet? **

The plain truth is …

Washington now has no choice but to DEFAULT on its massive debts by crushing the value of your dollars

 

[stinkcat_14]

What Fed Chairman Bernanke is doing is also immoral. He is stealing from you by reducing the value of your savings.

Just how is he reducing the value of my savings?

 

[GodLovesTheSpek]

When the dollar become valueless electronic savings become worthless. What’s to withdraw? Can’t demand gold or food or a house. Up until the 1930’s the USA had “gold notes” (cash with yellow serial numbers) that were exchangeable for gold. Not anymore.

Sort of like the stock exchange when shares are worth $0.00 – there is nothing to “cash out”. Even if stock was “worth” something what’s to cash out to – worthless dollars?

 

[stinkcat_14]

You are being robbed, by Larry Edelson

Since March of 2009, the value of every dollar you have saved, invested or set aside for retirement has plunged 15%. A greenback that was worth $1.00 just seven months ago is now worth only 85 cents.

This is untrue, when I go to the grocery store, the dollar that was worth $1.00 7 months ago is still worth $1.00 today. Now, if I wanted to buy Japanese Yen, it has weakened a little bit against the yen, but I don’t buy yen, except when I go to Japan.

Back in the late 1970s, even smaller, slower declines in the dollar came with a massive surge of inflation, gutting your buying power.

Declines in the dollar are not necessarily a cause of inflation. We have had dollar declines since the 1970’s that did not result in inflation.

Now, it’s happening again. The falling dollar is already making energy … food … clothing … and most of the products you buy more expensive:

Just in the last seven months, gold has surged 14%, crude oil is up 96%.

Raw materials needed to manufacture most products you buy are also rocketing higher. Copper is up 88%. Aluminum is up 38%. Nickel and Cadmium for the batteries in your cell phone and computer are up 93% and 18% respectively.

Cotton is up 45% and wool is up 24%, which can only drive the cost you pay for clothing higher. Food imported from overseas is already soaring: Coffee and tea are up 26% and 42%. Oranges are up 41%. Sugar is up 71%. Olive oil is up 14%.

Prices of commodities always change. Sometimes that benefits some people (i.e. farmers, oil companies) sometimes that hurts people, but there is no link between the Fed and these price changes.

And as the dollar continues to dive against foreign currencies, you can expect all your other expenses to rise as well.
Hard to believe when everyone is talking about deflation? Well think again: In the entire history of the U.S., there has never been a period when Washington spent as much money as it is doing now without major inflation rearing its ugly head.

Government spending increased as a percentage of GDP during the 1980s and inflation fell rather than increased.

And what if this disturbing trend continues? What if the dollar begins plunging even faster? **How will you make ends meet? **

The plain truth is …

Washington now has no choice but to DEFAULT on its massive debts by crushing the value of your dollars

The government has plenty of options to pay off its debt, most of these options will not harm purchasing power. After all, after world war II the us debt was over 100% of GDP and the debt fell as a percent of GDP and inflation was minimal.

 

[CDNowak]

Who is being stolen from? The government borrows the money, if they do not pay it back, then that is stealing. Everyone has been paid back so far. As to my share of the debt, what makes you think that I haven’t paid my share many times over?

The government has intended to pay it back by taxing future generations (starting with the up-and-coming generation). This is, honestly, taxation without representation, tyranny by the American definition.

 

[stinkcat_14]

The government has intended to pay it back by taxing future generations (starting with the up-and-coming generation). This is, honestly, taxation without representation, tyranny by the American definition.

So by this definition, any and all government debt is immoral? Does that include state and local government debt as well?

 

[CPA2]

So by this definition, any and all government debt is immoral? Does that include state and local government debt as well?

Get real. Government has no intention of paying back the national debt, ever. It is impossible to pay back the national debt with today’s dollars. Governments do what governments always do. Government will inflate away the debt by robbing you of the purchasing power of your government money. This cycle always ends in the total collapse of the currency and the death of the American dream. Government is a thief and a liar.

 

[CDNowak]

So by this definition, any and all government debt is immoral? Does that include state and local government debt as well?

Debt is either amoral or immoral.

Let’s take the micro- view first. In the consideration for an individual (or individual family) taking on a debt that you can repay is amoral, in itself it has no moral weight (giving said loan and expecting interest, that is another question). Taking on a debt knowing that you cannot pay generally is immoral, as it is essentially stealing from lender.

When the state (general political entity) borrows money it is borrowing against future taxes either from its citizens or on imports (tariffs). Generally in the American state (individual and federal) a bond is issued, payable at some future date from the treasury (ie taxes). One time loans, if absolutely necessary, can sometimes be justified (perhaps to pay for our participation in WWII). To take out indefinite loans, whether explicitly or through unfunded liabilities, is borrowing with no intention of repaying (since the money does not belong to the government but to the people). At this point I think we can note that if it were an individual, this would be immoral. Also, in similar straights, a group of colonies some 200+ years ago decided that they would not pay taxes that they did not vote for, perceiving taxation without the consent of the governed as tyranny.

The burden of this debt then is passed on to the next generation and the next and so forth, until the interest payments alone approach the tax revenues. As this happens, the government (a force for the well being of the state) either ceases to function or increases taxes on the people. The ever increasing taxes become a oppressive burden on the people, and at some point we will have true tyranny.

The debt of the individual states (shall we take California as an example?) can be just as crippling, and just as tyrannical as any federal program, but at the same time the people have more direct control. This is even more true in the local government.

 

[CPA2]

This is untrue, when I go to the grocery store, the dollar that was worth $1.00 7 months ago is still worth $1.00 today. Now, if I wanted to buy Japanese Yen, it has weakened a little bit against the yen, but I don’t buy yen, except when I go to Japan.

Declines in the dollar are not necessarily a cause of inflation. We have had dollar declines since the 1970’s that did not result in inflation.

Prices of commodities always change. Sometimes that benefits some people (i.e. farmers, oil companies) sometimes that hurts people, but there is no link between the Fed and these price changes.

Government spending increased as a percentage of GDP during the 1980s and inflation fell rather than increased.

The government has plenty of options to pay off its debt, most of these options will not harm purchasing power. After all, after world war II the us debt was over 100% of GDP and the debt fell as a percent of GDP and inflation was minimal.

Only governments can cause inflation!

The Price of a Dollar

It sounds strange to say that a dollar has a price. However, it is true. Supply and demand determine the dollar’s price. “…The value of currencies in the foreign exchange market is determined by market forces. Just as the forces of supply and demand determine other prices, so do they determine the exchange-rate value of currencies in the absence of government intervention (Gwartney, Stroup, Sobel).”

When looking at the foreign exchange rates, we can say that the dollar price of the pound is $1.50. The inverse is also true, the pound price of the dollar is 0.67 pounds.

The American dollar is the reserve currency of the world; therefore, the price of gold is in terms of American dollars. If gold was the reserve currency of the world, a financial commentator might say, “Today the price of the dollar dropped by 1/10 of a dwt.” It all depends on what you are use to hearing.

“Why gold has been accepted as money for several thousand years cannot be appreciated without looking at the unique role performed by gold as money and the alternatives to gold….Ancient gold coins were widely accepted in primitive times because of the weight of gold they were known to contain. It was the physical qualities of gold, the known content of gold of a particular fineness, the fact the coinage could not easily be expanded in supply or debased and counterfeited, the durability of gold, that made gold universally accepted (Sutton).”

Milton Friedman, Nobel Prize-winning economist, had this to say about the American dollar: “…each accepts them because he is confident others will. The pieces of green paper have value because everybody thinks they have value, and everybody thinks they have value because in his experience they have had value. Paper money “is a social convention which owes it very existence to the mutual acceptance of what from one point of view is a fiction.”

I return to CON2 and the qualitative characteristic of accounting information, reliability. Does the monetary unit, the American dollar, “faithfully represent what it purports to represent?” My answer is no. The American dollar changes in value everyday. It is not a store of value. On the other hand, gold is a store of value. “Even in ancient times, with primitive communications among vastly different peoples and customs, gold coins generated worldwide confidence…Recognizing the essential requirement of confidence, ancient empires kept the value of their money constant for long periods without debasement (Sutton).” Gold is a reliable monetary unit. Governments cannot create more gold by fiat.

References

Friedman, M. & Schwartz, A. (1963). A Monetary History of the United States, 1867-1960. Princeton: Princeton University Press.

Gwartney, J.D., Stroup, R.L., & Sobel, R.S. (2000). Economics, private and public choice. Orlando: Dryden Press.

Sutton, A. C. (1977). The War on Gold. Seal Beach: ’76 Press