This past week, the Federal Reserve cut interest rates yet again in hopes of easing the strain in the credit markets and jump-starting the economy. The government is also doling out billions of dollars to taxpayers through economic stimulus checks, coming soon to a home near you. What both of these stimuli hope to gain is: your money. In other words, the Fed hopes you’ll start spending again — really soon!
I’m not an economist, but this much I have figured out: If our spending is always more than our income, we’re heading down the wrong fiscal road. That’s where we’ve been for quite some time. Except for brief periods in our nation’s history, we never have been very disciplined with debt management.
On Jan. 1, 1791, during George Washington’s second year as president, the national debt was more than $75 million. On Sept. 30, 2007, the government estimated the balance owed at $9 trillion. The nonprofit, nonpartisan Institute for Truth in Accounting calculates the actual national deficit to be closer to a staggering $56 trillion. Our annual trade deficit is a whopping $800 billion, from $38 billion in 1993. That’s $90 billion with Mexico and $250 billion with China.
Even at $9 trillion, we, the people, could satisfy our national debt if we required every American to pay roughly $184,000 each. Of course, that’s not going to happen, especially because many Americans are in the same chronic income-debt ratio rut as the federal government.
According to the Federal Reserve, the total U.S. consumer debt reached $2.46 trillion in June 2007, up from $2.398 trillion at the end of 2006. Credit cards account for roughly $850 billion of that amount. Credit card companies are the Godzillas of greed, using deceptive methods of control and abuse that rival any slave-trafficking scheme.
Credit card company corruption has become so prevalent that the Fed had to intervene this past week to prevent potential fraud. CNN reported last week, "The Office of Thrift Supervision, which oversees the nation’s savings and loans, endorsed a seven-point plan to tackle ‘unfair’ and ‘deceptive’ practices by companies that issue credit cards." But is the government coming to save the day, or are they merely asking credit card companies to be more lenient with their indebted clients to extend vassal relations?
In any form, debt is a form of repression. Debt is bondage, plain and simple. In fact, the U.S. Department of State got it right when it reported that debt bondage has one primary goal: "to keep a person in subjugation." For more than 200 years, we, the people, have proved as a nation that we know how to dig ourselves quite successfully into a bottomless financial hole and perpetuate our subjugation to debt.
Our Founders created this country to experience freedom from tyranny and domination. Do we think we can experience liberty politically and personally when our private and national debts loom over us like the king of England once did?
Though the Revolutionary War took its toll upon the financial status of the nation (as wars always do), most ardent patriots didn’t want to see the country accrue any further arrears. Shedding representative light on that fiscal responsibility was Thomas Jefferson, who had quite a bit of financial advice to offer the new nation. Here are a few of his pearls of wisdom:
— "The maxim of buying nothing but what we had money in our pockets to pay for; a maxim which, of all others, lays the broadest foundation for happiness." — Thomas Jefferson to Fulwar Skipwith, 1787.
— "We must make our election between economy and liberty , or profusion and servitude. If we run into such debts as that we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our callings and our creeds, as the people of England are, our people, like them, must come to labor sixteen hours in the twenty-four, give the earnings of fifteen of these to the government for their debts and daily expenses, and the sixteenth being insufficient to afford us bread, we must live, as they now do, on oatmeal and potatoes, have no time to think, no means of calling the mismanagers to account, but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow-sufferers." — Thomas Jefferson to Samuel Kercheval, 1816.
— "It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world." — Thomas Jefferson to A.L.C. Destutt de Tracy, 1820.
So did Jefferson accept his own advice? Yes and no.
Jefferson and his contemporaries did in fact apply some wise fiscal principles to the running of the national government. For the record, Jefferson’s administration (1801-1809) reduced the national deficit from roughly $83 million to $57 million, despite America’s war with the Barbary States during the same period.
Sad to say, however, that Jefferson’s own personal life ended up in quite the financial shambles; he owed more than $100,000 when he died.
In the end, I guess he really was American after all.