Pick a Western nation, any Western nation, and you will find unsustainable debt totals. The combination of outright socialism and Keynesian economics has left us with an uncertain future. We cannot continue to spend as we have in the past. Governments will have to eliminate or drastically reform social programs. We are seeing the beginning of these cuts in Europe and the turmoil it is creating there. Honestly, I think it is despicable how many Europeans are reacting. The governments have to cut the pensions, they have no choice. If they allow the current rate of spending and debt to continue, they will have a complete economic collapse.
The Untied States is in a particularly bad situation due to the two largest holders of our debt being the Fed and China. These are not the kind of people you want to owe trillions. Combine this with our lack of energy independence and you have a recipe for disaster. The solution that many in power have presented is to increase spending. Timeout… You can be a raging liberal and understand why this is a bad idea.
To try to make it work they are purposefully devaluing the dollar, and yes, they are doing this on purpose. The easiest way to handle a 13 trillion dollar debt is to make 13 trillion worth less. This strategic inflation is the most grievous of taxes, for it makes all of our saving worth less. The thousand dollars you saved ten years ago cannot buy near as much as when you set it aside.
Americas out of control debt will have a dramatic impact on every western nation. Right now America is the world’s police force, and the army of the West. Most western nations spend little of their GDP on defense. They do not need to spend billions when the U.S. is willing to help defend them. This has lead many western nations to use the money on social programs. As the U.S. debt grows, we will have to cut all areas of spending including military. Unless they want Russia, China, and a handful of Muslim nations to do as they please unchecked, Western nations will have to spend more on defense. This will in turn mean less money for social programs.
Some nations will be hit harder than others. We all have some hard years ahead, but the nations that embrace Libertarian ideas of limited government will be the ones best situated to weather the coming storm. As debt loads pile up societies will be forced to revaluate the role of government. The governments that embrace limited government sooner will emerge stronger than before, but those that fight this enviable change will suffer greatly. The following are things that all nations must cut back or end completely:
- Pension programs
- Socialized medicine
- Unemployment and welfare programs
- Foreign aid
- Countless agencies and wasteful bureaucracy
No emotional argument will suffice. The world is facing a cold mathematical reality. We cannot hope this problem away, it is coming. This is much bigger than a few currencies being devalued. We, for better or worse, are now tied together in a global economy. When nations get desperate, they do things they normally would not. No doubt the coming storm will lead to some wars. If we do not make the changes needed for what is coming, this century will be even bloodier than the 20th.
I hope that the world will become more practical about the role of government in society. Government is a part of society not the other way around. Government is a tool, but it is not the only tool. Attempts to use government for large-scale social engineering, is as effective as using a sledgehammer to paint. It is obvious the socialism of the 20th century has failed; the future is Libertarian of bust.