William de Berg, Where Did All the Money Go?

June 27, 2022 James Fetzerblog

William de Berg

The year 1913 was an historic turning point for the United States. It was in this year that the Federal Reserve Bank of the United States, a privately owned bank given the privilege of controlling the nation’s monetary policy and supply, was created. The Federal debt of the U.S. at that time was 2.9 billion dollars and being paid off, all other debt was less than 50% of the U.S. GDP, Arizona had just been accepted as the last state in the continental portion of the U.S. the year before, and the nation was at peace. The first huge oil find at Spindletop in East Texas was little over a decade old and the first mass-produced automobile was already five years old. The outlook for the U.S. for the remainder of the 20^th Century was very promising, indeed.

Within a few years, the U.S. embarked on over a century of war and over a century of epic debt accumulation. Its federal debt alone eventually reached the current 125% of GDP ($30 trillion), with the overall public and private U.S. debt in the vicinity of $100 trillion.[1] With official inflation now close to 10% (and unofficial inflation far higher) and de-dollarization occurring throughout the world with

nations such as China and Japan unwilling to finance the massive U.S. debt any longer, any more governmental debt accumulation will be counterproductive, setting off even higher inflation. So, we can now look in retrospect at what the several tens of trillions in debt bought—and, more importantly, didn’t buy.

The greatest infrastructure program in American history—the Works Progress Administration (WPA)—cost only $11 billion (a mere $216 billion in 2021 dollars). Among its accomplishments, the WPA funded over 600,000 miles of streets, 10,000 bridges, two of the largest dams in the US (Hoover and Grand Coulee), large airports such as La Guardia in New York City, and famous tourist attractions such as the San Antonio Riverwalk.[2] The second largest infrastructure project of the U.S. government was the Interstate Highway System with its 40,000 miles of multi-lane freeways crisscrossing the continental U.S. and built at a price tag of $114 billion ($500 billion in 2008 dollars).[3]

In contrast to the above successes are a string of expensive government boondoggles, including the cancelled Supersonic Transport aircraft (which never took off), the Supercollider (which ended up as large hole in the ground), the Space Shuttle (which spent the vast majority of its time languishing on Earth), the California High-Speed Rail project (which went off the rails before laying even a single mile of track), and the War on Drugs (an abject failure that is barely mentioned now). There were also the multi-trillion bailouts to save the “too-big-to-fail” banks in 2008 and to resuscitate the entire U.S. economy from its near-death due to the insane COVID lockdowns in 2020.

All of this waste pales in comparison to the amount spent on national defense—nearly $20 trillion in unadjusted dollars since 1960 alone.[4] True, the U.S. has not been invaded for over 200 years, but with oceans on its eastern and western shores, a friendly nation to its north with a relatively small population, and a militarily weak southern neighbor, it is difficult to conceive of how the U.S. could have been invaded with even a small fraction of that expenditure. Especially since a large portion of those defense trillions went to disastrous conflicts thousands of miles away in Vietnam, Iraq, Syria, and now Ukraine.

In the end, all that matters is that the money is no longer there and must be repaid or defaulted on. So, as the era of gargantuan debt accumulation comes to an end, it is worth reviewing what never was built or created:

Universal health insurance. After decades of inaction, the U.S. stands out as the only western nation—and behind over 50 other nations in total—without universal health care coverage of any type. The Affordable Care Act of 2010 turned out to be not very affordable and, excluding coverage for those below the poverty level by an expansion of Medicaid, resulted in a net increase of only two million insured Americans—at an astronomical cost of over $25,000 per insured.[5]
Affordable housing. The ability to afford a house in the U.S. has dropped to 110% of the median income level,[6] meaning that almost 50% of Americans (and an even higher percentage of millennials) are unlikely to ever own a home in their lifetimes—contributing in part to a rising tide of homelessness.
Fully funded retirement plans. The World Economic Forum has estimated the current “pension gap” in the U.S. at close to $30 trillion, with the possibility of a future rise above $100 trillion by 2050.[7] The Social Security and Medicare Trust Funds—the only source of retirement income for tens of millions of Americans—are projected to run out by 2033, just ten years into the future.[8]
Paid parental leave. Despite the indisputable benefits of dedicated early childhood caregiving, the vast majority of American parents continue to be without financial support during the first few months of childrearing—again, a rare situation among the developed nations of the world.[9]
High-speed passenger rail. Except for Amtrak’s northeast corridor, no high-speed intercity high-speed rail exists in America comparable to that in most other advanced nations. In 2019, the year before COVID, ~32 million passengers were carried on all of Amtrak’s routes as opposed to 926 million on airlines.[10] The highly touted California high-speed rail system became so bogged down in legal and mismanagement issues that it was eventually cancelled by Governor Newsome in 2020 after billions had already been spent. As regards metro rail lines, only 11 cities in the U.S. currently have dedicated (heavy) metro train lines not competing on the same surfaces with roadways,[11] and even some of these are limited in scope to one or two lines. The inadequacy of metro public transportation systems has led to increasingly clogged highways and average work commutes approaching one hour per day in the U.S.[12]
First-rate academic performance. Despite spending on average in excess of $13,000 per student, ranking it in the top five internationally in terms of educational expenditures, the U.S. has relative to the rest of the world suffered major declines over the past fifty years in its academic status, now even ranking below the world average in mathematics.[13]
Reduced income inequality. As of last year, the top 5% of Americans owned 23% of the total wealth.[14] The difference between the median ($67K) and average ($446K) household wealth in America has now reached alarming proportions. The situation is even more dire for minorities in the U.S., with the median household wealth of African-Americans and Mexican-Americans less than $15K. Given the incestuous relationship between the big banks and corporations and federal government (“crony capitalism”), the growing income inequality can hardly be described as accidental.
Quality and affordable medical care. Per capita health-care costs in the U.S. rose from $148 in 1960 to over $11,000 in 2018.[15] Despite the vast expenditure increase, U.S. average life expectancy has stagnated over the past decade and, at 79 years, ranks only 46^th[16] Major diseases and disorders such as autism and Alzheimer’s disease—for which the highly funded and vaunted medical research establishment in U.S. has yet to find a cure or even causal explanation—continue to rise along with medical disability claims in general.
Low-cost, advanced military. The massive military expenditures spearheading the U.S. debt accumulation since WWII has ironically created a large but increasingly obsolete and less-qualified military. The U.S. lags behind Russia and China in hypersonic missile capabilities, anti-aircraft defense systems, and electronic jamming.[17] With a declining industrial base and limited domestic competition, American aircraft are extremely costly to produce and maintain and, in the case of the F-35, of dubious effectiveness. (Recall that, against older-generation Soviet anti-aircraft systems, the U.S. and its allies lost almost 10,000 aircraft during the Vietnam War.)[18] In terms of personnel, the military can recruit less than 30% of American youth because of physical, mental, and legal disqualifying factors.[19]
Greater happiness. Due to increasing work demands, financial pressures, societal and family stresses, longer commutes, concern over the future, etc., Americans who describe themselves as “very happy” dipped to an all-time low of 14% in 2020, from almost 40% in the 1970’s.[20]

The United States during the 20^th Century witnessed the greatest wealth generation by any nation in human history, spurred on by exploitation of cheap resources, a youthful population, and enormous technological innovation. Much if not most of this wealth creation was squandered, as attested to by the above list of societal failures. That a large part of this wealth creation was the product of an epic debt accumulation makes the historical outcome even more tragic.

Now, however, technological progress is slowing, the population is aging, energy costs (either from traditional or renewable sources) are rising, and further debt accumulation by the Federal government is totally counter-productive in today’s hyper-inflationary environment. The likelihood of major economic/technological breakthroughs by the private sector is also diminishing, as evidenced by the meager accomplishments of venture capital in the U.S. since 2000.[21] So, it almost certain that the above needs will remain unfulfilled for generations to come, as will the dream of an equitable, efficient, humane, prosperous, and sustainable American society. A very troubling question then becomes: Who will pay it off—and when? Or even worse: What will happen to the U.S. if it isn’t paid off?

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William de Berg is the pen name of an American scientist and author of four conspiracy/truther fiction novels: Serpent and Savior, White Spiritual Boy, Divided We Stand, and Shield Down.