The effects of credit can be insidious, often amplifying an individual’s flaws. Even the most prudent person can make foolish decisions when armed with limitless credit. However, the average individual, given the same opportunities, is particularly prone to making unwise choices.
A few weeks back, we encountered a troubling story about Mike Meru. This seemingly rational individual, with good intentions, accumulated over $1 million in student loan debt in pursuit of becoming an orthodontist.
Surely, with a few well-chosen textbooks and a commitment to self-study, Meru could have acquired all the necessary skills to align teeth for a mere $200. Instead, supported by Uncle Sam’s loan programs, he made a deeply questionable choice.
Meru is not an isolated case. According to the Department of Education, 101 individuals in the U.S. carry federal student loan debts exceeding one million dollars. Additionally, around 2.5 million are burdened with debts of at least $100,000. What knowledge could possibly justify such staggering amounts?
Did they learn how to turn nickels into dimes? Did they unlock the mysteries of a four-sided triangle? Or perhaps they caught a glimpse of the universe’s secrets?
Delusions of Grandeur
People rarely grasp the full extent of the disasters they create. Those moments of clarity, often fleeting and occurring just before dawn, reveal the harsh reality that they’ve acted foolishly. They find themselves reflecting on decisions that have led them to a precarious state, feeling utterly trapped.
Nations, much like the individuals that form them, have shown themselves equally incapable of responsibly navigating a landscape of unlimited credit. In the United States of Debt, federal debt has soared past $21 trillion, corporate debt has exceeded $6 trillion, and total household debt has hit over $13 trillion. This collectively suggests that the country, as a whole, has also gone off the deep end.
These staggering debt figures signal the beginnings of an approaching storm, yet they remain largely overlooked. Particularly, leaders in government are turning a blind eye to the brewing crisis. After 80 years of near steady prosperity, few wish to confront dire possibilities.
People often prefer the comfort of delusions rather than face harsh realities. They want to believe they are unique and can live off the hard work of others. Many hold onto the belief that they can reap more from their retirement than they contributed.
In a country that prides itself on being a free market economy, there’s a glaring contradiction within the immense bureaucracy overseeing it. While free trade is seen as beneficial in theory, many justify protectionist policies to ensure fair trading, perpetuating a cycle of delusion.
America Goes Full Imbecile
Meanwhile, a significant portion of the American populace has been unwittingly thrust into a state of financial servitude. In contrast, the entire framework of Social Security and Medicare teeters on the brink of collapse. These cornerstone programs, established by FDR and LBJ, risk vanishing before we can say “lickety-split.”
This week, the Social Security and Medicare Boards of Trustees released their 2018 Annual Report, which disclosed that the Medicare trust fund is set to run out by 2026 and Social Security trust funds, covering both old-age benefits and disability insurance, are projected to be depleted by 2034.
What will happen when these deadlines arrive? Will those depending on these entitlements find themselves stranded?
Not quite. It’s likely that the Treasury, in collaboration with the Federal Reserve, will resort to reckless measures. They will generate more money out of thin air to fulfill their commitments, jeopardizing the currency in the process.
Make no mistake, America is in the midst of a perilous journey into foolishness. Massive debts, fostered by a speculative money system, have brought unique risks to the forefront more rapidly than ever anticipated. Furthermore, the government’s proposed solutions, which would ultimately debase the dollar, are as rational as severing one’s head to alleviate a headache.
The blind faith in the government’s ability to rectify all societal issues led us into this predicament. For the many individuals who suffer from the insidious effects of currency devaluation, this misplaced trust in the government is unlikely to return.
Sincerely,
MN Gordon
for Economic Prism
