How Did We Get All This Debt?

Lots of folks have been wondering how we got to the point of having $14.2 trillion of Federal debt.  We have spoken on it much and now have found a graph that confirms what we have been saying...courtesy of the New York Times.

Remember that Post WWII the USA was given the privilege of having the worlds ONLY reserve currency because we were the only country that wasn't destroyed in the war so we had 50% of the world's manufacturing capacity...and we had most of the gold.  So it was agreed at Breton Woods, where the winners of WWII all met, that USA would only print $35 of US Dollars for every ounce of gold we had in Fort Knox.  And that system worked for about 25 years.

Richard Nixon is the president who took us off that system (we had to pay for the bombs to drop on Viet Nam) and Congress agreed from 1971 on that the US dollar would now be upheld by "the full faith and confidence of the U.S. government".  From this point on our dollar became what is called a "fiat currency"....meaning it is only paper backed by faith.

Now go to this article and scroll down to the graph that says, "HOW OFTEN THE DEBT LIMIT HAS BEEN RAISED". http://www.nytimes.com/interactive/2011/07/28/us/charting-the-american-debt-crisis.html?src=ISMR_AP_LO_MST_FB

You will see that in the 1970's we had to start raising our debt limit because Congress soon figured out that they could simply print more IOU's to pay for any marvelous program they could think of.  New aircraft carriers....CHARGE IT!  New Medicare program....CHARGE IT!  New Social Security program....CHARGE IT!  A war in Iraq and Afghanistan...CHARGE IT!  New Food Stamp program...CHARGE IT!.....you get the picture.  If they ever charged TOO MUCH...never worry about it because they would simply raise the self-imposed debt limit and simply charge a little more.

Do you see how the graph looks like a hockey stick?  It's very hard to reverse this trend...not impossible but very hard.

We are now at the point where we have to borrow money every day to pay our daily bills.

How long can you continue borrowing from one credit card to make the payments on another credit card?

How long can a fiat money system survive based on faith and confidence of the U.S. government when faith and confidence in that government is now at an all time low?

"Have faith in God...and God alone."

PS....If you look at the graph that shows which Presidents ran up the debt, you will see that George W. Bush had rung up about $6.1 trillion during his tutelage....so lest you think we can blame this all on the Democrats or Republicans....all of our recent leaders (including Reagan) have been leading us to the financial abyss.