Credit

“Credit is an ‘I love debt’ score.” Dave Ramsey

Dave Ramsey is a well-known and respected financial adviser who has been ringing the debt crisis bell for a while now as the American credit addiction is headed to a catastrophic phase. Ramsey and others have debunked many of the narratives the government has gaslighted America with, blaming the pandemic, corporate greed, wars, China, climate and whatever they can fill their echo chamber of alibis with, but not accepting their role with lockdowns, irrational spending, monetary manipulation, and overregulation, but at the same time telling us how great the economy is.

The financial news today reported that the US is approaching $35T in its national debt. In order to quantitatively understand that kind of debt in individual terms, divide the debt by the US population; that would mean that every man, woman and child in America has a debt burden of approximately $106,000, and it’s growing fast. Given that the average family in America is 3.14 people, their share of the nation’s debt is currently at $318,000; add to that the average private debt per family of $104,000 and what you have is a country whose average families are $422,000 in debt. These numbers are staggering and clearly unsustainable.

Added to this dilemma is the jaw dropping 2023 statistic that approximately 78% of American households are living paycheck-to-paycheck, and during a time when inflation is running ahead of income growth; this clearly shows why savings is a fantasy for most Americans, and adding to their fear that a catastrophic event could put them below the poverty level, joining 38M Americans already there.

Also in the news were discussions among financial and economic analysts regarding the likelihood of Fed rate cuts; the estimates of how many cuts have dropped with the latest CPI, PPI and jobs reports from as many as seven cuts this year to as little as two, and maybe none, to perhaps even a rate increase. The insight that the number in the March jobs report of 303K additional is mostly comprised of government and part-time work, with a decline in private sector full-time work.

While all of this is ready political fodder during an election year, there is little optimism for those with a memory of the prior administration’s poor record of fiscal and monetary prudence. The same can be said for the various administrations before that. The fact is that this problem was created more than a century ago under the Wilson administration with the creation of the Federal Reserve, the central bank for the US. The Fed is a legalized cartel created under the pretense of the greater good while in reality it is structured to serve the banking system. This façade is crumbling given the history of the Fed in the boom-and-bust cycle, as is the same for all the world’s central banks. As Meyer Rothschild famously once said, “Permit me to issue and control the money of a nation, and I care not who makes its laws.”

Investment bankers, including the Fed, have the incentive to support deficit spending by underwriting government bonds, a form of credit that creates the debt burden forced on the American people. This creates one cause for inflation, while the other is the fiat currency the Fed directs the UST to print in order to then buy those same bonds to support the fiscal problem of government spending, all without actually spending anything itself. While this in the private sector would be a criminal activity, it is for the Fed legalized fraud.

That the Fed is responsible for inflation in America is empirically evidenced by the simple fact that inflation is the increase in the money supply, and the Fed is the monopolistic entity that creates more money, and it does it with the credit of the US, ultimately a debt owed by the people. This was made even more insidious with the actions of the FDR and Nixon administrations suppressing and then abandoning the gold standard; this decoupling from a sound store of value removes this restriction against inflation.

With this egregious debt we will have less to invest in the future of this country resulting in fewer opportunities for our younger generations. It is also corrosive to the world’s confidence in the US dollar, which puts its status as a reserve currency in jeopardy. It also creates more dependencies on the Federal government, a consequence that many authoritarians like Vladimir Lenin understood when he observantly said, “The establishment of a central bank is ninety percent of communizing a nation.”