Book Review Jobenomics Chapter 3: Our National Debt -

I have always had an interest in our nation’s economy. While it might sound like a shallow thing to say, it’s the heartbeat of America. And if that heart is not in good health, the public will also feel the pain. I have paid close attention to names like Stiglitz, Buffet, Dent, and Roubini. However, Chapter 3 of Jobenomics: Our National Publi Debt, frightened me more than any predictions or comments made by those mentioned above. While many people will shake their heads and state that these types of predictions are made by pessimists and Wall Street bears, everything in this publication is referenced. Not only that, but the numbers add up. Chapter 3 of Jobenomics shouldn’t be looked at as something to scare you, rather as something to educate you so you can prepare for what’s to come.

The most important thing that struck me about reading this chapter was that it gave me the same feeling as reading many other trustworthy economists. The public is under the impressions that government stimulus was a success and that the economy is turning around. What they don’t realize is that the government stimulus was enacted simply to buy time. Once it runs out, we will not only be in the same place we were in late 2008/early 2009, but worse. That time period featured the Credit Crisis. The future holds a larger problem – the Debt Crisis. Some of the numbers provided in Chapter 3 of Jobenomics was confirmation of what the future holds.

I was already aware that our national debt was the largest in the world and that is stood at approximately $13 trillion dollars. However, I was not aware that our private debt was as high as $16.5 trillion dollars. These might just seem like numbers to many people, but that’s because these numbers are so incomprehensible. Do people have any idea what kind of affect this is going to have on taxes? Taxes are going to skyrocket, which will keep our economy crippled. How will the consumer, which is 70% of our economy, have the capability of purchasing discretionary items when they’re paying so much in taxes? How will they have the ability to pay for anything? In addition to taxes rising significantly, there will have to be drastic changes made to social security, Medicare and Medicade. One thing that was not mentioned in this chapter was that banks also have $16 trillion dollars worth of debt. That being the case, where will credit come from?

Another scary number that this chapter pointed out was that our debt to GDP ratio might jump as high as 200% within the next 20 years. It is also stated that our current fiscal situation is unsustainable. This is not a word that should be brushed aside. Think about that word and the consequences it will have for the American public. At our current rate, all debt will rise by more than 100% within the next 10 years.

Instead of just being a doom and gloomer, this chapter made me contemplate a solution. While many people would oppose it, one option would be to focus solely on paying off debt for the next 3-5 years. This would lead to a deflationary environment, which would in turn lead to a depression. But contrary to popular belief, this is actually a good thing for the long-term economic environment. It will lead to lower prices, which will allow for more innovation. It’s basically like hitting the reset button opposed to going the hyperinflation route like the south prior to the Civil War, Zimbabwe, or Mexico. Of course, it will also eliminate the problem – debt.

Chapter 3 of Jobenomics is something every American that cares about economic stability should read.

Jack Canfield, Dares You to Dream Big

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