In Niall Ferguson’s comprehensive history of the Rothschild Family, the author describes how that family created their legendary fortune and changed the world. Two centuries ago, when Jews were the only money lenders on the planet, they financed European governments. Somewhere in the last 200 years, the non-Jews have also learned about lending money and debt, and in a big way indeed. Now the world wallows in debt so overwhelming that it threatens to capsize the global economy.
Greece, a relatively small country of about 11 million people, may trigger a financial crisis throughout the European Union (500 million people) because her budget deficits and enormous debt have brought the country to its knees. The country’s national debt – 300 billion Euros – is roughly equal to their annual gross domestic product. That is over 27,000 Euros of debt for every Greek -- including children. They have 27 billion Euros of debt coming due in April and May. And how are they are planning on paying that off by? Yep, by borrowing more money.
As this crisis has unfolded, nobody has stopped to ask how a country like this has accumulated so much debt. One might think that if the government was short on money, they might learn to say no. Yet, no one ever asked how this debt-ridden country managed to fund the 10 billion Euros it cost them to run the 2004 Summer Olympics. Not one responsible individual ever said that while it would be nice to have this event, we quite frankly cannot afford it. This is the way it has been in America for a while. We had periods of extensive borrowing in the 19th century (particularly during the Civil War), but America’s debt really started exploding in the 1930s during the Great Depression. The Roosevelt administration borrowed extensively to fund economic initiatives; initiatives, incidentally, that never worked. Our national debt continued to grow during World War II, but began to subside in the postwar era until the 1980s.
Liberals blame the bipartisan tax cuts passed under Ronald Reagan; but, in reality, revenues exploded during that era. It was expenditures, which escalated even more rapidly, that fueled the debt growth. Reagan tried to confront the spiraling growth of Social Security, but the plan failed because Congress could not summon the political courage to say no. The leaders of the time never even attempted to address the ever-increasing costs of a newer entitlement – Medicare.
For the last fifty years, we have instituted program after program on a municipal, state and federal level that has left us with staggering debt. Elected officials continue to expand the sphere of government without matching the costs to future revenue streams.