The column from Feb. 7 entitled “The debt debate” on the U.S. debt and our seamlessly never-faltering credit score is wildly off base and out of touch with financial reality. Mr. Brawer points out, “The U.S. debt doesn’t really matter.” The Greek government probably thought along the same lines. We see how that is working out for them. I understand that Mr. Brawer is a columnist and exercises his right of speaking freely, but I highly encourage him to seek counsel from finance professionals and people who are in touch with the inner-happenings of our complex economy. He may find out that our debt does matter and is a burden on the taxpayer.
Mr. Brawer points out the debt ceiling extension by Senate in his column. So I am concluding that he remembers the U.S. credit downgrade by Standard and Poor’s. Mr. Brawer may see this as irrelevant, but the Dow Jones Industrial Average swung violently down to 10,700 after the U.S. credit downgrade. This DJIA loss translates in a massive devaluation of America’s leading companies. Companies like McDonalds and Bank of America, popular investment avenues for many Americans, lost value. This led to personal portfolio value loss, something that affects all of us either directly or indirectly. In fact, many college endowments have investments in the Dow Jones. These endowments lost value during this credit downgrade caused by an enormous amount of United States debt.
What Mr. Brawer fails to understand is that the revenues from taxpayers enable the U.S. to overspend. Taxpayers provide the U.S. government revenue to go out and borrow against, usually from bond issuance. Our “military might” is a direct effect of taxpayer revenues. What happens when taxpayers move out of the country to find better, higher-paying jobs and harbor their savings in banks with positive real interest rates? This is an improbable scenario, but crazier things have happened.
An explanation of the Federal Reserve and the role they play in conducting this drunken circus is necessary for describing our web of financial problems. The devaluation of the currency you hold in your pocket is dangerous and could potentially lead to the change of the world’s reserve currency. If this event takes place, we could see a major decline in our quality of life. But hey, let’s keep spending! It’s all on credit. It is time for fiscally-responsible leaders in this country to remedy our scary debt situation.
Brandon Morris
Junior, plant science
