The national debt hit $1 trillion while Ronald Reagan was President. It is now estimated to be approximately $12 trillion. Many used to say that deficits don't matter since we owe it to ourselves. Not now. Countries such as China, Japan, Saudi Arabia, and even Russia now own our debt.
But, Dr. Jeremiah stresses that $12 trillion is just the tip of the iceberg. There are approximately $25-30 and $75 trillion in unfunded liabilities for Social Security and Medicare, respectively. Plus, there are the hidden government guarantees associated with our alphabet soup entities: FDIC, Freddie Mac, Ginne Mae, Fannie Mae, and the Pension Guaranty Trust -- the proverbial moral hazard. The current demographics and economics point to either sovereign default at best or financial collapse at worst. This is quite sobering.
Since WWII, we have gone from the benefactor to the world to the ultimate sovereign debt crisis waiting to happen.
Many believe that unless we see some form of a new fiscal policy and soon from Washington, we are destined to join the ranks of Ireland, Spain, Portugal, and Italy. The scary thing is that our leaders in Washington do not seem to have this iceberg in their sights. The last 3 years has not served as a wake-up call.
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The reason they say deficits don't matter is also because we can monetize the debt, the gold standard doesn't exist anymore. I don't think you realize that if you don't fund something today you will have to pay for it regardless in the future. Don't educational grants today, and then wonder why there people don't have skills in the future. I think this calls for a return to good old Marx, in which he points exactly this contradiction in "Das Kapital" where the socialization of labor is necessary for the reproduction of capital, i.e. the future US workforce will need to compete in a global market will need skills that can only really be taught in economies of scale and will need to be subsidized in order for capital to be profitable, but capital refuses to socialize any of these costs. This leads to the internal contradiction of the socialization of labor, in which capital can only reproduce itself if labor socialized (i.e. public roads, public transportation), but it doesn't want to pay for any of these socialization necessary, producing what we see now as structural unemployment. Complain about the debt all you want, but when we balance the budget and have unemployment at 25%, then don't call in the military to put down the unrest. How about raising taxes instead of cutting spending.
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