- - Sunday, March 9, 2014

ANALYSIS/OPINION:

Mired in the first modern depression, President Franklin D. Roosevelt opened his inaugural address in 1933 by saying: “This is pre-eminently the time to speak the truth, the whole truth, frankly and boldly.”

What a refreshing concept — that elected officials might tell the truth to the people.

With regard to today’s economy, the Obama administration still refuses to admit that five years of reckless deficit spending and artificially low interest rates now threaten America and the civilized world.

The existential threat of U.S. debt

Since 1991, all sectors in the U.S. economy have become too comfortable in borrowing. Compared to most other nations, America has seemed a safe place, and most of us have enjoyed the benefits of relentlessly declining interest rates.

The debts we have piled up since 1991 are staggering in size.

According to data from the Federal Reserve System, the U.S.’ total debt quadrupled from $14.1 trillion at year-end 1991 to $56.1 trillion at year-end 2013.

The federal government’s debt was only a fraction of the problem — rising from $2.8 trillion in 1991 to $12.4 trillion in 2013. Debts owed by financial institutions, businesses, households and local governments climbed from $11.3 trillion to $ 43.7 trillion.

The U.S. never before has confronted a reality in which the rest of the world has forced us to reduce our debt. This could change — rapidly — as geopolitical conflicts damage America’s world standing and shake investors’ confidence that our currency will hold its value.

Lost amid the flow of news last week were ominous developments in U.S. government debt markets.

In past crises, investors abandoned other currencies and fled to U.S. dollar-denominated debts, driving down the interest rates our federal government pays. Last week, interest rates on U.S. government debts rose — markedly so for many maturities.

America’s demographic destiny

In other bad news last week, we learned that the U.S.’ debt burden is a weighty yoke on a population that is less able to work, earn incomes, save money and repay debt.

According to Labor Department statistics last week, 84.2 million persons out of 104.8 million aged 25 to 49 worked during 2007, the year before the global financial crisis hit with full force. (Workers in that age group — not those just starting out or nearing retirement — are best able to generate excess cash.)

In 2013, 77.9 million persons out of 102.1 million aged 25 to 49 worked.

The 7.5 percent absolute decline in employment in that age group is disturbing.

America today finds itself in a place that Japan and Europe know well, with citizens of childbearing age opting to have fewer children, while retirees are living longer.

The strains upon society are easy to understand — a dwindling number of active workers supports a growing number of retirees and unemployed persons.

Honey, I shrunk our credibility

Under President Obama, America is losing a conflict of competing ideals as we retreat from forceful action abroad and ignore financial reality at home.

From the Europe to Asia to Latin America, economic insecurity is mounting amid cries for justice, liberty, democracy and peace.

In the crucial days ahead, our elected officials in both parties must abandon unrealistic hope and fanciful, but false solutions.

Official lies are far more dangerous than fear itself, whether concerning activities of our government abroad or the financial condition of our once great nation.

Charles Ortel serves as managing director of Newport Value Partners (newportvalue.com), which provides economic research to executives and to investment firms.

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