The following post is an e-mail forward from my friend Richard.
It is economic and political commentary by Bill Bonner,
taken from the website "The Daily Reckoning."
I thought it might be interesting material to reflect upon during the Advent season. However, it doesn't go so well with my daughter's otherwise excellent four-month check-up this morning. But this is just one man's opinion............
LOOKING OUT FOR THE LARVAE
By Bill Bonner
In a letter to James Madison, Thomas Jefferson asked how, “one generation of men has a right to bind another.” He concluded by saying, “No generation can contract debts greater than may be paid during the course of its own existence.”
But contracting debts greater than may be paid during the course of its own existence is precisely what Americans are doing. In fact, they are contracting debts that increase over the course of their own lifetimes.
George W. Bush will go down in history not as a great war president, we recall predicting earlier this week, but as the greatest debt-beat president the country has ever had. In his few years in office, the feds have borrowed more than $1.05 trillion from foreign governments and banks. This is more than all the rest of the nation’s administrations put together, from 1776 to 2000.
Last month, the U.S. national debt passed the $8 trillion mark. This year’s budget deficit alone added $319 billion to the country’s obligations. According to the feds themselves, deficits will rise to $873 billion per year within 10 years. Two years more and they will be at $1 trillion per year, with a national debt edging up to $20 trillion. By 2017, annual deficits are supposed to reach $2 trillion per year.
These figures are not just guesses. They’re projections based on boondoggle laws already on the books.
According to the Bush-friendly Heritage Foundation, federal deficits are expected to rise to $1 trillion per year, by the year 2017, with a $16 trillion national debt, twice today’s level. After that, deficits should grow to $2 trillion per year,
Public debt is a remarkable thing. Through generation after generation, over thousands of years, each one usually left the world a little bit better off than it found it. More land was placed under cultivation; more animals were tamed and corralled; more houses were built; more factories were put up.
Occasionally empire builders, adventurers, or natural calamities set things into reverse. After the collapse of the Third Reich, for example, Germans found themselves with a pile of rubble and armed occupying troops on every street corner. Still, the little Kraut born in Dusseldorf in 1945 entered the world almost completely free of debt! He could rebuild, and enjoy the fruits of his own industry.
Today, the child born in America practically has an electronic ankle tag put on him immediately. He’s got his share of about $50 trillion in obligations to pay; they need to make sure he doesn’t get away. As far as we can tell, no other generation in history has ever been burdened to such an extent with the expenses of its parents.
Even in the private sector the ‘get it while you can’ attitude crushes the next generation. In the third quarter of 2005 alone, Paul Kasriel of Northern Trust reports, U.S. households spent $531 billion more than their after-tax earnings. About half of that money came from “equity extraction.” In other words, the present generation is selling off its houses one room at a time. By the time the tadpoles come of age, there will be nothing left.
Consumer spending has risen to 76% of the economy; before 2000, it was only two-thirds. The savings rate has fallen to less than 2%. Student loans outstanding have risen more than 800% since Ronald Reagan took office. Mortgages are up nearly 900%. Credit card debt is up more than 500%.
Finding no better source on the subject, we quote ourselves:
“America’s debt will not be paid by those currently working, nor even by those currently breathing. It will be pushed on to the next generation…and the next. One generation consumes, the other pays. What the first enjoys as a blessing comes to the next as a curse.”
It doesn’t seem fair.
The Daily Reckoning