Tierney’s Real News | Sept 6, 2024
This is Part 4 of my series on “What’s the Plan to Save America?” Please read Parts 1-3, if you haven’t yet, as each chapter builds on the previous.
What’s the Plan to Save America – Part One
What’s the Plan to Save America – Part Two
What’s the Plan to Save America – Part Three
People throw around words like Federal debt, Federal deficit and the Federal Reserve – but frankly, I don’t think most of us understand what it really means, how it got that way, who is responsible, who we actually owe money to and how to fix it.
In order to fix a problem – first you have to understand it and define it. So let’s do that together.
The newborn US had roughly a 30% debt-to-GDP ratio and that has been the average over time.
Back then, the Continental Congress lacked the power to tax the people. It first tried to pay for stuff by printing money. This currency, known as the Continental, collapsed. The Continentals were intended to be an early form of fiat currency, which was not tied to a commodity like gold or silver.
Continentals were the paper currency issued by the Continental Congress in 1775 to help fund the American Revolutionary War. Continentals quickly lost value, partly because they were not backed by a physical asset like gold or silver, but also due to the fact that too many bills were printed.
You can see that wars and recessions always spike the debt of countries. Central banks LOVE wars and recessions and pandemics because they require nations to borrow lots and lots more money from them.
People try to blame President Trump for the debt we had to incur for COVID – but it was at historic levels well BEFORE that.
Look at the huge increase in debt/GDP that this country incurred from 1980-2015 – before COVID hit – due to the wars in the Persian Gulf, Iraq and Afghanistan and the recessions of 1980, 1987, 1990, 2001 and 2007.
G7 projections for debt/GDP in 2024 are as follows:
US: 134%
UK: 110%
Italy; 145%
France: 115%
Japan: 255%
Canada: 105%
Germany: 64%
Remember, the historic average for America of debt/GDP is 30%. So, America is NOT the only developed nation struggling with a high debt/GDP ratio. Why is this happening?
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