Capitalism’s Obituary: “Debt saturation …”

The United States economy was put on debt life-support almost immediately.  During the Revolutionary War and under the Articles of Confederation, the Continental Congress issued paper money.  However, the British counterfeited huge amounts of that currency as an act of war, causing inflation and leading to the expression, “not worth a Continental.”  Some people opposed ratification of the Constitution because it did not give Congress the power to issue paper money, only coin. 

Why bother with having the government issue money, then go through the Capitalist process of unequal exchange to absorb that money when the First Congress had the votes to go straight to debt as the way to “fund” the economy.  So they passed the Funding Act on August 4, 1790 to base the money supply entirely on borrowed money, which it has been since then except for greenbacks issued by President Lincoln to fund the Union army for the Civil War.  Greenbacks are still legal currency but they have been taken out of circulation because they support equal exchange which goes against Capitalist unequal exchange.

Since 1790 when the Federal debt was $70 million, total public and private debt has grown at about six percent per year because of interest until now, 2011, to about $70 trillion.  That’s 70 million times $70 million.  Every year it grows by ever more.  When it doesn’t grow enough, we have slumps, by one count about 50, variously called slumps, recessions, depressions, and Panics.  As recently as 1976, total debt, not just Federal debt, was $3,800 billion, just under $4 trillion.  In the 45 years since, it has grown to $70 trillion.  Debt life-support, because of interest, requires ever more and larger new debt.

We passed the point of debt saturation, debt to the limit of our ability to pay it, long ago.  But the debt life-support infusion continues as you read this.  Federal debt alone has just surpassed $15 trillion.  That’s 15 million million dollars.  Debt in the rest of the economy is more than $55 trillion.  New debt must be taken on at multiple trillions of dollars this year and more next year, yet the focus at the moment is Federal debt – which is debt of the fire department.  Republicans think they can put out the debt fire by cutting the fire department.  What are they thinking!  They are blaming the fire department for the fire!!!

Someone said that it is very difficult for a person to understand something when their paycheck depends on their not understanding it.