Deficit Spending: Suicidal Pickpockets at Work

Yesterday I learned with dismay that, in just 9 short years, the interest on our national debt will overtake all non-defense Congressional spending. In other words, in 9 years, those interest payments will equal every dollar our spendthrift, La-La land Congress now imagines they will be spending on "homeland security, education, job training, housing assistance, veterans' health, science, workplace safety, transportation, the environment and foreign aid."

That's only if universal healthcare doesn't get passed. If it does, interest on the debt will shoot up even faster.

I am not making this up! The figures come from Barack Obama's very own White House, as reported in Investors Business Daily.

Why, why, why? I've been racking my brain trying to figure out what is to be gained by throwing our economy off a cliff. I can understand (in a limited way) that power-hungry dictator wannabes would act to destroy our liberties, but our . . . wealth? Surely the power structure would want to hold onto that at least.

Then I read a little article by Alan Greenspan, former chairman of the Federal Reserve Board, which he wrote back in July 1966, when Barack Obama was a three-year-old capable of throwing only much smaller objects than the U.S. economy off a cliff. Greenspan published this article, "Gold and Economic Freedom," in Ayn Rand's The Objectivist Newsletter; it was reprinted in Capitalism: The Unknown Ideal, where I encountered it. Greenspan had a good grasp on what is to be gained by running a nation into debt:

Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. A substantial part of the confiscation is effected by taxation. But the welfare statists were quick to recognize that if they wished to remain in political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale.

As Greenspan explained, welfare statists can "use the banking system as a means to an unlimited expansion of credit." Sound familiar? Through a complex series of steps, banks accept government bonds [debt] in place of actual tangible assets [such as gold] and treat them as if they were actual deposits. (Soon, the current welfare statists hope to use carbon credits in place of tangible assets.)

The holder of a government bond or of a deposit believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets.

The law of supply and demand is not to be conned.

Eventually, inflation takes over: prices rise, sucking value out of the savings of the productive members of the society as well as from the goods and property anyone owns. This lost value, Greenspan pointed out, is equivalent to whatever was given away by the welfare state.

Thus, concluded Greenspan, "deficit spending is simply a scheme for the 'hidden' confiscation of wealth."

It is not difficult to imagine that a tsunami of pain awaits us.

The question remains, what if anything, are we going to do about it?

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