In 1992, I read Bankruptcy 1995: The Coming Collapse of America and How To Stop It, by a captain of industry, Harry E. Figgie, published by Little Brown and Company. Now, 29 years later, as our national debt is soon to reach $30 trillion, we should re-consider many of Figgie’s observations. Here are the notes and excerpts that I extracted from the book:
Harry Figgie, here and for all that follows: Within two to four years, the United States, for all practical purposes, will have spent itself into bankruptcy. Interest on the national debt will become the largest item on the federal budget, and the government will have to spend more to make its interest payments than it will collect in taxes.
The federal government’s deficit, will soon be an amount un-repayable or controllable.
Suppose you earn $50,000 annually, and you are in debt for $450,000. “Are you broke at that point? Technically, no, but you sure have a serious problem, and so do your creditors, since you won’t be able to make your payments.” Soon, the U.S. won’t even be able to afford the annual interest payment on this debt.
Spending cuts that Are Obvious
The Grace Commission report outlined how the government could cut its spending by $424 billion a year between 1984 and 1987, however, the report was ignored.
Most of the recommendations were painfully obvious. One proposal called for closing a western army base that had been built in the 1800s for use as an outpost in the Indian wars. Another base in Virginia was so antiquated it had a moat around it but the state’s junior senator insisted that it “would not be closed on his watch.” It wasn’t.
Year after year, Congress and the Administration present a budget to the American public that shows the deficit being reduced by several million dollars, while the actual deficit at year’s end comes out much higher. Meanwhile, everyone manages or pretends to remain ignorant of our impending physical collapse.
Unable to Meet IMF Standards
Only one important difference separates the U.S. and many Eastern European and South American countries that we think of as being poor or economically distressed. These countries receive aid from the International Monetary Fund (IMF) and the U.S., ignoring reality, pretends that it is still rich enough to contribute money to the fund.
Countries receiving IMF aid must conform to spending controls. If the U.S. abided by these rules, it would literally be out of business. We do not qualify for an IMF loan.
When the Federal Reserve begins to buy substantial amounts of the governments debt, large private investors become overly concerned with inflation, interest rates begin to rise, and the process builds on itself. To protect yourself, watch for stories about bankers and economists fretting about the expanding money supply.
Decline in the Standard of Living
Some people believe that the debt hasn’t caused their standard of living to suffer, but there has been an actual fall in real family income, the percentage of Americans who own homes, and other vital indicators.
Moreover, personal bankruptcy is nearly triple what it was in the 1960s and 1970s, the cost of higher education exceeds the means of most families, a higher proportion of families require two parents bringing in income, and the age at which first homes are purchased is rising.
The solution involves unrelenting pressure on Congress. Call, write, visit. Be assertive but courteous. Convey your concerns clearly and forcefully. Demand that your elected leaders and officials be accountable to you.
The End of Modest Measures
The time for modest measures has passed. We are in an emergency situation.
The author admonishes: “Get it out of your mind that economic and political collapse can’t happen in this country, or that we can deal with it once it happens.”
Harry Figgie concludes: We must either take control, or suffer the consequences of losing control entirely.
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