January 9th, 2015 // 7:56 am @ Oliver DeMille
I am an optimist. I believe the best of America and the world are still ahead. But we’re only going to get there by dealing with the reality that the United States is now in an era of significant decline. Specifically, at least two things happened this year that are major problems, and a third serious problem is gaining increased support among many world leaders.
First, our federal debt went over the $18 trillion mark in 2014. Someone is going to have to pay this back, and that means we’ll be paying for it for the rest of our lives—and so will our children and grandchildren.
That’s approximately $58,065 for every man, woman, and child currently in the United States. If you have a family of four, you now owe around $232,260. This debt must be paid in addition to whatever other taxes are needed for national security, services, and all other government programs now and going forward–not to mention your family’s living expenses.
To be more realistic, the truth is that many people will never pay any taxes toward this amount—because they won’t make enough. This means you’re likely to end up being charged at least twice this amount. Some people will pay a lot more. So you really owe more like $116,130 or $464,520 for your family of four.
If you have big family, say of ten people, you owe roughly $2 million dollars over the course of the rest of your life. Whatever you don’t pay off, the government will charge your kids and grandkids.
Oh, and you need to add to that all the interest still to be charged on this amount, which means that you actually owe between $1.8 million if you have a family of four, or up to around $7 million if your family is bigger. And, yes, if interest rates on the national debt increase (all the trends indicated they will), this amount will go up rapidly.
Most people have no idea what a big deal this is. This is money that has already been spent. It’s owed. And we have to pay it, now and later. We, our kids, and their kids too.
Problems and Booms
How big is this? Multiply your salary by the number of years you have left working (x), and then multiply at least $116,130 by the number of years you have to live (y). If you make more than $60,000 a year, double both amounts. If you make more than $100,000 a year, quadruple both. Then subtract one from the other to find if you’ll make more than you already owe the government.
Too much math? That’s exactly what the government is banking on. The government only gets away with this level of borrowing and spending because very few people do the math or understand what it means to them personally. Granted, these numbers are very basic, and the reality is actually worse, given interest and rising interest rates on the national debt.
So, the United States has a problem. It has a number of problems, actually, but this one is massive. The government owes so much that our economy will struggle under the weight of this debt for the rest of the century. It will dampen every citizen’s opportunities, block every generation’s choices, and haunt our posterity for many decades.
Is there any way out of this? Yes. The answer is simple, in fact. We need a major economic boom. A massive boom would allow us to pay this off much quicker and put the nation back on positive economic footing. Without such a boom, this problem is going to deepen.
How do we get a boom? Again, the answer is simple. I’ll outline it below in Column A.
But first, what happens if we don’t make the choices that will bring a boom? The answer is clear. And drastic. Our economics will rapidly get worse. For the nation, for families, for almost everyone.
Second, China just surpassed the United States as the top producing economy in the world. It was already the top trade economy, as of a year ago. How does this translate into real life consequences for real people? Well, such a transition has happened before, and there is a predictable pattern that occurs when a new nation becomes the largest global economy.
Here is a rough outline of this pattern:
- The new power (e.g. China) has the ability to dictate its own trade rules, which increases the flow of wealth to it—and away from the old power (e.g. the U.S.).
- The new power’s currency eventually becomes the lead world currency (replacing the old power’s currency). When Britain lost it’s top power spot, the average British citizen lost 30% of net worth within weeks. In the current shift, the Chinese will likely push for a global currency. (More on this in Part III)
- The old power keeps trying to regain its status by engaging in wars and military interventions around the globe, while the new power focuses mainly on economic success. This further weakens the old power, and quickly.
- The new power, with its booming economy, is able to enjoy lower interest rates, less debt, fewer expenses for international conflicts, and much higher rates of savings and investment. The wealth of the world flows into the new power as investment capital, lifting the entire new power’s economy. The old power sees its standard of living drastically fall, while the new power watches its standard of living rapidly increase.
In the eighteenth century the old power was Spain and the new power was France, in the nineteenth century the old power was France and the new power was Britain. In the twentieth century the old power was Britain and the new power was the U.S.
Today, and in the years ahead, China is the new power, and the United States is the old power. As Brett Arends put it:
“This will not change anything tomorrow or next week, but it will change almost everything in the longer term. We have lived in a world dominated by the U.S. since at least 1945 and, in many ways, since the late 19th century.
“And we have lived for 200 years—since the Battle of Waterloo in 1815—in a world dominated by two reasonably democratic, constitutional countries in Great Britain and the U.S.A. For all their flaws, the two countries have been in the vanguard worldwide of civil liberties, democratic processes and constitutional rights.” (Brett Arends, “It’s Official: America is now No. 2,” Market Watch, December 4, 2014)
China’s influence will certainly go in a different direction. This may be the single biggest concern of our century.
Can we do anything to reverse this trend? The answer is “Yes.”
Failure by Surrender
There is an irony to how old powers lose their leadership role. The old power usually has the ability to stay the top leader, if it chooses. But is seldom does. Why? The answer is instructive.
This is so predictable that following the pattern of decline again in our time is ridiculous. The U.S. continues to follow this path, however. Part of this is spurred by collectivist ideological ideas, but the ultimate blame goes to voters who aren’t willing to back candidates who support truly frugal economic choices to cut government programs and incentivize a free-enterprise economic boom (Column A).
Voters in traditionally powerful nations are accustomed to lavish government programs; they vocally decry government debt, but they vote for more government programs anyway. Conservatives and liberals disagree about what to spend money on, but they both increase the size of government.
One problem is that people from both sides of the political aisle blame the other. Liberals fault conservatives for supporting continued military interventions around the world, and conservatives blame liberals for increased government programs and spending.
The truth is that both are right. Liberals adopt Column B government spending and bad anti-business regulations, and conservatives support Column B global military interventions around the world. Both kill the power and economy of the nation. In our day, both of these drastically decrease American prosperity and power and lift China to global leadership.
In simplest terms: Both are bad. But Republican voters hold on to their support of U.S. interventions in Europe, Africa, the Middle East, Asia, etc., and Democratic voters refuse to stop promoting big-spending federal programs. In our two-party system, both parties are deeply committed to Column B, though for different reasons.
If the United States keeps following this pattern, our looming crash is inevitable. If not, if we reverse it and move toward an economic boom (by adopting Column A), we’ll reboot and reestablish the top producing economy in the world.
It’s up to us. Boom or crash. The choice seems simple, yet voters keep electing leaders who implement Column B rather than Column A. If we keep it up, we’re going to get what we deserve. A crash.
In all this, the most amazing thing is how simple it would be to create a boom. Column A is direct, do-able, realistic, real. We just have to adopt it, and apply it. But if we won’t even vote for it, it won’t come.
Third, changes in the world’s currency system are gaining momentum. Few Americans realize how significant these two changes ($18 trillion in federal debt and counting, and the loss of the “#1 producing economy” status to China) will be. For example, just consider the impact of the dollar being replaced by something else as the world’s reserve currency.
While most people prefer to leave currency discussions to the experts, such head-in-the-sand behavior can’t shield them from the consequences. The next reserve currency will be the dollar, if only the U.S. adopts the items in Column A and catalyzes a major American economic boom.
If not, it will be something supported by China. Specifically, look for it to have three characteristics that will drastically restructure the entire world:
- It will likely be a global currency, meaning that the international community (with China in the #1 spot) will regulate its use. This could easily result in a drastic reduction of national sovereignty around the world and in the U.S.
- It will almost surely be electronic, which will give governments massive controls over people. This amounts to at least some controls from China, not just your national government. The power of regulating electronic currency is almost impossible to overstate.
- It will also likely be sold with biotech, meaning that to access your electronic money you’ll need your finger print or eye scan. (See Molly Wood, “Augmenting Your Password-Protected World,” The New York Times, November 5, 2014) This will provide global surveillance at an unprecedented, literally more than Orwellian, level. Again, China will be a top influence (perhaps the top influence) in how this system is administered.
These three massive shifts in our world reality are mostly hidden from our view. They are reported, but few people realize how significant or personally relevant they are.
The future of our nation, our economy, and literally our society (with its God-based ideals, freedom-based values, and free enterprise economics) are at stake. If Column B prevails, an American Crash is assured.
(Oliver DeMille addresses the solutions to these challenges in his book, The United States Constitution and the 196 Principles of Freedom, available here)
Oliver DeMille is the New York Times, Wall Street Journal and USA Today bestselling co-author of LeaderShift: A Call for Americans to Finally Stand Up and Lead, the co-founder of the Center for Social Leadership, and a co-creator of TJEd.
Among many other works, he is the author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, The Coming Aristocracy, and FreedomShift: 3 Choices to Reclaim America’s Destiny.
Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.