Episode-82- Empire of Debt – Book Review

Today I introduce you to the Empire of Debt by Bill Bonner and Addison Wiggin. Both men operate the Daily reckoning website and they are wonderful writers who continuously educate their readers with humorous lessons from history and their importance to understanding the economics of today. Empire of Debt is filled with stories of what defines an empire and why they fail. I learned from Empire of Debt that America is an Empire because it is the world’s largest economy, it possesses the world’s reserve currency and it has over 700 military installations in over 100 countries. This book helped me to understand the waxing of the American Empire from 1917 to about 1968. Since then a role reversal has slowly been gripping this latest in a long list of empires. The world has seen 56 empires come and go. The 57th is the American Empire and the path to its future is written on its credit statement.
The Outstanding US Public Debt as of 11 am on 25 Apr 2012 is: 15 trillion 629 billion 429 million 650 thousand 988 dollars and it is growing exponentially by the second. The population of the United States is over 310 million and Each citizen’s share of this debt is $49,991.74. It’s an illusion and a fallacy to believe this money will ever be paid back to those who have leant the country the money. 2/3 of the debt is owed to investors around the world. 1/3 of the debt is owed to Treasury securities held in accounts administered by the federal government, such as the Social Security Trust Fund.
The mind cannot fathom what that means so I put some links in today’s show notes at todolisthome.com to help explain the numbers visually.
Empire of Debt explains with wit, humor and many useful charts how the debt got this high this quickly. I remember when it was a big deal to have a trillion dollar debt in 1990. It was 6 trillion by the time Clinton left office and now only 12 years later it is almost three times bigger. The interest on the debt that must be paid every year is approaching 700 Billion which is barely what the income tax brings in and what it is used for. Interest gets paid but the debt continues to grow.
Only economists and mad men believe in exponential growth and so the debt of this nation must someday come to an end. The end will be when it is realized that the wealth invested in creating America’s debt will not be repaid. For the time being a world wide game of musical chairs continues just as it has for other empires throughout history.
Empire of Debt provides an historical analysis of America’s 20th and 21st century wars which is really insightful because the reader is asked to think carefully, before agreeing with politicians and the media in the rush to war. The stories of empires past and the follies that led to their destruction ring true today in the USA. Empire of Debt discusses war and economics and relate that in “a modern democracy, it is relatively easy to stir the masses to absurdity”. Waging wars as we have done on borrowed money is probably about as absurd as it gets.
Empire of debt compares the Roman program of bread and circuses to how Americans occupy themselves and are indifferent to the costs their children will bear to foreign powers. Government bread programs and Nascar circuses would impress Emperor Nero. He would be awed by The watering down of a currency to the point where a dollar is a vehicle of debt. A promise to pay something from nothing in the future and at interest. Nero would be envious of the way in which money is created in the USA. Empire of Debt does a great job of explaining how the creation of money in our nation no longer comes from scarce materials in the ground but rather electronic signals based on a 12 to 1 lending ratio for each dollar invested. In short money today comes into existence by being borrowed. Please see the show notes for more on that one for I don’t wish to bend your mind on my own.
What’s really great about Empire of Debt is the way in which it explains possible scenarios for how America’s debt will be dealt with. American debt is denominated in its own currency- the value of which it can control. Having the world’s reserve currency means you can stiff your creditors without ever having to say you’re sorry.” This is just too straight up though, instead Emprie of Debt proposes that the payment of debts can be achieved in one of three ways: US currency in which the debt is denominated can be devalued against other currencies; US currency can be made less valuable through inflation; or the debt can be repudiated.
There’s more to the Empire of Debt that I can attribute much of my economics education but the important thing for me to share with you is that this book puts national destruction into a context that is entertaining and valuable. What you do with your time and money as the debt clock continues ticking will determine how you and your family survive the aftermath of too much debt. Empire of Debt can help you determine how to begin the necessary preparations. Starting a garden won’t hurt either.
This book is available for $10 and you can find a link to it at ToDoListHome.com I hope you found this book review interesting and useful and I thank you for watching. That’s it for today now go and prepare for the future of the American debt bomb.


Song of The Day – This Debt Is Your Debt 

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