At What Percent?

A while back the Wall Street Journal reported that 61% of last year’s Federal borrowing was funded by the printing press. We just created digital money and lent it to ourselves. My question is, at what percent will America’s people recognize the problem? If 80% of our borrowing came from the printing presses, would that make headlines in all our newspapers? What if 100% of our debt was sourced from our own Central Bank, would we then care? I don’t know.

Right now in Euro land, one of the PIIGS is looking like it is going to exit the herd. It is believed that it (Greece) will be better off because once it has its own printing press again it will be able to pay its debt and lend to itself as needed. It could, no doubt, work for a while—it seems to be working for US. What is missing, however, is an exit strategy. The reason countries get to this point is that they have borrowed more than they can afford to repay. When they turn to the printing press, the problem of too much debt neither goes away nor does it get better. It just defers and exacerbates. You just turn what would have been a bad cold into pneumonia.

It looks to me like our own ship of state is run by a crew of pirates composed of political, financial, academic, and media elitists. Every single one of those categories should be sounding the alarm on overspending, not helping bury us in debt. The latest category of debt to explode has been student loans. Who are we going to lend to next to get another bump in GDP? Maybe our high school students? After that let’s try the grammar school kids.

Our ship of state was not really designed to be one giant vessel. It was instead to be a flotilla of 52 ships capable of coming together against common enemies. If one got into trouble, there would be others to rescue. With 52 captains and crews you could not pirate the whole fleet. But what has always happened, has happened. Governments accumulate. Bureaucracies grow. Power corrupts.

So where do we go from here? Well, we could start by recognizing the problem. Until you identify a problem it is impossible to solve it, so let’s admit that our government has gotten way too big and too centralized. Both those problems are largely addressed by returning to constitutionally limited government. To get there we need our state governments to be the checks and balances in the system that they’re supposed to be. While DC will not give up power voluntarily, the states can start strategically taking some back. Ultimately it would be nice to have 52 ships manned with crews that would refuse to act on unconstitutional orders, but lets start with Idaho. The Constitution is the line we should not have crossed. Our Constitution has not failed us, we have failed it, and in doing so each other.

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