Dark Days

We as a nation are facing some of the darkest days in our short history. At question is whether we will survive as a free people. Threatening our existence are mountains of debt, of a size never before seen in all of world history. When I was still in college more than 25 years ago, I was assured that government spending could grow indefinitely, as long as it grew at a slower pace than the economy. Now decades later we can look back and observe the results. Our federal government uses off-budget spending, government sponsored entities, and other “Enron type” tricks to mask its true spending. Economic growth has averaged around 3% for the past 25 years. During the same period total federal government debt including government sponsored entities, off budget spending and the un-funded portion of Social Security, Medicare and Medicaid has grown an average of 9.8%.

When examined more closely, in the ‘60s each dollar of new debt added almost a dollar of economic growth. However, as the debt load mounted each dollar of added debt resulted in less and less growth to the point where in the third quarter of ’09 the relationship turned negative. This rapid growth in total debt accompanied by a shrinking response in economic growth necessarily proves that the Keynesian theory of economics, on which much of our government action is based, is invalid. Deficit spending is harmful, not helpful like the government and press would have us believe. Recent history proves it. What will happen if the economy continues to stagnate, tax revenue declines, and government spending continues to grow unchecked?