Facing Debt Reality, Most of the So-called Developed World is Broke
Interest-Rates / Global Debt Crisis
Jun 29, 2010 - 04:18 PM

By: David_Galland

by David Galland, Managing Editor, The Casey Report writes: Scanning through a local newspaper this week, I came across a letter to the editor that speaks volumes about the popular misconceptions that are dragging this country, and the world, to its knees.

The letter writer, a retired public school teacher, unleashed a litany of solutions for making America’s children better citizens. Summarizing his list (the exclamation points are his, too):

Give parents a livable wage!

Provide excellent subsidized childcare!

Guarantee parental leave with full pay and wage protection.

Institute a single-payer health care system.
Regrettably, the gentleman’s perfect-world vision of how things should work is not his alone, but is widely shared. Unfortunately for him and his demanding ilk, it is a vision now made obsolete by the facts on the ground.

Simply, the nation – and most of the so-called developed world – is broke. As is the model that these modern-day economies have been built on – a model that foolishly assumed that politicians could be trusted to manage a currency in a responsible fashion.

Consider, in the 1940s central bank reserves were 70% gold. Today, official reserves are only about 10% gold, even though the price of gold is far higher. The balance of those reserves, for all intents and purposes, is nothing more than IOUs.

Out of a justifiable fear of being repetitious, I’m not going to belabor the point. But I am going to comment that it’s time for people to grow up… to get real about the situation we are in.

To believe that a government that produces nothing can paper over every crisis, as well as provide succor and sustenance to meet every human desire, and can do so infinitely and without a serious consequence, is to believe in tooth fairies and magical beasts that dance through distant woods.

Even so, like the letter writer, there is still a large block of Americans who persist in believing in such a fantastical world – a world where government’s largess should be extended even further. From this crowd you would get rousing cheers to the suggestion that the state should also provide a free and top-notch education to all, quality foodstuffs for both the domestic and foreign needy, high-quality computers (and free Internet connectivity) to every young student, housing subsidies, and open-ended unemployment benefits. And that’s just the short-list.

Back in the real world, the declarative statement “I wantâ€