US Borrowed $50T To Produce Only $13T Of Goods & Services

Dr. Ileana Johnson Paugh * Canada Free Press

An unlimited power to tax involves, necessarily a power to destroy, because there is a limit beyond which no institution and no property can bear taxation.” – John Marshall

Americans are in denial about the simple fact that our national debt is the biggest threat to our national security. National debt grew exponentially from Washington’s profligate deficit spending, recessions, and wars.

When I looked today at the national debt clock, each taxpayer owed approximately $142,000, the figure changing rapidly based on factors such as the value of the dollar, trade deficits, and the latest sums borrowed from U.S. taxpayers or from whatever country willing to buy our Treasury Securities, T-bills, T-notes, and T-bonds – China, Japan, and oil exporters being the largest buyers of U.S. debt so far.

The national debt to most Americans is something on paper in a faraway place that does not concern or affect us. Americans have no idea how it grew so exponentially large, where it came from, who owes it, who owns it, and how many zeroes a trillion has.

Perhaps the debt figure would become more real to Americans and take on dire significance if each taxpaying citizen would receive a bill for $142,000 payable in full right now, no kicking the can down the road to our children and grandchildren in exchange for our current comfort.

It is true, our national debt is measured in dollars, which we can always print in order to meet our payments. This is called monetizing the deficit. Doing so, however, creates inflation, as too much money is chasing too few goods. A responsible government should never print money in outlandish excess of GDP, the amount of final goods and services produced in a year. If they do, hyperinflation will occur, and severe devaluation of the currency.

“Since 1971, U.S. borrowed $50 trillion to produce only $13 trillion of goods and services in a 40 year period.” Egon von Greyerz, a financial analyst with Matterhorn Asset Management AG in Zurich, Switzerland, said, “From 1971 when President Nixon ended the gold-backing of the dollar, virtually all of the growth in the Western world has come from the massive increase in credit rather than from real growth in the economy.”

The mantra that the “rich are not paying their fair share” promoted by the MSM sound bites and the Democrat ruling party prompted many to calculate what would happen if we were to confiscate every millionaire and billionaire’s wealth, what impact would have on our national debt, the accumulated budget deficits of previous years. All the U.S. accumulated wealth would last a mere two months.

There is a difference between income and wealth. The Democrats are talking about taxing the rich (income), not taxing the wealth – big difference which voters clearly do not understand. Taxing income will result in “spreading the wealth” from producers to takers in the name of “social justice” and the subsequent consumer spending, with no tangible assets created. Excessive tax discourages capital formation and job creation, stifling economic growth. Perhaps that is the political intent of the ruling party.

Taxing the rich already brings in the lion’s share of revenue to the Treasury. If the rich are taxed too much, who is going to create manufacturing jobs, the government?

Average earners and small businesses that pay taxes at the personal income tax level are now the rich – the middle class will be taxed more when the Bush era tax cuts expire and the Obamacare taxes will go into effect in January 2013, contracting job creation. The Democrats and the President have no intention or concrete plans to cut spending. Their main goal seems to be tax increases.

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