What is the truth about the predicted U.S. economic boom?
Is prosperity just around the corner?
How long will it last?
PRESIDENT Johnson and his economic advisors are forecasting a nation-wide economic boom in the months ahead.
Government economists predict the nation will, in the next year, spend more for luxury goods, more for travel and vacations, more for food, more for housing, more for clothing than in any previous year in our history. That, we are assured, will bring prosperity!
What's behind this sudden optimism? Is there any real basis for these smiling predictions of national prosperity?
Why Economists Predict Prosperity
Economists hope that the reduction of income taxes will put more money in the pockets of the average American. It is a foregone conclusion the average American will spend this extra money, if he gets it. Economists assume this increase in spending will cause business to boom through much of 1965.
But will it?
This predicted U.S. economic boom is expected to boost the economy of other nations as well. Several nations base their currency on the American dollar. Their prosperity is also at stake! The value of their money rises or falls with the value of the dollar. If the dollar value drops, the value of their currency also drops.
That is why many astute observers declare the survival of the Free World hinges on continued U.S. prosperity.
Many world leaders, however, anxiously wonder how long U.S. prosperity will continue. They ask, "Will a U.S. tax-cut really bring lasting financial prosperity?" "Is it possible for taxes to be permanently reduced as long as government spending spirals upward, as is now happening in Britain and the U.S.?"
This next year is to be a year of apparent prosperity. But this prosperity will be artificial, not real.
Let's face the plain facts!
By cutting income taxes, the U.S. is cutting government income. But it is barely cutting government spending.
Economists estimate that in the next two years the U.S. Government will spend from $15 to $18 billion more than it takes in!
Some day this spending will have to be paid for!
Will Borrowing Money Bring Prosperity?
It is incredible that anyone could believe that prosperity can long continue when more is spent than is received as revenue.
Suppose a family has a net income of $100 a week. They borrow another $100 every week and spend twice as much as their weekly income. Eventually they will run so far into debt they will go bankrupt!
Such a high-spending family would have to borrow $200 the second week to pay the $100 they borrowed the first week and still have an extra $100 to spend. And that doesn't include interest! They would be forced to borrow $300 the third week, $400 the next, $500 the next, until they would be borrowing thousands! But eventually this high-spending family will run so far into debt that their credit will no longer be good. The money lender will either run out of money to lend, or he will no longer trust this family's ability to pay their debts. This family will no longer be able to borrow money. It will be BANKRUPT!
A national budget is no different than a family budget. Both work on the same principle. Any nation that spends more than it takes in is ultimately headed for bankruptcy!
The Government can forestall the "day of doom" longer than an individual can. But the end result will be far more disastrous — national bankruptcy! National poverty! A fatal blow to the entire Free World!
The only possible way the Government can obtain the $15 billion to $18 billion more than it will collect in taxes is either to borrow money or to reduce the value of the dollar by printing dollar bills or their equivalent. There is no other way!
The result is a corresponding rise in prices — inflation. The economy becomes inflated like a balloon!
This planned inflation could cause the U.S. dollar to lose from 1½ to 2 per cent of its purchasing power every year. That is — an article which cost $1.00 in 1960 may well cost $1.12 in 1965.
Higher prices mean it will cost MORE TO LIVE. It will soon cost the average American family so much to live they will have less actual money to spend than they had before a tax -cut took place.
Not only will higher prices make it more expensive to live, but unless federal spending is stopped, higher taxes will eventually have to be collected from wage-earners to pay for excessive government spending.
No government is richer than its people. No government can give something away without first taking it from the people in taxes.
Perhaps the average man in the U.S. and the British Commonwealth of Nations is shocked at the spending policy of his elected officials. Yet he commits THE SAME MISTAKES IN HIS OWN PERSONAL LIFE.
Economists are hoping this tax-cut will send American consumers on a buying spree to load up on washing machines, color television sets, new automobiles, and new clothing.
Advertisers are using every "gimmick" known to man in an effort to persuade a gullible public to satisfy their natural lust for material goods with a charge account, credit card, or the "friendly" loan.
This buy-now-and-pay-later craze has led many wage-earners to borrow more each month than they are able to repay.
Many families have not only borrowed all they can on the installment plan, but they are borrowing additional money by placing mortgages on their houses.
They then are spending this borrowed money on such things as vacations, automobiles and college tuition. No wonder so many are having financial difficulties!
A recent U.S. News & World Report states that the total national and private debt "now exceeds 1.1 trillion dollars." The end of rising debt is nowhere in sight!
There is no logic under the sun which even remotely supports the foolish theory that either a family or a nation can — by borrowing money — long continue to spend more than its income.
Unwilling to Change?
The tragic thing is that the nation as a whole is not willing to admit its mistakes. Instead, signs point to ultimate higher taxes, increased spending, deeper debt — both public and private — and a continued loss of the gold which backs our currency, culminating in a fantastic financial "bust."
Unless a drastic national reform takes place, the day is coming when a dollar bill will be as worthless as a piece of old newspaper.
European leaders have warned the U.S. to put its economic house in order or go broke!
Dr. Arthur Upgren, professor of economics at MacAlester College in St. Paul, Minnesota, startled a meeting of insurance men, bankers and educators when he said that by 1970 the U.S. will go flat broke. "LOOK OUT FOR THE BIGGEST BUST YOU EVER SAW!" he said.
Depressions Are "Made"
Let's face the plain facts of economics.
Everyone the world over recognizes that a farmer can only be truly prosperous when he produces enough crops to bring him a good income and can sell them profitably. Granted, a farmer can, by borrowing money, live high for a time in apparent prosperity, without producing crops, but what will happen when he runs out of borrowed money?
Why don't statesmen recognize that like a farmer, a nation must produce by hard work if it is to have lasting prosperity?
Because the hard-working, industrious people of Japan and Germany are outworking, out-producing and out-selling America and Britain, they are rapidly becoming the world's most prosperous nations.
But our people in Britain and the U.S., instead of working hard, often try to see how little work they can do and still collect a day's wages.
Labor demands high wages but too often won't put out an honest day's work.
Secretary of Commerce, Luther Hodges, reported that perplexed businessmen are saying, 'They can't find the people who are willing to give a full day's work!"
The educator, Dr. Houston Cole of Jacksonville State College, said, "The average American actually works only about 4 hours a day. The rest of the day he 'goofs off'. "
World observers report that the nations of the world are beginning to feel that the "made in the U.S.A." brand indicates POOR WORKMANSHIP and little durability.
Are the U.S. and Britain headed for a financial collapse of our own making? Will history repeat itself?