Nikki Haley Joins the Debate on Debt

The former South Carolina governor, Nikki Haley, is sounding the alarm over our surging national debt. “In the next two weeks, our country will hit $40 trillion in debt. It’s one of the biggest problems facing young Americans right now,” she cautions, “yet politicians in Washington and around the country aren’t even discussing it.” It’s a timely warning, and one that is intertwined with America’s fiat money crisis.“We’re leaving an entire generation broke,” is how Ms. Haley sums up the federal profligacy. She points out that “Washington is borrowing $60,000 a second and paying $24 BILLION a week in interest alone.” The fiscal debacle, she laments, has slipped off the agenda for our elected officials as they start campaigning in earnest for the midterms. The debt, she says, “is spiraling while the House is on summer vacation and the Senate can’t wait to take their own.”A telling criterion of today’s fiscal laxity is traced by the Joint Economic Committee of Congress, which reports each household’s share of the gross national debt amounts to some $295,000. By contrast, America’s average mortgage balance is about $264,000, per credit reporting agency Experian. The federal debt, in short, is saddling future generations of Americans with a de facto second mortgage. And the pace of borrowing shows no sign of relenting. Plus, too, it’s becoming increasingly clear that the vast federal indebtedness is fueling today’s crisis of affordability by making it more expensive for Americans to borrow. “The government is running these large deficits, and debt is so high that investors in United States debt are demanding higher interest rates,” cautions the head of Yale’s Budget Lab, Natasha Sarin. “That trickles down to the rest of the economy.”The federal borrowing binge, the Atlantic’s Martha Gimbel has reported, pushed up “Treasury yields by a full percentage point,” making borrowing more costly and adding tens of thousands of dollars to the expense, say, of a mortgage. The swollen federal debt, in Ms. Gimbel’s analysis, is adding some $2,500 a year to the cost of a 30-year mortgage, or $76,000 to the span of the loan. It’s no wonder home ownership seems out of reach for many Americans.All this federal debt has been made possible in part by the fiat money regime that was launched in 1971 when Nixon severed the dollar’s last ties to gold. Prior to the end of the Bretton Woods system, the dollar was convertible, at least for foreign governments, into gold at the rate of a 35th of an ounce. The discipline of convertibility helped put a brake on federal deficits and borrowing. Federal debt in 1971 was but 35 percent of gross domestic product.Since then, the fiscal brakes have been off and the public debt now stands at 122 percent of GDP. Meanwhile the value of the dollar in terms of gold has plummeted to less than a 4,300th of an ounce. At the intersection of this fiscal and monetary debacle sits the new chairman of the Federal Reserve, Kevin Warsh. He took office with ambitions of “regime change” at the Fed, but unchecked debt could crimp his plans to curb inflation and tame the bank’s balance sheet.The Cato Institute warns that “fiscal pressure” could impinge on “the Fed’s willingness to tighten” interest rates “when needed,” in “a modern echo” of the debate, resolved in 1951, over the Fed’s independence from the Treasury vis-à-vis borrowing. That opens the door to the debt ending up being repaid via higher inflation rather than fiscal restraint. So we hope that Governor Haley finds her voice and sticks with the fight on the hustings.

Nikki Haley Joins the Debate on Debt

Nikki Haley Joins the Debate on Debt

More from the New York Sun

Antisemitism Accusations Against Rightist Rising Star, Jordan Bardella, Roil France’s Presidential Contest

In the Pied-à-Terre Tax Clash, Where Were the Adults?

From Russia to America, Bears Advance, People Retreat

Escalating Crisis Over Pro-British March at Northern Ireland Flashpoint Raises Specter of ‘The Troubles’

Tech Experts To Testify on ‘Rogue AI’ Before Senate Subcommittee

Klobuchar Revels in GOP Colleague’s Failed ‘Gotcha’ Moment After He Confuses Atlanta Hawks and Iowa Hawkeyes During Questioning of Jack Smith

Mamdani’s Grocery Store Experiment Is Making Waves All Over Trump’s America

Pope Leo’s Stunningly Successful French Visit Echoes the Epochal Pilgrimage of John Paul II to His Homeland

More from the New York Sun

Antisemitism Accusations Against Rightist Rising Star, Jordan Bardella, Roil France’s Presidential Contest

In the Pied-à-Terre Tax Clash, Where Were the Adults?

From Russia to America, Bears Advance, People Retreat

Escalating Crisis Over Pro-British March at Northern Ireland Flashpoint Raises Specter of ‘The Troubles’

Tech Experts To Testify on ‘Rogue AI’ Before Senate Subcommittee

Klobuchar Revels in GOP Colleague’s Failed ‘Gotcha’ Moment After He Confuses Atlanta Hawks and Iowa Hawkeyes During Questioning of Jack Smith

Mamdani’s Grocery Store Experiment Is Making Waves All Over Trump’s America

Pope Leo’s Stunningly Successful French Visit Echoes the Epochal Pilgrimage of John Paul II to His Homeland