*No matter what the latest fitness or diet gurus may say, there is only one way to lose weight: by burning more calories than you consume. Likewise no matter what the latest financial experts may say there is only one way to financial stability: take in more money than you spend.
The commonality between these two concepts is that the goal is achieved through some measure of sacrifice and discipline.
Borrowing money without a dependable increase in income or decrease in spending denies the truth that discipline is needed. In fact borrowing money, particularly for a country like the United States, is too often the equivalent of a fad diet. Issuing bonds allows the American government to have immediate money on hand to meet current obligations but it is not a long term solution for three reasons.
First – issuing bonds essentially creates money. This translates to an artificial inflation of American currency because the inflation is not based in rising demand for products but by a manufactured infusion of money into the market. Inflation can be positive but artificial inflation is usually not.
Second – issuing bonds ultimately passes debt to future generations. Bonds are issued because the current administration does not have enough cash. Bonds alleviate the immediate money troubles but when the country is made to pay back the bonds the same problem of not having enough money resurfaces. In fact the problem is worse because of interest.
Third – just as repeatedly borrowing money reflects badly on an individual and their ability to maintain good finances, repeated issuances of bonds is having a negative long term effect on the United States. Repeated bond issuances have allowed China to be the main investor in the United States. This puts the United States in the position of needing to support China if for no other reason than that they do not redeem the notes.
Because the only real method to financial stability is taking in more money or spending less, the United States must come to some tough choices. Taxes must be increased or the national budget must be reduced. Making either of these changes would begin to balance the national budget and make it more feasible for future Americans to pay off the debts.
The better option is to decrease expenditures in the form of a scaled back military budget.
Some will argue that as Americans we need a strong military because the country has been targeted for violence. Another perspective on September 11th is that a mega budget for defense did not, and does not, ensure safety.
Some will argue that deemphasizing defense spending will harm companies that specialize in military industries. But companies show all the time that they can adapt; this is how new products come about. And having these companies focus on consumer products would allow them to insert themselves as suppliers in the American culture of excess.
The United States cannot continue to depend on the fad diet of issuing bonds. Instead we should spend less on our military which is currently one of the top items in the national budget. We should decrease our defense budget and sacrifice some of our international influence that stems from the threat of violence and work on gaining influence based on parallel interests.
We cannot afford to depend on bonds. And neither can our descendants.
Trevor Brookins is a free lance writer in Rockland County, New York. He is currently working on a book about American culture during the Cold War. You can reach him at [email protected]