Is The US Debt a Threat to Democracy?

The Industrial Revolution (1820-1870) ushered in significant advances in agriculture which resulted in an increased supply of food and raw materials. Developments in technology resulted in increased production, efficiency, profits, commerce, both foreign and domestic. Industries directly affected were textiles, coal mining, iron, transportation, and steam. The United States was second only to England in the production of wealth and export of goods. The American economy was strong and the dollar was gaining global recognition and nations were waiting in line for America’s exports and the American currency.

But this rapid growth began to decline around the turn of the century and America was on the path to becoming a debtor, instead of a creditor nation. The culprit - globalization, an area the United States wasn’t psychologically prepared for. Fast forward a few years and we now see the United States in economic peril, on the brink of economic disaster and owing more to rogue nations, putting limitations on America’s ability to spread and maintain Democracy around the world.

The U.S. national debt now stands at more than $8.3 trillion.  $2 trillion is owned by foreign nations, doubling since 2000. As of March 2008 China held over $321 billion worth of U.S. Treasuries, significantly above the $60 billion it held at the end of 2000. Japan now owns $640 billion worth of U.S. Treasuries, up from $317.7 billion at the end of 2000. America has borrowed untold billions from oil exporter nations from 2000 - 2008, many who despise America such as Venezuela, Ecuador, Iran, Libya, Algeria, Indonesia, and Iraq. According to the US Treasury Department several nations, primarily Middle Eastern nations, now own $98 billion worth of U.S. debt.

Saudi Arabia, China, and Russia are buying US debt at alarming speeds and none of which are democracies, or friends of America. The United States economy is increasingly dependent on a group of creditors who do not have our best interests at heart and they are gaining bigger and bigger stakes in the American economy. This puts the value of the American dollar in the hands of foreign nations which makes the US more and more vulnerable to coercion and blackmail. This ownership also decreases American influence over the world’s largest market, the $2 trillion in foreign exchange that changes hands daily. The dollar’s value can be influenced by decisions made by foreign governments regarding the selling of dollar assets. What’s also at stake is leverage on matters as diverse as U.S. home mortgage rates and America’s global political clout.

Former Japanese Prime Minister Ryutaro Hashimoto simply wondered aloud regarding the fate of the US economy if Japan diversified and began to sell some of its $400 billion in U.S. Treasury securities. The Dow Jones Industrial Average plunged by the largest single day amount immediately following this comment. Since then, other foreign nations have wondered aloud about dumping U.S. treasuries, also causing ripple effects through global markets. Another significant risk in foreign ownership of US Debt is the possibility of foreign nations choosing to stop accumulating the debt and start spending it. If this happens, the U.S. currency in circulation would drive the value of the dollar down, making American holdings less expensive relative to assets in other currencies such as the Euro. As a result, American corporations and businesses could increasingly become targets of foreign acquisitions. Recently, we’ve seen in the news where American Corporations are already being purchased by foreign companies at alarming rates.

The US debt is so great that the threat of other nations inducing a U.S. economic disaster by just refusing to lend more money is now a painful reality. As this debt grows, and it most likely will, America will be less able to protect strategic industries from foreign takeovers, putting a once independent way of life and a stable democracy in jeopardy. The $700 billion bailout package is a good start but it’s more borrowed money and unless the industries receiving the money can make a different on the world economy, then we’re simply $700 billion plus interests in additional debt. America has non democratic enemies, more so in the past eight years, and those non democratic enemies now control our debt and subsequently our economy.

Our national/global debt is turning America into a poor nation and the next generation of Americans will become the new biblical Israelites. Who will be the Moses, or what will be the events to lead them out of bondage?

Think about it.