Today Bloomberg reported: Federal Reserve Chairman Ben Bernanke said large U.S. budget deficits threaten financial stability and the government can’t continue indefinitely to borrow at the current rate to finance the shortfall. Since most of our citizens still haven’t figured out that 13 minus 11 equals fiscal destruction, it’s a great time to watch and recommend the outstanding film I.O.U.S.A.
The film breaks down our fiscal crisis into four severe deficits:
- The Federal Budget Deficit
- The Savings Deficit
- The Trade Deficit, and
- The Leadership Deficit
The first section explains that when our government spends more money than it earns, financial and social instability is inevitable. Apparently, like any genuine addict, our entire society is living in denial about the effects of our Federal Budget Deficit. The older generations are enjoying government services which will be paid for by their children, grandchildren, and great-grandchildren. Their actions say: “Your financial slavery to our national debt (to be paid for with future taxes) is not my concern.” As one person says in the film, it’s analogous to an individual running up a huge credit card debt and then leaving it to their offspring when they die. Selfish? Irresponsible?
The second section explains the Savings Deficit. Basically, Americans don’t save money. This behavior directly amplifies the problem with the Federal Budget Deficit because when people don’t have money saved, the government usually ends up paying for things like healthcare, food, shelter, etc. The government could say “F you,” but that leads to social unrest. And the NUMBER ONE thing a government cares about is keeping order. Everything else is a distant second. So, we are in a vicious cycle.
The third section explains the Trade Deficit. Currently, we import and consume more goods than we export and produce. To make up for this deficit, our suppliers lend us money (i.e., they purchase US Treasury Bonds) which the government pumps into the economy. This is like a retailer which gives you a store branded credit card to buy their goods. So long as you can find money from someone else to pay the debt to the retailer, all is swell in Pleasantville. However, when the game of hot potato ends, someone’s hands get burned. In our situation, the more money we borrow from other countries like China, the more of our tax dollars we will send them. Worse, when that process gets maxed out, our creditors will force us to either sell assets (land, houses, cars, etc.) to pay them or simply start selling our debt. If they sell our debt too fast, our currency will lose value. If our currency loses value, inflation sets in. Once this horrible cycle starts, we will all be working much harder to acquire the same things we have now. Not fun.
The final section of the film highlights the bipartisan contribution to our Leadership Deficit. Rather than talk straight about our illness and the prospective paths to fiscal health, FOX News and CNN focus on petty dramas and blameshifting. We have radio talk show hosts and other entertainers heavily influencing both political parties. We have people who are such diehard fans of a political party, that there is no hope of rational conversation. We are at the point where as a country we must realize that governors, presidents, legislators, etc. are people who make mistakes. In this case, they’ve made some huge ones. But, they have the power to fix those mistakes if we focus their election-centric brains on what we need. Unfortunately, like any good parent knows, it’s hard to be the bad guy when the medicine doesn’t taste good. And our current crop of representatives (if they represent our best interests, please shine some light for me) are more interested in their political careers than our country’s well-being. Clearly, this contradiction must be ripped out like the heart of the guy who got sacrificed in the original Indiana Jones.
With all that said, this movie has wonderful charts and graphics to transform complicated realities into simple understandings. I highly recommend this film if you are:
- interested in transcending partisan politics so our society understands the truth of our problem;
- explaining our fiscal problems to friends, family, or co-workers;
- debriefing someone who is an unbeknownst member of the FOX, CNN, or MSNBC cults; or,
- trying to teach your children fiscal responsibility or simply explain how out national budget is f*ed.
I guarantee that anyone who watches this film will be more enlightened after 125 minutes.