|Frank Wright, Ph.D.
President & CEO
As I write this we are three months into the great environmental and economic disaster in the Gulf Coast resulting from the fire, explosion, and sinking of the Deepwater Horizon drilling rig. We can only hope and pray that the latest efforts by BP to cap the well are successful.
I confess that during this unfolding disaster, my mind has occasionally wandered from the event itself to a striking parallel suggested by it. Throughout the crisis, I have from time to time pondered the gushing oil well as a metaphor for our out-of-control government spending. The parallels seem to me quite remarkable.
For example, the oil leaking into the Gulf clearly damages our own national resources, economy, and the lives of our people. Yet some scientists predict that the Gulfstream might carry the damaging effects of the spill to Europe at some point.
In the same way, while our profligate government spending and the explosive growth in our national debt will eventually cripple our own economy and affect the lives of ordinary citizens, we live in an integrated global economy and the rest of the world will eventually share the pain of our fiscal irresponsibility.
Another parallel (one which will hopefully be temporary) lies in the fact that the best efforts to stop the gushing oil are seemingly ineffective. And at some point there may be nothing left to do except clean up the damage.
As this relates to our national debt, eventually we will reach a tipping point where the trillions of debt being inexorably added will make it difficult, if not impossible to pay the accumulated interest. The cost of debt service will become such a large portion of the federal budget that we will have insufficient funds to pay. An unexpected spike in interest rates might bring that day on faster than we might imagine.
I also see a parallel in the underwater camera that dramatically shows the well head spewing the brown crude oil into the surrounding water. This visual evidence helps us understand the problem far better than we otherwise would.
Well, we have another visual recording device in the form of our National Debt Clock (www.usdebtclock.org). I watched it for a while today. Using the stopwatch on my iPhone, the Debt Clock revealed $1 million added to our national debt every 22 seconds. In the brief time it took to write this piece, our national debt increased by $123 million. And just this week the Treasury Department announced that the U.S. budget deficit for the first nine months of the year is $1 trillion. Every penny of that will be added to the national debt.
What will the outcome of all this be? I am no prophet, but the Scripture says the borrower is servant to the lender. That has implications for both individuals and nations. As a friend of mine says: Get out of debt and buy a little gold. It may not be that simple, but that could end up being good advice.