Paying for Collectivism
Most leaders meeting at Davos think of the world as a collective, and believe that it can be managed in top-down, autocratic fashion — even though top-down experiments of socialism and fascism always implode (fail). Sadly, the USA has drifted away from the ethical individualism of free markets and has adopted collectivism, also.
But collectivism has a price which rises over time, while it progressively removes the private-sector incentive to create wealth in the world. It causes more money to go out than comes in. More and more of the bills for collectivism end up gettin put onto the nation’s “credit card” — until fiscal crisis ensues.
Back in 1981, total federal debt was around $970 billion ($0.97 trillion), with over half of federal debt being from government bonds sold to the US public. US bonds sold to the public were over twice the share of any of the other 3 sources of debt: inter-agency debt, monetized debt, debt to foreign interests.
The blue area is money borrowed “between agencies” — such as by borrowing from the infamous Social Security Trust Fund. The red area is “monetized debt” — when the Fed buys US bonds — and it represents government spending which was printed-into-existence. The green area shows the sale of US bonds to foreign interests.
The purple area is the sale to US interests (US bonds sold to the public).
But besides robbing our future by spending money (blue area) which had been set aside to sustain social security benefits, sale of US debt to foreigners is a problem, and monetizing debt is perhaps the biggest problem. The amount of federal spending which has been printed-into-existence represents 19% of GDP (total exceeds 120%):
But that is how Greece economically collapsed:
By not being able to sell bonds to “real people” in order to cover the growth in debt that is required to pay for ramped-up government spending.
Instead of financially collapsing like Greece did — surviving by life-support from EU bailouts — the USA does not have anyone who would be able to bail it out if it falls. This makes it all the more important to stop collectivism here, to restore free enterprise. Let’s heed the words of Argentina’s president, Javier Milei:
Do not surrender to the advance of the state. The state is not the solution. The state is the problem itself. You are the true protagonists of this story and rest assured that as from today, Argentina is your staunch and unconditional ally.