Economic Issues of 2016 Election

The failure of the U. S. dollar and potential loss of sovereignty of the United States of America will be first and foremost the largest economic and social issue that American voters will face in the elections of 2016. Today our national debt stands a little over 12 trillion dollars according to treasurydirect. gov, and the gross domestic product of the United States is estimated to be approximately 14. 4 trillion as of 2008 (cia. gov, 2009).

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Projections by the current administration estimate that the national debt will rise to around 14 trillion dollars in the next 2 years, bringing our national debt as a percentage of GDP to a staggering estimated 82%, numbers not seen since the end of World War II (Washingtonpost. com, 2009). The U. S. was able to recover from the massive debt load in the 1940’s due to the fact that a majority of the industrializes nations had been bombed into oblivion. Today, this is not the case.

With the consolidation of economies within the European Union, and the rise of China and India, the United States does not have the “fortune” of being the only modernized and technologically advanced economy. According to the Treasury Departments own numbers as of October 2009, China is the largest foreign holder of US debt at 798. 9 billion dollars, with Japan a close second at 746. 5 billion. The balance of the 3. 498 trillion dollars is held by many other foreign governments.

This is a staggering number considering that as recently as 2002, the US debt was only 6 trillion dollars. How can the United States expect to have any political influence with this kind of debt? From a historical perspective, the Weimar Republic could be a look to the future of our economy. Between 1914 when the Weimar Republic moved from a gold backed currency, and 1923 at the height of the hyperinflation of the German Mark, the German government printed money in an effort to pay off their reparations debt that came with the surrender and the Treaty of Versailles.

Between 1914 and 1918, prices doubled in Germany as the leaders thought World War I would be a short war, and rather than financing the war through taxation and savings, it financed it by borrowing. After the war, the German government felt as if they had no choice but to print money in an effort to pay off their debts, as well as ensuring that their population remain employed. This decision led to a spiraling problem that resulted in hyperinflation, and in the end the German Mark was being traded near 1 trillion Marks to 1 US dollar.

A far cry from the 5 to 1 that it was traded at a few short years prior in 1914. There is no doubt that this complete collapse of the Mark led to the rise of the 3rd Reich. When we take a look at current events, I believe we must give consideration to the possibility of a similar situation rising here in the United States. On December 16, 2009 the House of Representatives voted to raise the debt limit an additional 290 billion dollars (Boles, 2009) from its current level of 12. 1 trillion. Essentially the United States has spent everything, and still needs more.

Along with this, there is evidence that there are foreign governments that are looking for ways to dump their US treasury bills, in search of a more stable and reliable investments. Considering the fact that the United States paid over 383 billion dollars on the debt alone in 2009 (treasurydept. gov, 2009), and it is expected to be near 700 billion dollars a year in 2015, it does not take a rocket scientist to see that printing money might be a legitimate consideration in the very very near future.

The only problem with this is if China or Japan decided it wanted to liquidate their T-bills our economy would be in shambles. It is my belief that the pieces are all falling into place for the United States to fall into a similar situation as that of the Weimar Republic, where our need to pay off our national debt will be financed with the printing of money, which will in turn lead to massive inflation that will be borne by the residents of this once great economic superpower.

Inevitably the globalization of the world will lead to a new world currency as the dollar collapses, and with this new currency will come a total redistribution of wealth throughout the world, as the United States becomes a part of a larger coalition of associated nations with similar economic concerns. Certainly this could be a real possibility in the 2016 election, but could it be here in 2012? References Montgomery, L. (2009, March 21). Deficit projected to swell beyond earlier estimates. Retrieved from http://www. washingtonpost. com/wp-dyn/content/article/2009/03/ 20/AR2009032001820. tml (2009, November 11). The Debt to the penny and who holds it. Retrieved from http:// www. treasurydirect. gov /NP/BPDLogin? application=np (n. d. ). Cia factbook. Retrieved from https://www. cia. gov/library/publications/the-world-factbook/geos/us. html Goodman, George G. W. (1981). Commanding heights. Retrieved from http://www. pbs. org/ wgbh/commandingheights/shared/minitext/ess_germanhyperinflation. html Boles, Corey. (2009, December 16). House narrowly passes $290 billion increase in debt limit. Retrieved from http://online. wsj. com/article/SB126099939736594429. html