The Reality of the Debt
The American people have been propagandized for so long they
don't really know the truth about the national debt. Most people
are more concerned with making a living than they are concerned
with spending time in the library looking up information. Particularly
statistical information...from a government publication. It remains
for others to do that research.
Oddly enough, I started a chart 30 years ago to illustrate the
national debt in relation to the GNP, to include the deficit
(which was a word no one used to any great extent 30 years ago),
who was president and some event of his tenure in office. I was
a teacher then, and we were trying to find ways to include economics
in our history courses. There were great ongoing debates about
the size of the debt even then, only the Republicans were laying
the blame for it on the Democrats. (Where it quite rightfully
belongs.) The Democrats said, "Oh, not to worry! It's only
like the right hand owing the left hand some money. Besides,
if you divide the debt by the GNP you will see that we are quite
solvent." So that's what I did. Using the Statistical Abstracts
I did my research to find the debt, the GNP, and I did a column
which showed the percentage of the debt divided by the GNP. There
were no figures for the deficit until about 1970. I also added
a column to show which party had a majority in both chambers.
I had a hardbound copy of the Abstracts which had figures only
up to 1957, but it was sufficient for my needs at the time. I
left teaching in 1971, but I kept my chart around. In the eighties,
I was a Reagan person, and when the Gipper was catching so much
flak about the debt, I brought out my chart and brought it up
to date. There are some very interesting facts contained in it
that don't just grab you, but they grow on you. The immediate
thing which can be shown quite easily is that the entire national
debt in 1932 was only $19.5-billion. Hey! That's less than Clinton
gave to the bankers in New York in lieu of a Mexican bailout!
When Roosevelt got the New Deal started in 1933, he introduced
the practice of deficit spending, which was the brain-child of
John Maynard Keynes. In the sixties, Democrats didn't like to
admit to the practice of Keynesian economics, but the fact could
not be escaped. You will notice that there have been only 6 balanced
budgets since 1933. It should be obvious why the debt has grown
so large. After 60 years of continuous growth, it is bound to
For a number of years I wrote letters to members of Congress
and sent them a copy of my chart with these three basic items
in bold print:
THERE IS NO DEFICIT WHEN THE BUDGET IS BALANCED.
WHEN THE DEFICIT IS REDUCED, THE DEBT GOES UP!
THE BEST WAY TO REDUCE THE DEBT IS TO CUT SPENDING!
The last balanced budget was in 1969, Nixon's first year in
office. The Democrats were big on that percentage gained by dividing
the debt by the GNP, so I gave it a name. The percentage of solvency.
They liked Kennedy's percentage of solvency, but his best was
52% in 1963. Reagan's worst was 53% in 1988. No one seemed to
notice that Nixon had 5 years when that percentage was 37% or
less. (The lower the percent, the better.) Carter even had a
couple of holdover years from Nixon with less than 40%.
One of those facts that doesn't grab your eyeballs right away
is a $40-billion+ jump in the debt and the deficit in 1975. Why
was there such an increase that year? I heard Gerald Ford making
a talk to the National Press Club in June, 1992, which gave me
a logical answer. He mentioned that there had been a Budget Reform
Act in 1974 which took away the presidential prerogative to impound
budgeted funds, simply not spend those he thought were excessive.
That reduced the president's power to control congressional spending
to the veto power. That's inflationary.
It should also be mentioned that Nixon's resignation in 1974
could have had an influence, and the oil situation which was
big guns a year or so earlier. And there is something else which
will be noted later.
The deficit became an item in itself in the Abstracts in 1970,
so I included it. In the eighties I had become computer literate,
so I could insert some formulas which did the percentages and
the ups and downs of the deficit as the figures were entered.
I thought it interesting that Clinton has been crowing about
reducing the deficit 3 years in a row, then 4 years, but he started
crowing in 1993! "First time since Truman" he said.
But if you will note, Nixon reduced the deficit 3 years in a
row in 72-'74. And we have since heard that the Clinton
deficit was manipulated to be lower.
The director of the Congressional Budget Office told a senate
budget committee that it was standard procedure to take money
from the Social Security trust fund, and any other trust fund
that had any money, and use it in other accounts, without showing
the debt of those accounts on the budget. Senator Hollings was
aghast! A Republican senator voiced the opinion that such a
practice in the private sector would be considered fraud. (That
is available on a C-Span video tape for a telecast in April of
1996.) The reported deficit was to be $144-billion. If the debt
was properly shown, it would be $206-billion, a difference of
$62-billion! Would you think that would tend to lower the deficit
for this year?
It happened that I was involved in a congressional campaign
in 1994 as an assistant to an independent candidate. To get current
information, we got figures from a senator's office and the Treasury
Department to finish FY93. I later did some research to
get 94, and found the figures for 93 had been seriously
revised downward. Whatever do you suppose that could mean? By
the way, it is the job of the Commerce Department to assemble
these figures for the Abstracts.
Notice that the percent of solvency went up to 64% in 1991,
then to 69% in 1992, and on up to 74% in FY'93! That is like
owing $3 of every $4 you earn! Try getting yourself a mortgage
for a home with numbers like that! What it means is this nation
is broke! And the Beltway Gang can't stop spending more and more
money! I'm like George Wallace; he said "There's not a nickel's
worth of difference between the Democrats and Republicans!"
And all he got for that was shot, and crippled for life.
Now there are some sidelights to all this. Things you need to
know. It is a fact that currency which is backed with specie
(gold, silver, et al) is much more sound because currency cannot
be issued for more value than the specie there is available to
back it. That means inflation will not be a problem. You will
get a truer value for your dollar. It also means that the money
supply cannot be expanded easily. The Federal Reserve System
was established in 1913, but not really energized until 1933.
The Depression was at its worst, and Roosevelt took us off the
domestic gold standard, and it became illegal for anyone to own
gold. That had to be done so that the money supply could be expanded.
If there was no specie backing our currency, where did it get
its value? The Federal Reserve sold Treasury securities to build
a supply of money which was to be the "backing" for
our currency. There are Treasury bonds, bills, and notes which
can be sold for varying levels of interest for varying periods
of maturity time. Generally, the longer the maturity time, the
higher the interest. (That's how Clinton initially got the deficit
to appear lower. They bought short-term bonds at lower interest
rates which meant less money had to be paid out to the buyers
in interest.) There is an interesting quote attributed to Thomas
Edison. "If all there will be is paper money with no backing,
why sell bonds for which you have to pay back interest? Why not
just print the money?" It works for me! Our currency has
no value past the confidence of those who use it, so why not
just print the money and forget about paying the interest on
When Roosevelt took us off the gold standard, that was inflationary
just on the surface. Later, when Johnson was president, he retired
silver certificates, so we no longer had domestic money which
could be redeemed for specie. That was inflationary. In 1971,
Nixon took us off the international exchange gold standard. That
was also inflationary, and it made our currency fiat currency;
legal tender for the payment of debt which has no backing in
specie. The money supply can be expanded or contracted easily
with fiat currency. The Fed can raise or lower interest rates
(discount rates) which ripples through our economy as a greater
money supply, or lesser one, depending on the cost of borrowing
There was a big deal with Arab oil suppliers in the seventies
which also had a substantial effect on our economy. That Budget
Reform item had an inflationary effect in the mid-seventies.
The debt increased 146% during Carter's years, topping off at
just under $1-trillion. You should also be reminded that Carter
left interest rates at 21%, 14% inflation rate, and 9.9% unemployment!
Arguably the worst economic figures since the Depression! Think
about paying 21% interest on a trillion dollars; think about
paying COLAs (Cost of Living Adjustments, which the Democrat-controlled
Congress had tied to the inflation rate with automatic escalator
clauses.) at 14%, and think of the loss of tax revenue from an
unemployment figure of nearly 10%! Very inflationary, and the
debt was already skyrocketing from 1975.
The recession that should have happened in Carter's years fell
on Reagan. In 1981 he authorized the sale of our Treasury securities
to foreign countries to find new sources of money for the artificial
monetary system. Then the S&Ls were deregulated and a great
many of them went broke. The FSLIC had to take up the losses...ah,
using taxpayers' money. The losses amounted to $300-billion un-budgeted
funds that we knew about, probably closer to a half trillion.
Jim Wright could have cut the losses but chose not to do so,
and his lack of action in the House cost additional money. Of
course, he could blame that on the Republican administration.
And the debt has continued to soar! Neither party has done anything
substantial to slow the growth of the debt, and so long as Congress
persists in spending more money every year than there is revenue,
the deficit will be there, whether going up or down, and the
debt will continue to go up!! What does Congress care? It's only
taxpayers' money! Just raise the taxes a few points more! Only
most folks are only getting 6 or 7 dollars of every ten they
I often refer to 1975 as ignition and liftoff for the skyrocketing
debt. We started borrowing money in the mid-seventies to pay
the interest on the debt. That means the interest is being added
to the principal each year. And the plain fact is, the debt cannot
be reduced until the budget is balanced. Last year (1995), interest
on the debt was $298-billion, the second largest item in the
budget! The money appropriated for defense was only $260-billion.
And, do you want to know something? The money paid in interest
doesn't buy a single saltine cracker for a kid on welfare! About
60% of our national debt is owned by foreign countries. That
means that about $179 billion of that amount was paid to central
banks and financiers in other countries! Wanta know something
else? That's our tax dollars! Wanta know something else? That
is draining our wealth out of the country!
Of all the members of congress I've sent that information to,
the only one who has mentioned that the debt has been growing
for more than 60 years is Bob Dornan. The Republicans just want
to look at the "last 40 years"; the Democrats only
want to look at the "last 12 years". The fact is, it
has been growing the last 63 years, since Roosevelt started the
New Deal. When you start borrowing money to pay the interest,
the debt will begin to rise at an exponential rate. (Rush, that
means in leaps and bounds.) And the debt we have today, which
is just over $5-trillion, is just what shows on the budget! We
have another 8 or 9 trillion that doesn't show! Since the end
of World War II, the dollar has fallen from an exchange rate
of about 385 yen to a low last year of only 87 yen, currently
about 114. How long do you suppose world confidence in the dollar
will be maintained at that rate? When the confidence goes, we
have economic collapse. Won't that be fun? All you young'uns
who didn't grow up in the Depression will find out what we have
been trying to tell you.
Seriously, our economic solvency is in bad shape. Even though
Clinton's "book chefs" (those folks who are "cookin'
the books") just released information that said our economy
grew 4.7% last quarter, our economy has been growing around 2.5%
for some time. It is not known where the 10.5 million new jobs
Clinton is claiming are located, but if you check back, there
were more than 300,000 jobs lost in the first 6 months or so
of his administration, and just this year at least 40,000 jobs
were lost when AT&T lopped off those folks from their roles.
Senator Hollings has stated more than once that we have lost
more than 3.5 million jobs in the last 15 or 20 years, and the
average family income has dropped about $100 per week in that
time period. And Hollings is a Democrat! That would mean that,
if what Clinton said is true, we have gained more than 11 million
jobs in the last 4 years, and quite honestly, that is extremely
hard to believe. Maybe they have been counting the new jobs in
Indonesia, Singapore, Mexico and some other places.
[Note: Since this writing, it has been pointed out by some sources
that Clinton's administration has simply made those jobs up!
Among other things, he counted teachers going back to work in
the fall. And others are purely "projections".]
Senator Dorgan made a talk to the governors' conference earlier
this year in which he stated that our federal government is giving
tax incentives to corporations to move their operations overseas.
And he is also a Democrat. Why should we pay the cost of shipping
our jobs overseas?
It is a known than since NAFTA, auto assembly plants have been
moved to Mexico; farm products have been imported which have
put American farmers out of business; and large numbers of textile
jobs have been, or in the process of being, sent to Mexico and
other places. One of the prime examples is the export of the
manufacture of Nike shoes to China. It costs Nike about $5 to
produce their shoes in China, and they are selling them here
for more than $100 a pair!! And they pay no duty! And our trade
deficit with China is more than $40-billion a year! What does
that tell you? (Here's another clue: the trade deficits we have
with so many countries is also a drain of our wealth out of the
country. Moving those production facilities out of the country
is another drain of our wealth. Not long ago, Clinton wanted
to sell our oil reserves, which would also be a drain of our
wealth. Oil in the ground, the Arabs tell us, is worth more than
dollars! And it's worth more than gold, too!)
Stop for a moment. Consider this: when we have a trade deficit
with a nation, what exactly does that mean? It means they are
selling more here than we are selling there. It is a known that
China and Japan don't allow certain of our products to be sold
at all in their countries, yet we allow them to sell those products
here. That tends to create a deficit. What does that mean? Money
is flowing out of our country faster than it is flowing in. That
means we are losing wealth. One of the facets of the various
"conspiracy theories" is that people are planning to
reduce our wealth; our wealth is to be redistributed to the poorer
nations of the world "to make it fair".
If you were in business, would it make any sense to you to have
your funds taken and distributed to the third world nations,
or anybody else, just to make it more fair?
For a guy my age, it is just incredible to be able to sit in
on congressional meetings, and see for myself what is going on,
and what is being said by what party. I grew up in the Depression
- in the South - where "Republican" was a dirty word.
My folks, except for my brother and me, were what I term "Yellow
Dog Democrats". If the Democrats would run a little yellow
dog for office, they would vote for it. And there are people
around who would vote for a "black Angus bull" if the
Republicans had one on the ticket. It has always been my choice
to be an independent and vote for whichever candidate impressed
But getting back to sitting in on hearings. I have been there,
via C-Span cameras to witness the hearing held by Senator Hollings
about the G.A.T.T.; to hear the director of the C.B.O. testifying
before another senate hearing, telling about the practice of
her Office of borrowing from any trust fund with money in it
and putting that money in other accounts without showing the
debt on the budget "to make the deficit look better";
I saw and heard the heads of several militias testifying before
a committee, and could decide for myself who was a "radical
extremist"; I saw and heard witnesses in Whitewater hearings
who denied any knowledge of information they themselves had given
members of the panel of senators asking them questions; and I
have been able to determine what the media made of such meetings
- nothing! The media coverage of those events, and others I've
seen via C-Span, was nil.
So when it comes to the importance of the banking acts, and
the status of the national debt, it has become my practice not
to rely on the media for accurate information on any of those
subjects. No significance has been placed by the media on the
law enabling banks to buy smaller banks across state lines, nor
the law allowing the merger of larger banks, even though the
media did mention those mergers previously mentioned here.
The personal contact people have with their banks, particularly
people in business, is important. You may remember bank ads which
have lines like, "If you want to be treated as a person,
instead of a number, come to _______Bank." When the parent
office of a bank, say in Ohio, has an office in, say Tennessee,
that Tennessee office will have to follow the rules of the parent
bank, and the parent bank will have "efficient rules"
which will likely be very impersonal. There are likely to be
more charges on accounts from parent banks in other states. It
will likely be more difficult to get a loan, because you won't
be known to the officers making those decisions. And as the larger
banks merge, more and more control of our money will be centralized
in large, impersonal, out of state banks. Interest on credit
cards will soar because there won't be any competition. Loans
will be harder to get, collateral rules more stringent, and foreclosure
more apt to take place. The larger the parent bank the more impersonal
it will be. The result will eventually be that the bankers will
control all available money, and also our lives as well.
Now he tells me! We heard a quote the other day about something
Jacob Schiff told Mandell House in a letter, just after the Federal
Reserve Act was passed, c.1914. In essence Schiff thanked House
profusely for his help in giving the monetary system of the United
States to Schiff and his colleagues. He also told House that
he could have carte blanche at any bank in the world! Anything
he wanted he could have! Wow! And we also got a quote from Woodrow
Wilson, 10 years after the Federal Reserve Act was passed. Wilson
said, "I am a most unhappy man. I have unwittingly ruined
my country." Wilson signed the Federal Reserve Act into
So the starting place was the latter part of the 19th century,
and the early part of the 20th century. Our monetary system had
to be captured in a central bank, and there had to be a new source
of tax revenue, and the Senate had to be controlled by other
sources than their home states. All legislation has to be approved
by both chambers in the same form. There were more than 400 members
of the House and only something less than 100 senators in those
days. If there could be control over one chamber, obviously the
Senate was the target. Senators appointed by their home state
legislatures were less likely to come under control of other
forces because they would be directly responsible to their "home
folks", and their interests would be in law which would
be favorable to their states.
The critical time for the beginning of all this was the second
decade of this century. The Federal Reserve came into being (and
it has been revised by law 193 times since then.), direct election
of senators came into being, and the income tax came into being.
(By gaining the income tax, eventually those planners would be
able to reduce the money people had to spend, and make them more
apt to look to the central government for their sustenance.)
The same people who accomplished those things organized the Council
on Foreign Relations in 1921. The same people helped finance
the Bolshevik Revolution. The same people financed Hitler's rise
to power. The same people were behind Roosevelt's insertion of
socialism into our government. The same people were largely responsible
for writing the rules of the I.M.F. and World Bank. The same
people were largely responsible for writing the Charter of the
United Nations. The same people formed another international
group in 1953 to decide economic and political moves throughout
the world called the Bilderberg Society. And the same people
were also responsible for the formation of the Trilateral Commission
in 1973. It is significant that all those groups held their meetings
in at least partial secrecy, and did not announce their plans
to the world.
If they are positioning themselves to influence the policies
of our government (Which, indeed, they have done.) and they are
meeting in even partial secrecy, that qualifies as a conspiracy!
That they plan with people from other countries to effect changes
on an international basis qualifies that as an international
conspiracy! Look up the definition of a conspiracy in your Webster's
and see for yourself!
Right now, today, we are being positioned to become a part of
the New World Order, and lose our national identity in a world
socialist government. There are at least four U.N. Conferences
floating around the Senate, waiting for the right time to be
ratified which will destroy the sovereignty of our states and
very likely the sovereignty of the United States as well. From
time to time there are world conferences sponsored by the United
Nations in which a variety of items, when boiled down to the
nitty gritty, are socialistic in nature, are discussed, and you
might say pre-approved. The following are some which are on stage
in the United States Senate:
The U.N. Conference on the Rights of the Child - If ratified
by the Senate will take parental guidance out of the picture,
and give the government control of our children.
The U.N. Conference on the Rights of Woman - If ratified will
activate the terms of the Equal Rights Amendment (for women)
which failed twice to be ratified as an amendment. In effect,
this would negate the wishes of the elected representatives of
the people for rules established by people who don't even live
in the United States!
The U.N. Conference on the Laws of the Sea - If ratified would
have a negative effect on laws written by our elected representatives,
under the Constitution, in favor of laws written elsewhere where
we have no elected representatives.
The U.N. Convention on Biological Diversity - If ratified would
put the United States under the regulations of world environmentalists
who have an agenda which is foreign to our own laws, in which
we had virtually nothing to say, except through radicals like
Al Gore, and some others who think the automobile is the worst
enemy of mankind.
There is another conference about chemical and biological warfare
which would put us at a distinct disadvantage to protect our
people from the possible use of such methods of wholesale killing,
and another conference on the subject of sustainable development,
which would enable people in other parts of the world to limit
the amount of space we can live in, and also limit the resources
we can use for our own welfare to those on a par with third world
countries far down the list.
Most of us work for a long time to get to a point where we can
have a larger home, with more conveniences, and other things,
if we can afford it. Those who are adherents to the idea of sustainable
development think the world can only sustain 1.5 billion people,
and we should therefore be limited to the space we may have to
live in, and limited in the consumption of food, and other resources.
The United States is currently a member of a world organization
in which there are 124 member nations, and though we provide
more than 20% of the costs, we are allowed only 1 vote, and no
veto power. We have less than 1% of the say, but we are expected
to pay more than 20% of the cost! By the way, did you know that
Clinton has an Office of Sustainable Development in his Administration?
The point is, through these world organizations we are now a
member of, the United States - the richest and most powerful
nation in the world - is reduced to the rank of a third world
power! Reflecting on the amounts of money the American taxpayers
have put into the recovery of the world after World War II, and
the amounts of money we have spent on maintaining a superior
military force, and the numbers of our young men and women who
have paid with their lives to protect people in other countries
(more than 115,000 since World War II), and those who have been
wounded in combat (more than a quarter-million), we have done
quite enough. It is time our government stopped squandering money
in other countries and started taking care of our own needs.
Charitable organizations have made substantial contributions
in other countries; people with money to invest have invested
substantial amounts of money (expecting a profit, of course)
in overseas enterprises. The American taxpayer has done his job!
Let those other folks take up the banner.
We don't need the government in Washington telling us how to
live our lives, and we certainly do not need people from other
countries chiming in! The American people have the power of
government in this country, according to the Constitution. Beltway
politicians who have other plans need to pack their bags and
go live in one of the socialist countries in Europe that are
going broke, if they like socialism so much. It's time we resumed
our rightful control of the government and stop being the sugar
daddy for all the other countries in the world. Americans have
been the most resourceful people in history, and much of that
is because we have been willing to allow the most venturesome
people in other countries to come here and become citizens. We
welcome those who come here to be productive and better themselves
by their hard work. We welcome those who would trade with us
fairly, so that we can benefit from each of our specialities.
It has been said that a contract is no good if it doesn't benefit
the participants equitably. If other nations would trade with
us, have relations with us, to our mutual benefits, fine. But
for us to trade with other nations who limit our access to their
markets, while they expect unlimited access to ours, is nothing
more than stupidity. We have become a great and compassionate
nation as a God-fearing people. We need to look again to our
religious heritage and seek the help of the Almighty to share
our good fortune with others in a way that will do all of us
the most good without the loss of our, or their sovereignty.
Note: This article was written in the mid-nineties. There have
been some new international conventions which would further intrude
on our sovereignty. Those conventions, if approved by our Senate,
would become the law here in the United States. There are as
many as 10 such international agreements still floating around
in our Senate, not yet approved. We need to be conscious of them,
and not allow them to be passed. Clinton signed the Kyoto Accord
without Senate approval, but President Bush withdrew that aapproval.
You will find other articles in this section which describe other