Socialist spending agenda will ruin America
Editor, the Advocate:
To understand why America has become the world's largest debtor nation, one must review historical events. Starting in the aftermath of World War II, Japan and most European countries were in serious financial trouble. Eventually, the British pound sterling, which was the world's currency reserve, was devalued due to serious economic conditions. This is when an international agreement known as the Bretton Woods System replaced the sterling as the currency reserve. This made all currencies anchored by the dollar and indirectly linked to gold.
In the period between 1971-73, President Nixon removed the dollar from the gold standard, leaving the dollar as "Fiat" money (unbacked currency). The dollar remained the world's currency reserve, and most nations went to a Fiat system.
The U.S. has now become the world's greatest consumer nation with little or no concern for savings, and we no longer produce the amount of goods and services to provide the balance needed to provide a viable economy backed by Fiat money. Today, the government and the media encourage overconsumption, leading to spending beyond one's means and massive debt problems. In addition, since the Federal Reserve and Treasury are no longer restricted by fiscal restraints that existed under the gold standard, they can manipulate the monetary system almost at will. This is why President Obama can pursue his socialistic agenda of deficit spending and borrowing large amounts of money to close budgetary deficit gaps. As long as the dollar is the world currency reserve, our nation cannot "technically" go broke, as the Federal Reserve can just print more money. However, if the dollar loses its standing as the currency standard because of massive debts and loss of faith, serious dollar devaluation and hyperinflation will occur. Then, the Federal Reserve could not print more money, and realistically, our ability to borrow money would disappear. At this point, serious economic consequences would occur, with bankruptcy a distinct possibility.
In conclusion, history is warning us to be very concerned about the overwhelming debts being amassed by President Obama's socialistic deficit spending agenda.
Allen J. Novosad, Edna