National Debt a Serious Threat
by JBS President Emeritus John F. McManus
Only recently, rioting broke out in Venezuela when supermarkets had nothing on the shelves. A few years earlier, the people of Zimbabwe found their supermarkets empty and their hope to obtain basic necessities vanished. In both of these cases, people turned to the American dollar as something of value that could restore a semblance of normality. But, is the U.S. dollar’s reliability unshakable? Could its value shrink to nothingness as did the Venezuela Bolivar and the Zimbabwean Dollar?
Money isn’t something to fool with. Where there are reliable pieces of paper that signify honest value, commerce thrives, goods and services are readily available, and next to nobody worries about the future. The key here is the complete meaning of “reliable.” In the United States today, the reliability of our currency continues to shrink. The rise in popularity of “virtual” currency such as Bitcoin provides evidence of trouble ahead.
During the 20th Century, the almighty U.S. dollar descended from being “good as gold,” to being “good as silver,” to being as good as the promises of most politicians. American currency went from history’s most reliable money to currency backed by nothing. The value of the “almighty dollar” continues to shrink. Venezuela and Zimbabwe, here we come.
Never one to miss an opportunity to trash her Republican opponents, former House Speaker Democrat Nancy Pelosi (now downgraded to House Minority Leader itching to get back to being Speaker) told the press recently that the current Republican-controlled Congress is “robbing from the future by increasing the national debt.” While her statement is correct, she completely ignored her own complicity in steering the dollar toward worthlessness.
When she served as House Speaker from January 2007 until January 2011, the national debt rose $5.3 trillion – more than $1.3 trillion per year. After the Democrats lost majority status at the start of 2011, Republicans took over and the national debt rose from $14 trillion to $20 trillion. In other words, the debt continued to rise, not as fast as when Pelosi led the House but still substantially. So, Nancy Pelosi who points only at Republican profligacy, is correct when she claims that GOP management of the nation’s finances is miserable. But she managed to ignore that it was even more miserable when she held the House’s most powerful post.
Any argument between Democrats and Republicans about whose leaders are more guilty of ongoing fiscal suicide is meaningless. The focus should be on the indisputable fact that our politicians are indeed taking the nation to the edge of a fiscal cliff. So the Republican response just enacted is a tax cut. But what the country needs is realistic consideration of the debt. Allowing the people to keep more dollars that are steadily decreasing in value – because of adding to the debt with freshly printed unbacked currency – doesn’t solve the major problem. It may even speed up the arrival of what happened in Venezuela and Zimbabwe. It has happened over and over again throughout the course of history when fiat money (make-believe money that is unbacked) becomes a substitute for honest backed currency that is exchangeable for the valuable commodity on which it is based.
Pelosi is wrong to target Republicans while essentially giving herself and her Democrats a pass. But also wrong are Boehner and Ryan her two successors. For their failure to take the nation away from “good as gold” currency, so are former presidents Roosevelt, Truman, Eisenhower, Kennedy, Johnson, Nixon, Ford, Carter, Reagan, Bush I, Clinton, Bush II, and Obama. And let’s not leave out of this list of shameful leaders the current president who seems unwilling to break the pattern of adding to the nation’s indebtedness. As his predecessors did, he is ignoring the escalating debt – the elephant in the nation’s living room – and continuing down the path that will make what happened in Venezuela and Zimbabwe resemble child’s play.
America needs a return to honest money – and that means money backed by a valuable commodity such as gold or silver, or both.
Mr. McManus served in the U.S. Marine Corps in the late 1950s and joined the staff of The John Birch Society in August 1966. He has served various roles for the organization including Field Coordinator, Director of Public Affairs, and President. Mr. McManus has appeared on hundreds of radio and television programs and is also author of a number of educational DVDs and books. Now President Emeritus, he continues his involvement with the Society through public speaking and writing for this blog, the JBS Bulletin, and The New American.
Fed Creates Money; Food Prices Rise
by JBS President John F. McManus
The government claims prices are up only 6.4 percent since 2011. But a shopper trying to feed a family sees chicken up 18.4 percent, ground beef up 16.8 percent, bacon up 22.8 percent, and the price of fuel steadily rising. “The things that are going up in prices are the things I absolutely need to buy,” laments homemaker Jen Singer in a report published by CBS News.
What causes these increases? Sadly and mistakenly, Ms. Singer refers to her problem only as a rise in prices of the goods she needs. She seems unaware that the real problem is the eroding value of her dollars. With precious few exceptions, the staples she buys for herself and two teenage sons haven’t risen in price; the changes she bemoans are due to theft of the value of her dollars. The thieving culprit is a partnership between the Federal Reserve and the U.S. government that manages a slick form of thievery.
In July 2011, the Government Accounting Office (GOA) issued a report doggedly pried out of hiding by Bloomberg News. It showed that the Federal Reserve had created at least $16.1 trillion to shore up the mega-banks after the 2008 banking crisis. Recipients of the bailouts, in round figures, included Citigroup $2.5 trillion, Morgan Stanley $2.04 billion, Merrill Lynch $1.9 billion, and Bank of America $1.3 billion. Slightly lesser amounts in the hundreds of billions were supplied to Barclays, Bear Stearns, and Goldman Sachs. Foreign banks, benefitting from the Fed’s money creation, were Arab Banking Corp., Bank of China, France’s Societe Generale, Japan’s Norinchukin Bank, Germany’s Deutsche Bank AG, Dublin’s Depfa Bank Plc, and Dexia SA in Brussels.
All of this was money that didn’t exist previously. It acquired value by stealing a portion of all existing dollars. The process has long been correctly described by Soviet dictator Lenin, British socialist John Maynard, and others. Both Keynes and Lenin could be classified as champions of honest money.
While this thievery was occurring, an awakening House of Representatives approved H.R. 1207 by a vote of 223-202 in December 2009. It called for an audit of the Federal Reserve, something that has never been done in the Fed’s 100 years of existence. The House bill, however, was gutted by the Senate in a 62-37 vote led by Vermont’s Senator Bernie Sanders, the proud and admitted socialist who regularly votes with the Democrats. His major helpers in continuing the gigantic cover-up were Senators Harry Reid (D-Nev.) and Charles Schumer (D-N.Y.).
Not only food but just about everything else, certainly including the fuel needed to heat homes and run businesses, costs more of everyone’s less-valuable dollars.
Government personnel, Federal Reserve officials, and their allies in the main stream media steadfastly refuse to tell the American people two very simple truths: 1) rising prices are the effect of inflation, and 2) what is being inflated is the amount of dollars created by overworked printing presses and computer entries. If Americans understood these truths, the process would stop.
Either it stops or America will grind to a halt. It won’t take an invading foreign army to destroy this “land of the free and the home of the brave.” All that’s needed is a few more years of the kind of economic treachery we have just described. After that, America will beg for mercy from others because it will have ceded what remains of its independence and freedom.
Learn more at our “Restore Constitutional Money” page, as well as watching Dollars & $ense, featuring the author of this post: