America in denial

Everyone I know has major concerns about money. And nearly everyone agrees that it is a scarce commodity. Virtually everyone wants to have more. Even so, most Americans have no interest in learning about the function of money, where it originates, why it fluctuates in value or who has control over our money supply.

Throughout history entire civilizations have risen and collapsed based on the quality of their money. Booms and busts have been around for centuries. Those who understand little about the complexity of our monetary system usually suffer the most, while others who are better informed tend to reap profits regardless of whether the market goes up or down. Now it's becoming much more important to know what money is, how its supply affects our economy and how, historically, it has been manipulated to benefit the few.

Beginning last year a worldwide effort was launched to prevent the world economy from falling into a financial abyss. The past two years have seen the greatest outpouring of money and credit from central banks and governments in history. Meanwhile, here in the United States, American's personal savings are far too low and private debt continues to soar. Personal credit-card debt has grown to over a trillion dollars, with many viewing affluence as an entitlement and a basic right. Unemployment remains over 10 percent, while our federal government runs an enormous $12.1 trillion deficit.

Today, the European Union's euro provides Europe and the world an alternative to the U.S. dollar as a unit of international currency. And while the euro's acceptance grows, Asian nations are restructuring their regional financial systems to become more independent of the U.S. dollar. Additionally, Muslim nations, including the oil-producing nations of OPEC, plan to replace the U.S. dollar with the gold dinar for all international crude oil transactions.

Now more and more economists are uneasy about our mushrooming debt, and a growing number are concerned that a fiscal day of reckoning is imminent. As the value of the U.S. dollar continues its long decline, they believe this portends the beginning of an inevitable serious correction. Others say it will be a more orderly decline that will actually benefit our economy causing exported products to be less expensive for foreign purchase.

But many others like myself are more pessimistic and see an eventual collapse of our economy as a real possibility. According to 34 signatories of a recent nonpartisan economic study, the United States, once the world's greatest economy, is facing a debt driven crisis previously viewed as almost unfathomable. They project that, unless draconian measures are taken starting now, debt will rise to 85 percent of GDP by 2018 and 100 percent four years later at which time the American economy will likely be in ruins.

The cold reality is this: At some time in the future, the threat of foreign governments greatly reducing their colossal dollar holdings could become a reality with the dollar's decline anything but orderly. Combine this with a Treasury Department that might attempt to print the U.S. government out of debt, and the Federal Reserve forced to raise its lending rate to prevent a complete collapse in value. Then add the necessity that our government is forced to offer securities at ever higher rates of interest to attract funding. Then you have a recipe for national disaster of unprecedented proportions.

It is time for all Americans to face reality and seek real solutions before it's too late. For openers, all Americans should demand that our elected officials explain why the dollar is receding as the world's reserve currency and exactly what is being done to fix the problem -- now instead of later. Time is running out, and we owe it to our children and their children to put our nation's economy on sound footing.

One thing is becoming clear. Running the printing presses 24/7 only makes the problem worse.

Robert Bunn of Cape Girardeau is a former contributing columnist for Business Today.