Consider this scenario:
You learn a neighbor has children who are going hungry and you’ve been asked by other neighbors to pitch in and help this fellow citizen who’s in need. The story is he has no money to buy groceries for his children. You remember you borrowed money from him several times, but you don’t make a connection at that point. Most neighbors chipped in, say, ten dollars. You reach for your wallet and pull out one hundred dollars to contribute. You get up and go to work the next day, only to learn that same neighbor in need has been given your job.
Soon, you’re behind in your mortgage payments and the credit card companies are calling demanding payment on your accounts. Still, when you’re approached again a few months later with the same request for money for groceries for that family, and even though you don’t have any money to spare, you again chip in significantly more than your neighbors. That neighbor not only took your job, but he’s accepted your money on both occasions, even as you’re repaying the loans with high interest. Suddenly, it’s looking like he’s working quite the profitable scheme.
Does that sound realistic? Of course not. But that’s exactly what’s happening.
72 Percent Increase
It sounds crazy, but every single household in the United States owes close to $47,495 to foreign countries, including China and Japan. The Treasury Department released the report this week and in it, it’s revealed money owed to foreign interests grew by 72.3% since President Obama took office in 2008. At his inauguration, the government owed slightly more than $3 trillion. Not quite four years later, that number is breaking records and totals $5.4 trillion.
Of the $47,495 for each household, $10,000 of it is owed to Mainland China.
While it’s China that still leads the pack, the Japanese have been on the move up in its ownership of American debt. One year ago, the Japanese owned $881.6 billion of U.S. government debt. Contrasted to what the U.S. owes the country now, which is $1.2 trillion, the warning signs are clear.
Your bill for that balance due is paid via your taxes, which means there’s less money for your own investments, your kids’ college education, mortgage and credit card payments and your savings.
As of August 31 the U.S. Treasury reports foreign interests hold a total of $5,430,000,000,000 in U.S. government debt. Using that figure along with the Census Bureau’s numbers regarding how many households there are in the U.S., it averages out to the $47,500 for each of those households.
This report comes on the heels of a recent Tokyo meeting where U.S. Treasurer Tim Geithner pledged a total contribution of $475 million to fight world hunger. The second highest contributors were Japan and Korea with $30 million each. The Global Agriculture and Food Security Program was one of President Obama’s first priorities when he took office in 2009. He has made strengthening food security in low income nations a personal priority.
Meanwhile, in 2010, 17.2 million households or 14.5% percent of American households were food insecure. This is the highest number ever recorded in the U.S. – even higher than the Great Depression. The report was released by the U.S. Department of Agriculture (USDA). There’s no doubt the recession and current economic crisis of the country is in has played a significant role in these statistics. There are a few basic economic realities that go along with all of these dynamics.
Those countries that have rampant poverty might have a lot of labor, but they don’t have the financial means for capital and machinery. Using the price equalization theorem, it stands to reason these countries with a lot of labor and who pay very low wages are attractive to companies who are willing to provide capital and machinery in return for those low wages. America can’t compete. For instance, China, which historically has paid low wages, raises the ante for the U.S. All of the jobs and production efforts shift to Asia because of those low wages. The cycle begins.
America loses jobs to those poor countries and that triggers bankruptcies, foreclosures, inability to make credit card, insurance and car payments. Soon, citizens find themselves filing for public assistance as jobs become even more scarce than before. Families are being forced out of their homes and into much smaller living spaces. Before long, we discover an announcement by the Treasury Department and we realize not only are we losing jobs to those poorer nations, but we’re also sending close to $500 million to them to fight their hunger and poverty issues as millions of Americans go to bed hungry.
Further complicating matters, many of these countries are ones we’re borrowing from and before long, each and every one of us owe those countries close to $50,000 because of those loans. Of course they have it – we’re supporting them. We’re taking on all of their social issues as our own are pushed further to the wayside. The lower the income level for those here in the U.S., the more those families feel the heat. Finally, and consider this the icing on the cake, immigrants are flocking to this country because the wages are higher than what they’re earning in their countries. Our social welfare programs are already buckling and millions of misinformed immigrants are sneaking in with the goal of living prosperous lives.
Of course, politics play a primary role in these programs and decisions and the outcome of the elections in a couple of weeks will likely affect all of those programs; however, on a global stage, it’s going to be difficult to re-evaluate those programs, regardless of who is elected into office.
What are your thoughts? Are you out of work and struggling financially? Have you ever sent your children to bed confident they hadn’t had enough to eat? Share your story with us – we want to hear it. Join the discussion on Facebook or tell us in the comments section below.
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