A NATIONAL DEBT CRISIS MAY BE AHEAD

THE MONETARISTS AND THE EVOLVING CRISIS, William H. James, Ph.D. Author

 A NATIONAL DEBT CRISIS MAY BE AHEAD. That debt, now about $16.5-trillion, seems caused primarily by the nation’s monetary and banking system which creates both debts and money. In general, the system creates both about equally but compound interest causes the debts, after their approval, to continue growing by compound rates and, in total, by trillions of dollars. As a result the debts outgrow the money supply, there is never enough money to repay all debts with interest, and the burden of unpaid private and public debts continues to grow. For example, a $200,000, 15-year, 3% mortgage will mature to a total debt of about $250,000, payable over 15 years, but the banking system creates and issues only $200,000 leaving a shortage in society of about $50,000 on that one debt alone. A shortage develops in relation to all debts, both private and public, and the shortage throughout society becomes huge.   Some of many mathematically foreseeable results are: millions of personal and business bankruptcies and foreclosures, unemployment, underemployment, poverty for many, economic depressions, and other ills in the private sector, and increasing national, state, and community debts in the public sector. The national debt has been increasing at an average annual compound rate of at least 1.068 ever since 1970 after politicians injected International Monetary Fund (IMF) Special Drawing Rights (SDRs) into the U.S. money system. All above is a record of national disasters.

 Often it is said that in order to reduce the national debt the nation must either reduce spending or raise taxes. However, significant reductions in constructive spending will erode society, jeopardize the repayment of current debts, and potentially weaken all national strengths: political, economic, diplomatic, social, military, and others. Modern warfare involves the entire society, not just the military forces. As for raising taxes, without prior constructive monetary  reform  the nation still will be unable to acquire enough money to balance budgets and reduce the national debt because (1) that amount of money was never issued, and (2) the unreformed monetary system will continue increasing mammoth debts at compound rates. Also, under current monetary and banking procedures it can be expected that many national ills will get worse, the national debt will continue increasing at compound rates, and the nation will continue to decline in relative strategic power in an increasingly dangerous world.

 It is time for a change. For constructive survival and progress the nation must build and coordinate all its strengths. Among many things, the nation needs to shift away from its current 100% interest-bearing, debt-based, and nation-weakening  monetary system toward a hybrid system, part debt-based and part a new economically oriented, debt-free—not free but debt free—asset-related system. The nation should establish at least one national bank for issuing this asset-based money solely for funding a massive nationwide infrastructure program (See Ch. 17.) which would build the nation without increasing either debts or taxes. Also, the new debt-free money would neutralize the national money shortage and debt problems created by the interest factor under current financial procedures. Also take other actions described in my book. All these actions together will help the nation and the people to build themselves to the extent of the nation’s economic assets and resources while also reducing national debts and taxes. Improve and coordinate all national strengths and make the U.S. a great nation again!    (01/31/13)

(My book is available thru my website www.buildusanow.com as a paperback, Kindle, or Nook at Outskirts Press.com, Amazon.com, and Barnesandnoble.com. Post comments. Tell others.)