Kidogo's World
... what happens if the dollar is no longer desired overseas. At that point all the dollars come home, and then we'll see real inflation. And, friends, that is going to happen .... And the reason that is going to happen is that the "dollar" is sinking steadily in the international credit market.
Howard Phillips
Now, a more obvious crisis coming to the fore is the debt crisis which faces our country. The debt crisis is the crisis which is going to precipitate a political crisis in the United States of America. Most people are very selfish. Maybe 30 million unborn children murdered in their mothers' wombs doesn't get their attention. Maybe government support for homosexual degeneracy has corrupted our blood supply and placed at risk the lives of thousands of innocent people. That doesn't get their attention. Pornography doesn't get their attention. Other things don't get their attention.
But what gets their attention is having less money to spend and their taxes raised when things get tough economically. My friends, America is going to face its most serious economic crisis ever.... We're going to face hyper-inflationary depression far more intense than anything that was seen during the great depression of the 30's. The reason is because 2 and 2 still make 4. I can't tell you when it's going to happen, because the government has the ability to delay the inevitable. It can't prevent the inevitable, but it can delay it.
Here are the facts. Let me share a few statistics with you.
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Spending
In 1961, when John F. Kennedy became President, the federal government was spending $97 billion a year. 20 years later in 1981 it was spending $678 billion. In 1991 it was spending $1.3 trillion a year. So it basically doubled its spending during those first two years of the Reagan and Bush administration. It was not for defense. The Reagan spending increases were twice as great for non-defense spending as they were for defense spending.
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Taxes
In 1961 the government collected $94 billion in taxes. In 1987, $599 billion. In 1991, $1.1 trillion. So again it doubled from '81 to '91 during the Reagan/Bush administrations. Taxes doubled during those years.
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Interest
In 1961 the government spent $9 billion a year in interest on the national debt. $9 billion to service the debt. In 1981 it spent ten times that much, $95 billion to service the debt. By 1991 it spent $285 billion in interest a year -- to service the national debt. Last year it was around $300 billion. When Reagan became President the national debt was $914 billion. At the end of his second term it was $2.8 trillion. It had tripled during his presidency. When George Bush left it was $4.2 trillion. Today it's about $4.7 trillion. By the end of this decade it's going to bump up against $10 trillion.
That's not a prediction. That's looking at the numbers and projecting by the congressional guidelines. If the numbers are not changed and the government continues along the path which leaders of both parties of Congress and the White House have designated for the end of this decade, you're going to have an 8 or 9 or 10 trillion dollar debt, depending on factors which are beyond our prediction and control. It's going to double; and if it doubles and interest rates stay the same, instead of paying $300 billion a year to service the debt, we will be paying $600 billion a year to service the debt.
You know what? The interest rates aren't going to stay the same. You know why? Because the government raises interest rates for the benefit of the people who buy government bonds -- especially people overseas. And, as the dollar grows weaker, and as the return on the investment seems less attractive, the only way to keep that balloon in the air is to increase interest rates. During the Carter years interest rates went up to about 21% . My guess is that they are going to be at least that by the end of this decade. So let's say that the government is now paying at the rate of about 7% a year. If it goes up to 21%, and if the debt doubles, we are going to be paying $1.8 trillion a year in interest on the debt.
What makes that interesting is that the government only collects $1.2 trillion a year in taxes. In order to come up with that extra money the Fed is going to have to kill more trees. They're going to have to print more Federal Reserve Notes. So far we've been somewhat protected from the Fed's printing extra Federal Reserve Notes, because no matter how many they print the Federal Reserve Notes go overseas. They go overseas because people like "dollars." People prefer "dollars" to any other currency. If you are a drug dealer, you'd rather have $100 bills than Japanese yen. If you're running a black market operation in Moscow, the dollars are what get peopleÕs attention. So far we have been insulated from inflationary practices by the Federal Reserve system.
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Why the Money Will Inflate
But what happens if the dollar is no longer desired overseas. At that point all the dollars come home, and then we'll see real inflation. And, friends, that is going to happen .... And the reason that is going to happen is that the "dollar" is sinking steadily in the international credit market. Recently it fell below 100 yen to the "dollar," the lowest it had been since Pearl Harbor. If you look in the Wall Street Journal's graphs, the "dollar" has been steadily sinking, and the reason it has been sinking is because of our debt. Because we have had no President since the mid 1960s who has even proposed a balanced budget, let alone insisted on it. The debt has gotten bigger and bigger and foreign governments have lost confidence in the dollar.
ThereÕs another factor which will lead to a hyper-inflationary depression in this country. And that is that there is a new currency coming on line. It is going to be called the European Currency Unit.
Last October, 80 [1993] others and I went to Europe and met with the leaders in eight countries to study the Maastricht Treaty and European Currency Unit. We came away with the conclusion that this new market of 380 million people was going to have a unified currency system -- a unified monetary system -- by the year 2000. They will have it. And that unified monetary system is called the European Currency Unit. And the central banks of Germany, France, Switzerland -- all over Europe -- are going to stop using the dollar as the currency of international trade, as the standard of the world, and are going to start using the ECU.
When that happens we'll have the confederate dollar, and that's when the attention of the people will turn. We will have major political problems. We will lose our country later in this decade unless we are able to offer hope -- unless we are able to show the American people that there is a way of making this country solvent, of making this country great again under the Constitution, under the Biblical premises that constitutional boundaries provide.
To continue: IV Battle Plan
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