Is The US Debt a Threat to Democracy?

(note: This article was originally composed 4 years ago. Click on the links within the article for latest figures)

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 2016 China held over $1244.6 billion worth of U.S. Treasuries, significantly above the $60 billion it held at the end of 2000. Japan now owns $1137.1 billion worth of U.S. Treasuries. 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 $263.4 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 true friends of America. The United States economy is increasingly dependent on a group of creditors who do not have its 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 $24 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 $1137.1 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 at the beginning of the Obama Administration a good start but it was more borrowed money and unless the industries receiving the money can make a different on the world economy, then America is simply $700 billion plus interests in additional debt. America has non democratic enemies, more so in the past sixteen years between the Bush and Obama Administrations alone, and those non democratic enemies now control US debt and subsequently the US economy.

The national/global debt is turning what was once a productive, economically sound nation of producers into a poor nation of consumers. Will the next generation of Americans become the new biblical Israelites - searching for a new promise land of milk and honey? If so, who will be the next Moses? Will it be Donald Trump, Hillary Clinton, or the struggling Bernie Sanders - and what will be the event, or events to trigger the exodus towards economic freedom? Will it be continued back-door obsolete trade agreements - or a major market crash due to foreign debt owners selling Americas' bad bonds - or massive foreign takeovers of American corporations due to declining American influence as a result of massive global debts?

In the words of the infamous Harold Melvin and the Blue Notes I offer this suggestion.... "Wake Up Everybody, No More Sleeping in Bed" No More Backwards Thinking - Time For Thinking Ahead".





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Comments 12 comments

sandra rinck 7 years ago

Phew, harsh realities, oy! My solution is much simpler, though seemingly unethical by many accounts accept that often times, we got to do what what doesn't always seem right to achieve what is, and I aint talkin'bout war or anything like that.

http://hubpages.com/hub/Stop-Paying-for-It


jxb7076 profile image

jxb7076 7 years ago from United States of America Author

I hear you sister! Desperate times cause for desperate measures.

Thanks for the comment


bgamall profile image

bgamall 7 years ago from Las Vegas, Nevada

And the debt must increase greatly if house prices are to come down. The only way they can come down is by people walking away from their houses in foreclosure. So, debt will increase as the alt a avalanche has not hit yet and will do so in late 2009 through 2011.


jxb7076 profile image

jxb7076 7 years ago from United States of America Author

bgamall: Sad, but true!  With the almost daily announcements of corporate lay-offs we're in this mess for the long haul.  I understand the Obama Bail out package has passed the senate and is heading to the floor for a discussion with a 95% probability of passing.  I hate to sound pessimistic but I think the small guy will not see much unless the big guys play fair - and we know that (excuse my language) ain't gonna happen!

Then again, they surprise us!

Thanks for the feedback!


EYEAM4ANARCHY profile image

EYEAM4ANARCHY 7 years ago from Las Vegas, NV.

The "calling in their IOU's" scenario is a little overblown because these countries that own our debt would do some major damage to themselves by taking America out of the trade picture, but we are certainly headed down a road where U.S. dominance is becoming less and less likely in the future. Not that I feel that this, in and of itself, would be a bad thing. The critical question is: who is next up to bat?


jxb7076 profile image

jxb7076 7 years ago from United States of America Author

Hello EYEAM4ANARCHKY: I agree to your comment  "The "calling in their IOU's" scenario is a little overblown because these countries that own our debt would do some major damage to themselves by taking America out of the trade picture" is a good point.  I just hope they understand this.  I heard over the weekend that Hillary Clinton encouraged China to continue buying US Bonds as an opportunity to solidify China's "favorite nations" status.  I hope the new administration knows what they're doing  in selling out debt.  "Who's up next?"  that's a million dollar question.

Hey, thanks for the comments.


H P Roychoudhury profile image

H P Roychoudhury 7 years ago from Guwahati, India

The hub is good as it has given a clear statics of the present economic scenario of the US.


jxb7076 profile image

jxb7076 7 years ago from United States of America Author

H P Roychoudhury - thanks for stopping by and commenting. I am hoping the new Federal Bank Chairman sees the writing on the wall and make the necessary changes.


dfager profile image

dfager 6 years ago from Federal Way, Washington

I like this hub! Should be good incentive for polititions to work together, but nobody is willing to sacrifice today's profits for America's future.

Hello from Federal Way Washinton.


jxb7076 profile image

jxb7076 6 years ago from United States of America Author

dfager - hello neighbor! I agree that no politician is going to do anything about the problem if their actions affect their profits or positions. As a result......the wheels on the buss go 'round and 'round.

Thanks for stopping by and commenting.


MikeNV profile image

MikeNV 6 years ago from Henderson, NV

Who is really pulling the puppet strings. What people do not realize is the privately owned Federal Reserve is running the show. And DEBT is in their best interest. Default on your debt and they take what you own. That's good for them not for you.

And these people may or may not be American Citizens. Most of them are "World Citizens"... but they own the Stock in the Worlds Central Banks so they will do whatever is in their own Self Interests.

Until people can look past Politics to the real issue - which is taking back control of the monetary systems world wide you can expect more of the same and a lower quality of life.

These people do NOT care about you and are very much in favor of reducing the Worlds Population drastically for their own selfish wants.


jxb7076 profile image

jxb7076 6 years ago from United States of America Author

MikeNV - thanks for stopping by and commenting. You're absolutely correct in the sense that we have to take control of our own monetary destiny as a country. Unfortunately, I think that ship sailed away with NAFTA and the WTO.

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