The title might be too much to stomach for some, but such is the tone of Fred Kingery’s commentary, published by the Center for Vision and Values at Grove City College, titled ‘The Dollar at the Precipice.’
Kingery writes, “At no other time in our nation’s history has the federal government ever attempted to embark on a borrowing binge like the one about to unfold; not during the Revolutionary War, the Civil War or even World War II.”
Kingery says that the country has moved away from savings and investment to a nation “very dependent on future borrowing to support our current standard of living.” This is where red flags should start going up. We have higher time preferences, which in economics means that we are focused substantially on our well-being in the present and the immediate future. This essentially results in limited savings and virtually no investment for future consumption.
What’s more, Kingery says that over half of our federal debt is owned by foreign countries that are not particularly friendly to our nation. After becoming the leading exporter of low-cost, quality manufactured goods, China has generated a cash surplus of over $2 trillion U.S. dollars. It is the single largest holder of U.S. Treasury debt outside the United States. In other words, if China and other holders of U.S. treasury decided to diversify away from an excessive exposure to the U.S. dollar, then our government’s ability to secure financing could become seriously questioned. This “Economic Warfare against the United States,” says Kingery, “is a very real possibility.”