Replies

"..please explain why the British have quite successful managed such a National Debt since the early 1600s to now?"

I lived in England for two years. To an extent, England is a microcosm of what has been happening in the US for the last 30+ years. It was the early 70's when we moved there. It was like stepping back in time thirty years. We rented a house on a street at the edge of a small town, about 14,000 people. The house had been an investment for a small business man who rented to American military officers. It was the only house on the street that had central heat; the rest heated with small fire places that primarily burned coal. The richest man on the street was a small farmer. He had the only modern and most expensive home on the street, but it was heated by fireplace. Their hot water heater was a tank built into the wall above the fireplace which was the source of most of its heat. The tank contained a electric coil that could be used if hot water was needed more quickly, but union strikes made electricity something that could not be counted on as an always on utility. During the winter, they used many blankets and vividly described waking up in the morning with a large layer of frost on the blankets where their breaths condensed and froze. Normally, it would be close to ten before the water in the toilet thawed enough to flush. The oldest couple that lived on the street did not have running water inside the house. The had a faucet outside from which they filled containers to carry what water they used indoors. I became good friends with a large farmer who was certainly in the top 20% of income in England. He cultivated Americans because he was renovating a 300 year old manor house and was furnishing it through the Sears catalog via the Americans he cultivated. At that time fewer than 1% of all English households had a dishwasher. My next door neighbor hated Americans. I was astounded when he came over late one evening and wanted to ask me some questions. He knew I was a doctor and wanted some medical advice. From the story he told, it was clear to me that he almost certainly had colon cancer. He, as most English people could not afford private medical care and was stuck with the National Health. He had been to see his primary care doctor who also believed my neighbor had colon cancer. The problem was he was a general practitioner and could not order a barium enema to confirm the diagnosis. Only a specialist could order the needed xrays. It was going to take six weeks before his appointment with the specialist. It was going to be another 6 weeks before he could get an appointment with a surgeon and three months after that before he could get on the surgery schedule.

When we were there, there was not much of a middle class in England. There was some old money and a few super rich with millions of lower middle class or poor, but there was almost no one living in abject poverty because of the dole. As a child for a time, I lived in town that was barely more a thousand. It's land area was several times that of the village where we lived in England in spite of the fact the village had more than 10 times as many people. Throughout England there are countless rows of narrow three story joined houses much like the row houses in some New England cities in the US. One family occupied a unit on each story. You could cram a lot of families into such places. The English had a name for them, but I have forgotten it. In thinking or ideology, it was something along the lines of "the project", but more descriptive. Our rich farmer friend rented his land and manor house from the Church of England. Most of the old family manor houses and farm land was owned by the Church or the National Trust. Estate taxes were prohibitive, for all but the very rich. By "donating" their estates to the church or National Trust, they could continue to live in their home and their heir would get right of first refusal on future leases for at least one generation. Leases were granted by sealed bids and generally were renewable for a fixed period as long as you could pay the rent.

The middle class is systematically being destroyed in this country as well. The people don't go broke overnight or even over a generation or two. They just get gradually ground down until everybody is equally poor if not impoverished and they live a subsistence standard of living.

When debt is used to temporarily increase your consumption, the long term net effect is to lower your total net worth and lifetime total consumption by the amount of interest that is paid. The short term increase in standard of living is paid for by means of ultimately lowering your lifetime total consumption amount. Debt used to finance an increase of production increases both income and ultimately net worth. Debt used to finance consumption may be common or even almost universal, but it is still foolish. When government taxes too much whether you call it FICA or IRS income taxes, the bottom line is the same, the middle class is squeezed into using debt to maintain their standards of living gradually impoverishing everybody. If it happens slowly enough people tend not to notice and don't complain as much as you would think. Worse, there is a constant propaganda barrage that blames businesses for high prices or the rich who are getting richer for not paying their fair share. People don't blame the politicians in government who are actually to blame, but instead blame the very people who are supporting what economy is left and look to the politicians as their saviors and for more benefits. It becomes a slow vicious cycle gradually grinding everybody down until nothing is left. Even the wealth of the rich becomes an illusion because politicians will print whatever money is needed to cover "government benefits" not paid for through taxes or the growing national debt. Because it happens so slowly over the lifetimes of generations most people are ignorant of what is happening to them much like the frog placed in a pot of slowly warming water. Sooner or later his goose is going to get cooked.

Politicians have been overtaxing Americans since 1913. Through the socialism created by the politicians income and wealth are being transferred and consumed instead of being saved and invested. For the middle class is means either a declining standard of living or decline in net worth plus a larger debt burden. More people have a deed to house now than ever before, but total housing equity net worth has been slowly declining for American families for 50 years. There was a time when most families could pay cash for a car or finance it for no more than 36 months. Most families that had two cars had at least one that was paid for.

For the first century+, it was production that made America great. We built more things, made them better, made them more efficiently making them cheaper and more people could afford to buy more of them creating even more profit. Made in America actually meant something instead of being a wishful thinking slogan. America had the largest store of saved capital ever accumulated in history. When politicians began introducing socialism in 1913, government started transferring that pool of saved capital to voters for consumption. Less than a century later, the capital pool is no longer large enough to accommodate sufficiently skilled workers or technologically enhanced factories to make up for lower wages in other localities. Manufacturing, and with it the good jobs it provided are transferred to lower cost centers of production. The erosion of our pool of saved capital means that we can no longer improve efficiency enough to compete. The cycle of decline is becoming noticeable. MNJohnnie acknowledges that most people can't afford to pay for a car, let alone a house. And he has noticed that business is having some trouble financing its capital needs as well. The graph tells you what is going to happen over the next 20 years if the US actually lasts that long. It's not the debt or even the consumption that does it. Remember the slogan that elected Bill Clinton? It's the SOCIALISM, stupid!