Causes of Uncontrollable US Public Spending and Debt

US public spending has been exceeding its income for many years, leading to increasing national debt. This situation is unsustainable, but the exact tipping point at which the markets will lose faith in the dollar is unknown. Unlike the US, countries like China and Russia have managed their public spending better, using gold as a guiding principle.

1. Abandoning the Gold Standard:

• The US moved away from the gold standard, which historically helped control inflation and government spending.

• Many other nations are accumulating gold in preparation for possibly reinstating a gold standard, indicating they have more respect for gold as a currency anchor compared to the US.

2. Historical Context:

• Nations typically returned to the gold standard after wartime spending; however, the US did not follow this pattern after World War I.

• The UK faced severe economic consequences when attempting to return to the gold standard under unfavorable conditions, and the myth of Roosevelt’s New Deal saving the economy persists despite it being based on misunderstandings of economic causation.

3. Shift in Welfare Responsibility:

• The creation of Social Security marked a shift in government responsibility for personal welfare, undermining individual financial responsibility.

• Although designed as a supplement, Social Security has become the primary income source for many retirees, contributing to growing dependency on government welfare.

4. Lyndon Johnson’s Great Society:

• Johnson expanded welfare programs, further entrenching the belief that the government is responsible for personal financial security.

• Traditional values around individual financial responsibility have weakened, as reliance on government support has increased.

5. Monetary Policy Failures:

• In the early 1970s, spending on the Vietnam War and welfare programs led to gold reserves being depleted.

• Rather than devalue the dollar, Nixon suspended gold redemption, allowing unchecked money printing. This dramatically increased the monetary base and led to significant increases in federal budget deficits.

6. Soaring National Debt:

• US national debt grew from $424 billion in 1971 to an estimated $38.5 trillion, demonstrating a lack of financial restraint and accountability.

• The ongoing increase in annual budget deficits exacerbates the financial instability faced by the US.

The relentless growth of US public spending is driven primarily by the abandonment of the gold standard and a cultural shift toward government dependence for welfare. Early legislation like Social Security replaced personal responsibility with a sense of entitlement, creating a systemic issue of massive deficits fueled by excessive money printing. The statistics illustrate a troubling trend toward unsustainable debt that poses serious risks to the US economy. 

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