Americans should be marching on D.C. by the millions with pitchforks in hand in protest of what the government has done to the economy and the nothing it plans to do about it. Yet they aren’t, primarily because they don’t understand the problem.
Called by one review “‘An Inconvenient Truth’ for the economy,” the new documentary I.O.U.S.A., loosely based on the book Empire of Debt, attempts to explain the current fiscal crisis in terms ordinary people can understand.
At an advance screening in Boston Thursday night, it was clear to this observer that it didn’t entirely succeed.
Everybody has heard of the budget deficit and the national debt. And everybody has heard that they’re growing like mad. The national debt has passed $9.5 trillion, a number most people can’t comprehend even after the meaning of “trillion” is explained.
Yet, I.O.U.S.A. shows that the economic problem is even bigger than that. With some 62 percent of government spending “on autopilot,” or so-called mandatory spending, on things like Social Security and Medicare, with current policies the amount of money the government will have to spend on everything else, including homeland security, national defense, infrastructure, and anything you can think of, will drop to zero by 2030, and those entitlement programs along with interest on the national debt will eat up the entire budget.
A counter displayed on screen before the movie began put the dollar figure of those unfunded future liabilities at over $55 trillion, or $175,000 for every man, woman and child now living, and that number is growing fast. In order to pay off these liabilities as they stand, taxes would have to more than double.
The movie explains that the real problem in the future is the ratio of national debt to gross domestic product, the entire output of the U.S. economy. Today it’s 66 percent, higher than during the Great Depression. It’s only been significantly higher during World War II, when Americans bought bonds to support the war effort. After the war, though, the government relatively quickly bought back the bonds and brought the national debt back down. With policies as they are, though, by 2040 national debt will grow to 244% of GDP, an outrageous figure.
Former comptroller general David Walker explained that this time it’s different. Now, instead of ordinary Americans, other countries hold a significant percentage of the national debt, and they can use that to control American policy, as the U.S. did to Britain during the Suez Canal crisis, not to mention using it to buy American real estate and businesses, as foreign investors have already begun doing in the last few years.
Compounding the problem is the failure of Americans to save money. This isn’t entirely the people’s fault, though. People are squeezed so tight right now that saving money is all but impossible, and many people are living off their credit cards, so much so that the rate of saving has actually gone negative. This will eventually come back to bite us, as Warren Buffett’s Squanderville vs. Thriftville story shows clearly.
Then there’s the trade deficit. While Americans fail to save money, the country is a net importer, with Americans buying all kinds of things they don’t need and contributing to the world’s largest trade imbalance, with China of all places. A trade imbalance isn’t necessarily bad, but it does make the debt problem worse. And meanwhile some ordinary Chinese workers appear on screen who are living on $10 a day and still manage to save and invest half of that. It’s clear that America has become Squanderville, while China is the model of Thriftville.
Finally, the movie points to a leadership deficit. It took 200 years to rack up $1 trillion in debt, and by the end of the Clinton era the national debt was past $4 trillion. George W. Bush has more than doubled the national debt to over $9 trillion. Sounds like fiscal conservatism to me . . . not. Then again, Congress shares some of the blame as well; they approve the programs which spend all this money, most of the time not even reading the bills before they vote yes. And the people of this country have failed to pay attention while the drunken sailors in Washington were busy spending beyond our means and putting our children’s future in jeopardy. Or they’ve been among the people who are cashing in on this unsustainable government spending spree.
I don’t think the movie put enough emphasis on the Federal Reserve, without which the Great Depression and the current crisis could not have occurred. With America now the world’s biggest debtor and China and other nations rising economically and buying everything in America they can get their hands on, Thomas Jefferson’s prophetic warning against central banks such as the Federal Reserve may yet come to pass: “If the American people ever allow the banks to control the issuance of their currency . . . the banks and corporations that will grow up around them will deprive the people of all property, until their children wake up homeless on the continent their fathers conquered.”
After the movie was a simulcast panel discussion with Warren Buffett, Peter G. Peterson, David Walker, William Niskanen and Bill Novelli, in which these men took questions in a town hall format and discussed potential solutions. Novelli, executive director and CEO of the American Association of Retired Persons, argued that Social Security would survive the crisis, perhaps with only minor changes. Niskanen, chairman of the Cato Institute, disagreed, saying that Social Security would have to be privatized in order to save it.
Buffett, currently the world’s richest man, played Pollyanna, repeatedly claiming that there was nothing to worry about and that everything would be fine.
Peterson’s foundation helped fund the movie, and Walker, who resigned as comptroller general in March, is now president and CEO of the foundation. Walker shocked audiences by proposing mandatory savings accounts, in which Americans would be required to set aside two or three percent of their earnings.
But all agreed that the number one cause of the crisis is rising health care costs, especially with Medicare, which accounts for more than half of the government’s unfunded obligations.
I heard several moviegoers complain after the movie that they still didn’t understand all of the issues. I can’t say, as some other reviewers have, that this is the movie’s fault. It does a great job of simplifying extremely complex, interrelated economic issues to a point where they can be understood, using charts and graphs to illustrate the country’s precarious financial position. (Unlike in some other cities, there wasn’t a significant Ron Paul supporter presence in Boston proper, and the movie didn’t sell out, though there reportedly was in other theaters around Massachusetts.)
The issues are complex and an 85 minute movie simply can’t go into enough depth to ensure that everyone understands everything. That said, it did contain some creative simplifications, such as how the Federal Reserve discount window works and how it causes inflation, that most people can understand.
What the movie failed to do is to explain why it’s so important that these issues be addressed now. It’s there that I will try to pick up the slack.
In the movie, Walker does make references to other republics which in the past have overextended themselves militarily and financially and collapsed, though nothing is said about what such a collapse might look like or how it will affect the average American. You could compare it to the Great Depression, but in fact, this collapse will likely be worse.
Consider Zimbabwe, where the local currency loses so much value so quickly that dollar notes are denominated in hundreds of billions and people have to spend it on anything they can possibly find because prices go up hourly or even more often. Or consider Argentina, which had an economic collapse in 1999-2002 which resulted in violent street riots and eventually the fall of the government. Put these together and multiply by ten and that’s how bad things are likely to get.
Yet not all is doom and gloom; there are ways out of the crisis, and there are ways to put the country back on a sound financial footing. Unfortunately, the movie didn’t discuss any of them, and the panel discussion afterward went out of its way to steer clear of any solution which would actually work.
I suggest you start listening to Rep. Ron Paul (R-Texas). He actually appeared in the movie a couple of times, and in several theaters the crowd erupted into cheers when he came on screen. In one scene he is berating former Fed chairman Alan Greenspan, saying that if he practiced medicine the way the Fed runs the economy, “my patient would die!” The best part of the movie may well be the fifteen seconds of silence which follow. Ron Paul is still berating current Fed chairman Ben Bernanke for much the same reasons, though you aren’t likely to see this outside of CNBC or C-SPAN. Paul argues that the country needs to return to the gold standard; indeed, our most serious economic problems could not occur until the currency was disconnected from gold. But you won’t hear that in the movie.
Now after the movie ended, I, along with several other people who went to various theaters across Massachusetts for this purpose, handed out flyers for the Free State Project, a movement to bring liberty loving individuals to New Hampshire to work for smaller government, with a list of web sites on the back where people can find more information on economic issues and liberty in general. The flyers were very well received, and a spot check of nearby trash cans indicated that few or none of them were thrown away. If you received one of these flyers, I’d like to hear from you. I blew out one laser printer and used an entire toner cartridge in another printer making them, and I’d like to know if it was money well spent.
As of Friday the movie is in limited release; if you missed it last night, you can watch the trailer now, find it in a theater, or wait for the DVD release. Meanwhile, Walker’s Fiscal Wake-Up Tour continues, and if it comes to a city near you, you should go see it as well.
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27 Comments
I had the pleasure of seeing IOUSA last night. It is a eye opener! We need to make this required viewing for our children, grandchildren and elected officials. Thanks for posting the trailer and other scenes. I also linked to a special offer above. Looks like if you save your ticket stub you get a free subscription to a newsletter. Anyway, thanks again for the great post. -Steven K.
Great and detailed review. Your memory is much better then mine. I wrote a review at the following link:
The movie was entertaining, and even comical, but it fell short of my expectations. Its a complicated subject that I understand, but somehow I doubt most viewers will understand it after watching the movie.
Hey, look at that, an astroturfing campaign! You should know that sort of thing gets caught around here. And I had to go in and fix your link.
Check out this video that seeks to bring the Social Security crisis to the attention of the youth. We need more media around such projects to engage and empower folks into action.
We wanted to see I.O.U.S.A., but it’s showing anywhere around here. We live in Louisville, Kentucky. It says that the movie has a limited showing. Can any one explain what that means? Is this some attempt to censor the movie?
Thanks
I meant to say it’s NOT showing any where near Louisville, Ky
That means that they believe there isn’t enough interest in the movie to push it out to a larger number of theaters like your big box office hits. If they find out in the limited release that it’s more popular than they thought it would be, then they’ll likely release it more widely.
Thanks for the great review. When talking about people not saving money, it might be worth adding a sentence or a phrase mentioning how even those that do save are having their savings stolen due to inflation.
I consider myself informed, but this film really opened my eyes as to the sheer size of our obligations for SS and Medicaid/Medicare and to the urgency with which these problems need to be addressed. Every American taxpayer or future taxpayer over 12 should see this film.
Thank you, Michael Hampton. We’re just glad this isn’t some attempt by a political body to limit the showing…
It’s more of an indication of how little interest most people take in why they don’t have any money anymore.
I.O.U.S.A. was a disappointment .I went into the advanced showing expecting Ron Paul type truth. But instead left with the same feelings of frustration that I always feel when I’m being lied to by the MSM. The movie points out the obvious ” this country is in a financial state of emergency “. Yet the main cause of the problem ( the Federal Reserve Bank ) was deceptively glossed over.The gist was that the American people, especially the baby boomer generation are to blame for the current state of affaires because of spending beyond our means.That is the grain of truth so popular with the propagandists.
After the movie, It was suggested by a live panel of “experts ” David Walker (Former GAO head), Pete Peterson, Warren Buffet, Bill Niskanen (CATO Institute), and Bill Novelli (AARP). that a saving account and working harder and into our 70’s is the solution.
Yes, there was an old clip of Dr. Paul humiliating Greenspan. However that sound bite would have one conclude that the problem was a result of Greenspans personal incompetence rather than the fact that the Federal Reserve Bank itself is the real culprit. The film was dangerously misleading. Just another lie with a grain of truth. Ron Paul’s presence in the film only served to legitimize the lie. I believe that if Ron would have seen the finished product he would have not participated.
Hey baby boomers apparently we are the new enemy within. Just like Hitler declared that the Jews were enemy’s of the state, this movie hints that our economic problems are a result of our generations selfish greed and fiscal irresponsibility. After all most of us are living like kings and we have never had to really work very hard.( sarcasm ). However there is a grain of truth to that but the real truth is that the connected elected along with world bankers have stolen this country’s wealth , now with that said.This will become the new trend
Seems like a good way to divide the country even more.Get the next generation to blame us and force us to work till the day we die all the wile dictating how we save our money.Then the next generation will come of age.The movies solution is new leadership that will address our over spending and get this, we need forced saving accounts and the baby boomers need to work longer even into our 70’s. OK lets put more money into savings accounts so bankers can loan even more on our deposits and get richer on the intrust . And get used to the idea of working till the day you die. Sounds like a blue print for slavery to me
I wouldn’t mind working till the day I die. I enjoy finding ways to make myself useful and I like to earn a buck. I’ll keep living that way for as long as I can.
I just don’t like the idea that over half of what I make is extorted from me by the system and used to support useless buggers who do little, and generate nothing.
I have no sympathy for those who won’t take care of themselves. I owe them nothing.
Bob I suggest that you read a little book called ” Animal Farm ” by George Orwell. Please pay particular attention to the character named Boxer the loyal hard working horse.
Oh yeah, I’ve read that one. The difference between Boxer and I though, is that I’ve never believed in the party line.
Given the chance, I wouldn’t hesitate to kick a few pigs in the head.
How about you read a kid’s book called “The Little Red Hen”.
That’s the one where she tills the soil, plants the grain, reaps the harvest, grinds the grain into flour and every step of the way, not one of the lazy, useless farm animals will help her. When she bakes the bread, they all smell it and want some. She tells them to piss off.
I like that book.
Good book “The little red hen ” Deep. I have to wonder though what would have happened if the duck, cat, and dog enlisted the help of the farmer and they all took a share. The farmer would naturally get the largest slice so he could distribute it to the cows goats and of course the sheep. Then the others all decide that the hen should be the official bread maker for ever after. Would the hen be so eager the next time she found a grain of wheat ? But then I think that was your stand from the beginning wasn’t it Bob ?
Hmm could the reason for all of this debt be due to the fact that we as Americans choose to swipe a handy credit card?
Would you like our economy to be strong? I suggest having money before deciding to spend it.
Topper. I guess the little hen would be kind of defenseless if they all turned on her. She’s just a little chicken. She can’t carry much gold or lift a shotgun and she doesn’t have any hands or fingers to pump in a round or pull the trigger.
Luckily, I don’t have any of those problems.
Biotopsis.
The last time people really had money before they decided to spend it, was back in the seventies. That’s when values were still real. Back then it was possible to save enough cash to actually buy a car or a piece of land or even(imagine this one), a house. The “buy on credit” crap started in the eighties. Interest rates were really high, but people were still earning enough to pay the interest with money left over. Prices went up, so credit got easier to compensate. People started to get a little cash strapped, so interest rates went down to compensate for that. Prices kept going up.
Now, here we are.
The numbers are so big now, that even people who have “money” don’t actually have the cash in their hand, it’s just a number in an account or on a statement from a pension plan or a retirement plan. Try to get your hands on it and the government will take half. Put the other half in a briefcase on your backseat for the ride home and the cops will pull you over and seize it as “suspected proceeds of crime”. Nobody has cash today. Very few people could actually lay 10,000$ on the table. What does that buy?
When I was back in highschool, I had an old teacher who was a bit of an expert on the Great Depression. He said that back then in 1929, there were lots of people who had money in the bank. Gobs of money. Big numbers printed in their account books. Things got tough, so they went down to the bank to get some cash, and the doors were locked. Those numbers in the book didn’t mean a thing. The money was gone.
People should ask themselves, “How much money do I really have? In my hand?”
Now think about the possibility that within a year, that cash in your hand will be worthless too.
The only things that will be worth anything in the coming catastrophe are your abilities, tools, supplies, food and a reserve of precious metals that can be traded for goods when things finally settle down. You have to be ready to protect these things too.
Don’t expect to get rich off of gold and silver. They won’t be worth a pinch of coon-#$*! when the ball first starts rolling. Tuck them away for later.
If the people of the United States would have been reading books over the past 50 years about their candidates and the history of their country, instead of having gotten their information from the television and radio, our Congresses, over that time, would have been composed of an entirely different group of men and women. And, certainly our old country and it’s people would be 100% better off today.
Start reading if you want to change things for the better. Read and teach others to read, especially your children. Read about both the politicians you admire and despise. Read about U.S. political and economic history and about the history and development of currencies, foreign policies, etc. Yes, it means some work, but you will gather factual knowledge. You will know the truth! You’ll get the whole picture correctly (instead of what the clever TV politicians and the media want you to see and believe. Stop listening to their sales pitches on TV and radio.
Start reading today, tonight. Plan to read several books and you’ll come to understand what’s really wrong and what’s right, and what needs to be done.
This is the truth, and it will set you free. It’s what each and every individual can and should do for themselves and their family. Have regular family reading sessions with your family. Teach them to read and study about these issues. If any politician or acquaintance tells you otherwise, ignore them and read on.
Television and media news are the great deceivers of men and women today. Turn off the TV and the radio, gather around with your family and read books about these people and the great issues of our time. Study together. Help your kids to get a factual understanding, so they can make a great difference someday.
Read both favorable and unfavorable biographies of say, Franklin Roosevelt, Lyndon Baines Johnson and Richard M. Nixon. Read about Thomas Jefferson and old Tom Paine. Read favorable and unfavorable books about Bill and Hillary Clinton, G.W. Bush, Rudy Guiliani, Ron Paul Barack Obama, John McCain and, of course, Dick Cheney. Compare and contrast.
Guarantee this, you’ll find out what the real problems are, and what really needs to be done about our government and the people who purport to operate it for us. It’s the very last thing the politicians and media bums want you to do. They need you to stay plugged into their pucky hype and whitewash. Read books about them instead and you’ll get facts and real information you can sink your teeth into, instead of their smoke and mirrors, which is deliberately prepared to look good, but is, in truth, almost always watered down and badly skewed to one side or another.
Extensive reading will protect you and your family from this.
And, more importantly, you will see through it, and be able to make truly “informed” decisions about it. That’s something the policians and media hate and absolutely fear.
So, get rid of your TVs and radios today! They will only help you to make the worse possible decisions for yourself, your family, your children’s future and your country. TV politicians and the media are trying sell you something based on fear, half-truths or commericialism. Something you and your family doesn’t need.
So make a change for the next 50 years, turn off the TV and radio, get the family involved and starting reading…
Old Ben Franklin
This is a fabulous blog! And there are a lot of intelligent people reading it. :)
I totally agree with the old ben guy, we got to get out there and look for the real info.
I haven’t watched TV in over 5yrs (or listened to radio much), yet I was just told last night that I was very informed and great to have a conversation with! :)
Finding the truth is much easier now with the internet and everyone sharing such great info and insights.
I found this video informative, but I really do think it’s only because I have a (very) basic understanding of the issue (because of reading books published in the 70’s about this subject). I really do think most people would walk away from this uncertain and confused. Hopefully they would look for answers.
I found it VERY upsetting at how unaware the people questioned in this film were.
Compared to them I’m a genius in this field, and I don’t know that much at all.
I really believe people want to know this sort of thing, but find it overwhelming, so instead they do nothing.
At least this video might get some people to thinking and maybe (even better) researching. :)
Hey Bob
If you are out there reading this I was wondering what you think about the new “Farmer” elect.
Now that the farm will be under socialist rule,where all get a slice. Will the little red hens of this country stay extra busy in the coming years? Or will they just blend in with the collective and abandon there ambitions in favor free feed and subsidized shelter?
Topper
I hear you Topper. What is going to happen? I don’t know.
There is no pie left to get a slice of, that’s what people don’t seem to get. We’re broke. Flat broke. Worse than broke because we owe money. More money than we could ever hope to pay. Our industry is broke, our banks are broke, municiple governments are broke, state governments are broke and the federal government is broke. No pie.
Obama will be handing out empty plates like a little kid at a pretend tea party and saying “Eat your pie Mrs. Periweather! Mmmmmmm, it’s good!” Stupid buggers.
The little red hens are going to be holed up in a bunker somewhere or blending in, if they want to survive this mess.
“Four legs good, two legs bad!”, with a special exemption for the birds. Their wings will be counted as legs in the context of this message.
Hello Bob I am glad that you are still following this. For a wile I worried that you ended up in the proverbial glue factory.You and I seem to have come full circle on this one and ended in total agreement. There are no more grains of wheat to find. Unless the hens turn there attention from wheat to shiny stuff like the crow would,(maybe gold and silver) we will be following pigs looking for the scrap they leave behind as they feed on the carcases of there fallen comrads.Now lets loose the analogy for a bit. I found this recently and submit it for consideration. Please Goggle “What’s Really Going
On With Gold And Silver? by Alex Panameno
You may find your bunker there.
I think it’s good to own some gold and silver for the longer term as a store of some kind of wealth but don’t expect to make a profit. We would be crazy to sell it even if the dollar price went up ten times. Who wants dollars? It will be worth something, that’s all we have to work with. Hang on to it until this completely unwinds and something fairly stable comes out the other side. That could be awhile. Or use it for barter during the hard times if you can.
This is going to get real nasty. Most people don’t seem to realize that yet.
I love this blog too, i’m only in the second decade of my life and man do I realize how bad things are in my country–
the kids seem to get stupider and stupider and want to be part of all the new fads and the schools are not going to get any better.
And everything you guys posted is just excellent advise
take care and be well
now something to keep us busy is this new flu.
Just watched I.O.U.S.A. on OZ T.V. and had to agree that you have a BIG problem over in the U.S.A. After just having a business trip to Pittsburgh, I was amazed at the amount of job losses and business closures in the area. Also noticed that everything manufactured in the stores was either made in Mexico or more so China. We seem to be relatively well off here in Australia, but that’s not because we have a smarter Government, far from it, we just have a lot of resources that China needs in exchange for all the goods that we also buy from them.
As I have a lot of American friends with some relatives also, I followed your last election with interest, and I must say that your Ron Paul made the most sense with all of his views, including his on foreign policy. Interfering in other countries,never pays off, unless you have the support of the whole population.
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