when I think about America’s financial future, I am reminded of a story a friend once told me.

A young man wanted to be a truck driver. The thought of being out on the open road, driving one of those big eighteen wheelers from town to town all across the county really appealed to him.

One day the young man thought it was time to quit talking about it and make his dream come true.

After weeks of studying and training at truck driving school, the young man passed his written and driving test with flying colors. There was only one requirement left, the oral exam. If the young man passed this test, he would receive his truck drivers license.

When the day of the oral exam finally arrived, the young man walked into the exam room. There sat three men — old, retired, truck drivers who now spent their days conducting the oral exam.

The young man took his seat in front of the three old truckers, and they began asking him questions. With great skill and articulation, the young man answered question after question.

Finally the oldest of the three truckers said, “Son, if you can answer this final question correctly, you will walk out of this room today with your truck drivers license.

“Here is the question. You are driving your eighteen wheeler, and you are coming down on the other side of the Blue Ridge Mountains. It is a cold day, and the road is slick because it has been sleeting. You wind around and come upon the last and final incline. It is a very long and steep incline. On your left is a school bus filled with school children, on the other side of the school bus is a mountain wall. On your right, there is a 300 foot drop off into the valley. Suddenly directly in front of you, at about 150 yards, in your lane, is a jack-knifed semi. What do you do?”

The young man began to think out loud.

“Well,” he said, “I can’t go to my left because there is a school bus filled with kids. If I try moving over toward them, I could cause them to crash into the side of the mountain. On my right is a 300 foot drop off. The roads are very slick and due to the steep incline. . . . Suddenly, the young man stopped speaking.

The room was filled with silence.

Finally after what seem like forever, he spoke.

“I know what I would do,” he said, “I would wake up Harold.”

The three old truck drivers looked at each other in shock.

The oldest of the three men asked the question that was on all their minds, “Who is Harold? And seconds before you crash, why would you bother to wake him up?”

In a very serious tone, the young man responded, “Well, you see, Harold is my partner who is asleep in the back of the cab. He is from a small town in Texas, and he has never seen a wreck like this one is going to be.”

I believe that just like the young man and his partner Harold, we are headed for a crash like we have never seen. Maybe it will not be today, tomorrow, next month, or even next year. Unless, however, we wake up the Harolds of our nation and begin to make the extreme and necessary sacrifices required, a crash is inevitable.

On and Off the Record

Before we look at how America’s social engineers have led us down the present financial road to disaster, let us examine our nation’s present fiscal nightmare.

Currently, America is approximately $4 trillion in debt on record. I say “on record” because when our leaders talk about our nation’s current debt, they seldom mention our off-record debt.

Off record, our nation is nearly $12 trillion in debt. A portion of the debt that is classified as off record is the amount of money our government borrows each year from the Social Security Administration. Each year for the past several years our federal government has borrowed $30 to $50 billion from the Social Security Administration in order to help pay our nation’s bills and keep the country running. In return, the Social Security Administration receives an I.O.U.

Eventually, the Social Security Administration will need to cash in its stack of I.O.U.’s in order to meet its financial requirements and commitments to millions of Americans.

In reality, the money that the federal government borrows from the Social Security Administration is a loan, which must be repaid; thus the money the federal government owes to the Social Security Administration is part of our national debt.

The ever-increasing dollar amount owed to the Social Security Administration, however, is not included in the national deficit figure we so frequently hear reported. This figure is only part of what we call our off-record national debt.

What would happen if the company you work for borrowed from its employees’ retirement fund and, instead of paying it back, simply said, “Oh well, we will repay it when we can. Here is an I.O.U.”? The company’s officials would be sent to prison.

If it is unlawful and determined to be fraud when American citizens conduct their business in such a fashion, what is it called when the federal government does exactly the same thing? The federal government “at work.”

How Much is a Trillion Dollars?

Let’s think about the $4 trillion debt our nation has on record.

How much is a trillion dollars? The typical answer is, “A lot.”

The head of a conservative organization in Washington D.C. that monitors government spending has given a brilliant scenario to describe just how much a trillion dollars really is. Let me summarize it.

If you were to open a business during the time of Christ and you kept your business open 365 days a year, and you lost a million dollars every day from the time of Christ to present, you would have to leave your business open another 700 years, 365 days each year, loosing a million dollars each day, to equal one trillion dollars.

Here is another way to look at it. If you were to tightly bind $1,000 bills until you had one trillion dollars, you would have a stack of $1,000 bills that would reach 63 miles into the sky.

Remember, our national debt is approximately $4 trillion on record and over $12 trillion including the off-record debt.

Currently, federal figures report that 40 percent of the federal taxes collected today goes to cover just the interest on the national debt. That means everyone west of the Mississippi is paying their federal taxes not to build roads or to pay for education but to cover the interest on the national debt.

According to federal figures, the debt is compounding so fast that by 1996, every dollar collected in federal taxes will go just to cover the interest on the national debt. That means that by 1997, this nation will not even be able to cover the interest being accrued on the national debt, much less pay anything on the principal.

Congressman Phil Crane, (R-IL) has said, “I believe we will just ride this thing out until the economy crashes and burns; then we’ll see what we can salvage from the ashes.”¹

On March 24, 1992, then U.S. Senator Warren B. Rudman said, “This recession will be a picnic compared to where this country will be in the year 1997.”²

Senator Rudman knows that very few politicians are truly interested in making the serious sacrifices required to get our yearly federal deficit — and ultimately our national debt — under control.

What’s the Difference?

America’s financial situation baffles many Americans. Begin talking about the national debt or the federal deficit, and eyes will glaze over.

As a result, most Americans have no idea how serious the problem has become in terms of America’s current financial condition and the economic nightmare that will haunt most Americans when this house of cards comes crashing down.

What is the difference between the national debt and the federal deficit?

The federal deficit is our nation’s yearly financial debt and is derived from the difference between what we as a nation bring in each year — through taxes and the selling of treasury bonds, etc. — and the amount we spend.

Larry Burkett wrote in his 1994 book that “the government has an income of approximately $1.2 trillion a year, yet it is spending approximately $1.5 trillion a year.”

The difference between those two figures is what makes up the federal deficit.

For instance, if you made $50,000 one year, yet you spent $110,000, you would have a deficit that year of $60,000.

When our nation spends more each year than it makes, it must borrow the difference in order to meet its financial obligations and pay its bills. The amount our government borrows each year is referred to as the federal deficit.

What, then, does the term national debt mean? It is the combined total of our yearly federal deficits.

For example, if you make $50,000 a year, yet it costs you $110,000 a year to meet your financial commitments and maintain the standard of living you desire, you would have to come up with an additional $60,000 each year. Where would you get the extra $60,000? More than likely you would go to your local bank and take out a loan to cover your commitments and maintain your desired standard of living.

That is exactly what our federal government does.

If each year, for five years, you borrowed $60,000 from your local bank to cover your yearly deficit spending, your total deficit after five years would be $300,000 ($60,000 x 5 = $300,000).

Actually, you would owe more than $300,000 to your local bank. Why? Because your bank makes its money by charging interest on the money you borrow.

Our nation is so far in debt that the interest we are paying each year on our national debt is eating us alive. “In 1995 interest will take $244 billion (15.5 percent) of all government spending.”³

Our federal deficit is the amount our government overspends each year, above and beyond what it brings in through taxes and other means.

The national debt is the combined total of all our years of deficit spending with interest added and accruing daily.

Not Will, But When

What would you do if you realized your family was spending more than twice your income? More than likely, you would quickly learn to live within your means, even if that meant doing without some things you want but don’t need.

This seldom practiced discipline, called “making sacrifices,” is foreign to many Americans — and even more alien to those running our federal government. Most Americans, however, are pragmatic enough to realize that our nation needs to cut back on spending in order to balance the budget.

Solving your personal as well as our government’s financial problems could be very simple. Unless the problem goes uncorrected for so long that you find yourself in such great debt that you cannot get out because you don’t — or can’t — bring in enough revenue to cover the initial amount you borrowed — much less the amount being added daily due to interest. Eventually you would have no choice but to file bankruptcy.

That is where America finds itself today. Our nation is now on the verge of bankruptcy.

The problem is so great that Harry E. Figgie Jr., CEO of Figgie International, Inc., the company that owns Rawlings Sports among other businesses, wrote a book in 1992 titled, Bankruptcy 1995.

Mr. Figgie reports that the government spends $1.68 for every $1.00 it takes in through taxes and other means.

No one can predict whether or not America will go bankrupt and have an economic collapse in 1995. The question is no longer, Will America suffer an economic collapse? But, When will America an economic collapse occur?

Four Reasons Why I Am Not Hopeful

Larry Burkett, author of the book, The Coming Economic Earthquake wrote, “If the elections of ‘94 confirm Clinton’s policies, I would change my previous estimate of an economic collapse from near the turn of the century (around the year 2000) to ‘96-’98.”⁴

Fortunately, the American people did not confirm Clinton’s policies in the November 1994 elections. However, despite Republican control of both the House and the Senate, and their Contract with America, I am not hopeful about the future for several reasons:

1. It is too little too late.

The Republicans are claiming to end our nation’s yearly deficit spending, which means no more federal deficits, sometime around the year 2003. I do not think we have until the year 2003 to get our yearly deficit spending under control.

2. Our politicians lack backbone.

Once our nation achieves the enormous task of no more deficit spending, we must create a yearly surplus. It will be a major victory for Congress and the White House to bring our government to the point of spending no more than it brings in each year through taxes and other means.

Not only will zero deficit spending have to continue each year, but the government will need to bring in more than it spends, leaving the government with a surplus. This surplus could then be used to begin paying off our national debt. It will never happen. Our government will never have enough years of zero deficit spending, plus a surplus, to even put a dent in the national debt.

I seriously doubt whether we will ever see our government operate for one year without a deficit. Why? Because we do not have enough elected officials who are truly serious about getting our financial problem under control. We have some but not enough fiscal conservatives who understand the seriousness of the situation. Nor do I believe that enough of our elected officials are willing to make the greatly needed massive sacrifices necessary to get our deficit spending and national debt under control.

Author and historian, David Barton, has said,

Unfortunately our political leaders are no longer required to face or to accept personal responsibility for the long-term consequences of their actions. Contemporary politicians often look no further than 2, 4, or 6 years into the future, depending on the term of their office. Consequently, their own short-term decisions, often taken to help ensure re-election, frequently jeopardize the people’s long-term security and prosperity.⁵

It is difficult for politicians to get elected or re-elected when they go around talking about cutting Social Security and other entitlement programs like welfare, food stamps, school lunches, pensions for federal employees, etc. Yet, unless we get the entitlement programs under control, we will never get our yearly federal deficit or national debt down to manageable levels. The long term results of such irresponsibility will inevitably be devastating.

How much is our nation spending on entitlement programs?

“In 1962 all entitlements took $32 billion (28 percent of all government spending). In 1995 they will consume $795 billion (50.4 percent of all government spending).”⁶

Recently, there has been a lot of talk about getting the problem under control, but for the most part, you are hearing nothing but political posturing. The politicians are telling you what they think you want to hear.

The entitlement spending has gotten so crazy that families are now receiving just that, “crazy checks.” Several investigations have shown parents are having their children do poorly in school, misbehave and even fake being crazy in order to get an extra check from the government that has been nicknamed, “the crazy check.”

Under the federal governments SSI program, individuals who have a so called disorder can receive a very healthy check for their supposed disorder.

NBC news reported on September 15, 1995 that the federal governent is giving families extra money in the form of “the crazy check” for such off the wall disorders as a child who has been diagnosed with “oppositional defiant disorder.” Now I have heard it all.

3. Bill Clinton’s presidential policies.

Despite the Republican takeover of the House and Senate in 1994 and their Contract With America, Bill Clinton has been in office for nearly three years and is still President.

Clinton has financed our debt through short-term bonds. As the interest rate was raised several times in 1994 alone, so moved up the interest on the short term bonds that Clinton used to finance our debt. Therefore, due to the increasing interest rate, our national debt began — and continues — to grow at an even faster rate.

Despite Clinton’s claims to have cut the national debt, he has not! The only thing Clinton has cut is “projected spending.” For example, instead of borrowing $100 million for some pet program, Clinton proposes only borrowing $50 million — and then says he saved American taxpayers $50 million.

4. New legislation continues to drain our economic resources.

Finally, I am not hopeful because our leaders continue to pass legislation that only makes the problem worse — such as GATT, the General Agreement on Tariffs and Trade.

Phyllis Schlafly has said, “GATT. . . is a budget breaker. It will add at least $31 billion to the federal debt as a result of lost revenues from tariff cuts.”⁷

Larry Burkett, writes, “This country is so far down the road to disaster now that, in my opinion, there is very little that can be done to avert it.”⁸

Soaring Prices

When, and not if, the economic disaster that so many authors, economists, and national leaders are predicting occurs, what effect if any, will it have on you and your family?

Unless you and your family are out of debt and well-diversified, you could be facing some very difficult times ahead. Under an economic collapse, the dollars you now hold will be worth very little if anything. Prior to an economic collapse, we could experience a recession, depression, inflation, and possibly hyperinflation.

Many economists are predicting a deflationary period that will cause the government to resort to more credit to make up for a rise in the federal deficit. Such a move could put inflation on a fast track.

If we see the return of inflation — prior to and after an economic collapse — it could lead to hyperinflation. Through hyperinflation your paper money would have less buying power to the point of becoming virtually worthless.

In countries that have experienced hyperinflation, such as Argentina and Germany, the price of goods sky rocketed while the value of their currency dropped like a stone. In Germany in 1918, “retirees who held government or bank bonds saw their assets devalued by 2000 percent in one day.”⁹

Due to hyperinflation the price of goods was increasing continually. Prices changed so fast due to the rate of inflation that stores found it futile to put prices on their goods. Instead, the prices were computed at the counter at the time of purchase.

The German mark became so worthless as a monetary symbol that the paper it was printed on was actually worth more than what the mark represented.

In some countries, inflation, which led to hyperinflation, was so bad that the factories would pay their employees every hour. The men would then take their wages and pass it through the factory fences to their wives. The wives would run and buy the needed groceries and items as fast as possible because every minute wasted meant that their money had less buying power.

Men who worked in factories that paid them every hour counted themselves fortunate. Some greedy businessmen would pay their workers at the end of the week, saving money for themselves.

Suppose, due to hyperinflation, you work for $500 a week. On Monday, that $500 may have the buying power of only $300. By Friday, suppose the decline in value of the dollar due to hyperinflation means that $500 only has the buying power of $200. Would you prefer to be paid each hour, the end of the day, or at the end of the week?

The problem with hyperinflation is that wages never stay consistent with the cost of living. Prices are soaring while wages remain the same, or move up very slowly.

Inflation — Less Buying Power

This might be a good place to stop and define some terms.

What is inflation?

Webster’s dictionary defines inflation as: “An increase in the volume of money and credit relative to available goods resulting in a substantial and continuing rise in the general price level.”

In other words, inflation occurs when people have access to money or to more credit to buy products and goods. The increase of availability in credit or money being pumped into the economy creates a demand for certain products. The demand for products creates an increase in the price because of the law of supply and demand.

Inflation makes your money less valuable. Due to the demand for products, there is a rise in the cost of those products. The rise in the cost of living means your money will buy you less than it did a year ago. Inflation makes your money worth less or causes it to have less buying power.

The difference in the price of goods from one year to the next is the rate of inflation. In order to achieve the most accurate figure concerning the rate of inflation, the government compares the prices of certain goods each year.

In 1994, the Federal Reserve raised interest rates seven times. The reasons for this rise in interest rates is debatable. The Federal Reserve claimed it was raising interest rates in order to stop the rise of inflation. Because banks were loaning money and credit cards where extending credit, people were given the means by which to buy products.

The increase in available cash or credit created a demand for certain products. In turn the demand created an increase in prices. The increase in the price of goods and services due to demand gives your money less buying power, which means inflation.

In order to slow down the rate of inflation or to hold back inflation, the Federal Reserve said it was necessary to raise interest rates. The hike in interest rates meant that it cost American’s more to buy products and goods on credit because of the increase in the interest rate at which they are borrowing.

This increase in the cost of borrowing money from your bank or credit card company usually discourages many people from buying that new car or sofa until they have all or most of the cash.

Slowing down the rate of spending and the demand for products — and ultimately the increase in the price of certain goods and services — means slowing down or stopping the increase of inflation.

The rise in interest rates means among other things that you are paying more when you carry a balance on your credit cards. Therefore the rise in interest rates will cause your debt to grow when you carry a balance on your credit cards.

Big Banks and Bad Government

What is hyperinflation?

Hyperinflation is “a condition of inflation that is so severe — ranging from 1,000 percent to even 1 billion percent — that people try to get rid of their currency before prices render the money worthless. Technically, it is defined as a monthly inflation rate exceeding 50 percent.”¹⁰

America could experience a period of hyperinflation because we are the biggest debtor nation in the world with a declining credit rating. Approximately 18 to 20 percent of the money our government borrows to keep operating each year comes from overseas.

When — due to our economic situation — it appears to our creditors (the nations who loan us money) that we will be unable to repay the massive amount of money we already owe them, much less the interest, they will cease lending us money.

What can we do to prevent that from happening? Pass a constitutional amendment requiring our lawmakers to balance the budget.

In early 1995, the Balanced Budget Amendment passed the House but failed to pass the Senate by one vote. The failure of the BBA Amendment sends the message to current and potential investors around the world that the United States is not interested in getting its financial house in order. Who can blame foreign investors for choosing to invest in the more stable Japanese yen or German mark instead of in a nation that acts financially irresponsible?

The other 78 to 80 percent of money our government borrows each year to make up for our yearly federal deficits comes from big U.S. banks like the Chase Manhattan Bank and individuals like you and me who buy U.S. Savings Bonds and other Treasury notes.

When you buy a T-bill, the federal government pays you interest on the money they have borrowed from you. Eventually millions of Americans will have good reason to believe that the federal government cannot repay what it has borrowed, plus interest. At that point many Americans will no longer purchase such T-bills, thus adding to the shrinking credit line of the federal government.

Around this same time, the big U.S. banks who have been loaning the federal government millions and millions of dollars each year, will deny the government’s request for another loan. As a result, these big banks will not be willing to risk loosing money on a government that is on the verge of going bankrupt.

You need to know that these big U.S. banks have, over the past many years, made billions and billions of dollars in interest alone by loaning the federal government money each year.

I am a true capitalist and believe in the free market. There is nothing wrong with a U.S. bank loaning our federal government money and making large profits on the interest it charges. The problem and conflict of interest arises when those who own the big U.S. banks are involved in setting the interest rates via the Federal Reserve — thus causing the government to have to borrow more and more each year from their banks.

Today the Federal Reserve, a non-government institution, and the Federal Reserve banking system have tremendous control over our economy and, therefore, our nation.

President Andrew Jackson at one point abolished the Bank of the United States because he recognized the power and control such a centralized banking system could have over the country. President Jackson warned us not to ever accept such a system, saying, “the bold effort the present bank had made to control the government, the distress it had wantonly produced . . . are but premonitions of the fate that awaits the American people should they be deluded into a perpetuation of this institution or the establishment of another like it.”

Funny Money

What will happen when other countries, the American people, and the big U.S. banks are no longer willing to loan money to the U.S. Government?

The federal government needs billions of dollars each year to make up for its short fall. Why? Because the federal government spends more than it makes. The difference must be obtained somehow, or the federal government will not be able to continue operating.

The government will have three options when it no longer has credit from the current three existing sources.

1. Default on all its loans.

2. Cut spending by 40 percent across the board. That means cutting Social Security, welfare, government employees, and every expenditure by 40 percent. In addition, the federal government will have to tax 50 percent of every American’s income. That is just federal income tax, you will still have to pay your state income tax.

3. The federal government can simply tell the Treasury Department to print more money.

In order to get the money the government needs to continue operating, it will print more money. This is called “monetizing the debt.”

Printing more paper money beyond what the economy can support will create inflation which can lead to hyperinflation. The paper money you now hold will become worth much less because there will be more of it in circulation.

Years ago, our paper money was backed up by gold and silver. Instead of carrying around gold and silver, the Treasury Department printed paper money called gold or silver certificates that represented the gold and silver that the federal government had in its vaults. If you desired, you could walk into your bank, hand them a ten dollar bill, and ask for $10 worth of gold. Try that today, and you will get a blank look from your teller.

Under his “New Deal,” President Roosevelt took us off the gold standard making it easier for the social engineers to control and manipulate the economy. The gold and silver certificates were replaced with Federal Reserve notes, which is the paper money you now hold.

Larry Burkett gives this example:

Think of the dollars you hold like stock in a company. Suppose a company with a total worth of $100,000 is authorized to issue 100 shares of stock. So you buy one share with assurance that it’s worth $100 shares of stock. So you buy one share with assurance that it’s worth $1,000 based on current value of the company. Later the company needs more capital, so the directors issue 100 more shares and sell them to the public for $1,000 a share.

At first glance, you might think, well, it doesn’t hurt me. I still have my share worth of $1,000.

But is it really worth $1,000? If the company is still valued at $100,000 and there are 200 shares outstanding, your share is only worth $500. However, it is possible that no one else know that another 100 shares have been issued. The “logical” thing to do in that case is to dump your shares before the others discover the company has diluted your stock by 50 percent.¹¹

Due to the fact that our government can simply print money at will, you are at great risk of having your money drop in value. When the government prints paper money with nothing of value backing it up, your money really becomes funny money. In reality, the government is printing counterfeit money.

You Ain’t Seen Nothing Yet!

Millions of Americans who now live paycheck to paycheck will — under such poor economic times — find themselves unable to meet their daily needs for existence.

If you think we have a problem with crime today, you ain’t seen nothin yet! Just wait, and the growing numbers of have-nots will be violently taking from those who have.

Crime in the big cities will be like scenes out of a fiction movie. There is something to be said for living out in the sticks on your own land where you can live and survive on your hard work. Having a house and some land that is paid for, along with a few good shot guns, might be the way to go.

Many of the middle class who lived in the city during the great depression found themselves out of a job and standing in soup lines. Those who lived on farms, which they owned, were much more self-sufficient. Aside from buying sugar, flour, and other such basics, there was very little they could not raise on their own.

A big garden, a few chickens, a couple hens, a milk cow, a husband who is handy with tools, a wife who knows how to can food and sew — and you could survive. You would not be living the life of luxury, but you would survive. Compared to the situation many would find themselves in, you would be doing very well.

Unless the government decides to confiscate your farm and land because you violated one of the Environmental Protection Agencies petty regulations. But that’s another book!

Give Us a Break!

In 1960, the average taxpayer worked 36 days to pay all of his or her taxes. In 1993, it took 123 days.

The American taxpayer now works four months to pay federal taxes and a fifth month to pay state and local taxes.

In 1994, The average taxpayer’s “contribution” to the federal budget, based on an annual income of $38,000, operates our government for approximately one seventh of one second.

Florida and Texas, two states that have no state income tax and generally low property taxes, have led the way. According to a University of Florida study, these two states topped the nation in 1993-1994 in job growth.

Other positive approaches gaining in popularity are a national sales tax and a flat tax instead of the present income tax system. Income tax taxes hard work while a sales tax taxes consumption.

Why should you pay more taxes simply because you work hard, save, and create jobs? The guy who works as little as possible, sits around drinking beer and smoking, makes no real contribution to society or to the well being of our economy. Yet, he pays less in taxes under our current flat tax system than the individual who is hard working, frugal, and contributes to the economy by creating jobs or products.

Part of the problem with our current tax system — which uses a flat tax — is that it creates class envy. The “rich” are tired of the poor living off them, and the poor think the “rich” should pay more in taxes to guarantee them a better standard of living. The current system is one based on socialism — the re-distribution of wealth.

A national sales tax or consumption tax makes everyone equal. You are only taxed on what you consume. The more you consume, the more you pay in taxes; the less you consume, the less you pay in taxes. You decide when and how much you pay in taxes based on what and when you purchase that boat, car, stereo, or case of beer or carton of cigarettes.

Through this system the lazy, beer drinking, cigarette smoking, MTV types don’t continue to get a free ride. At the same time, hard-working Americans are not punished for making a living and saving money.

Some people argue that a national sales tax would help only the rich. Not true. The poor would not be hurt by a national sales tax because housing, food, and medical care would be tax free.

Why a National Sales Tax?

What are the benefits of a national sales tax? A national sales tax will enable Americans to:

1. Have access to more of their pay check — instead of having big chunks taken out before they ever see what was earned.

2. Decide when they will pay taxes — based on what and when each individual or family wants to purchase an item.

3. Save more money. Presently, frugal savers are penalized because they are taxed on the interest they receive. A national sales tax would encourage people to invest their money.

4. Create lower interest rates. Increased saving would cause banks to lower interest rates in order to be competitive.

5. Save millions of lost productive work hours — hours that are now spent filling out complicated forms. It has been estimated that our national economy loses $200 billion dollars each year in lost productivity due to bureaucratic red tape.

6. Abolish the IRS — and put the $10 billion dollars allotted for their yearly budget to better use. In its place, the government would create a National Sales Tax Office.

7. Put an end to the “underground economy,” operated by those who do all their business in cash to avoid paying taxes — like drug dealers. They would have to pay taxes like the rest of us when they purchase a new Mercedes or speed boat.

8. Do away with the inheritance tax. Many families end up loosing the farm or business their fathers or grandfathers worked for years to leave behind. Why? Because they are required to sell all or half of the farm or business to satisfy the inheritance tax — which can be as high as 50% of the property’s value.

9. Stimulate the economy. With more money in their pockets, Americans will be more likely to purchase the things they need.

10. Lessen impulse buying. The idea of having to pay tax on everything we buy, however, should make us think twice before purchasing things we don’t need.

These are only a few of the positive results that a national sales tax could have on American families — and on our economy in general. I suggest you write your congressman and senators and get their opinion on this important issue.

The Quest for the American Dream

Every young couple who falls in love and gets married desires to achieve the “American Dream.” While the definition of the American dream differs, for most couples it means owning your own house, two cars, a dog, raising two children, and living at a standard that is equal or exceeds that of their parents.

Obtaining the American dream is harder today than ever. Why is that? In my estimation, there are two main reasons

First, I believe that many young couples start their lives together having never been taught how to properly manage their money. For this reason they wake up one day to realize the American dream they were pursuing has turned into a financial nightmare.

Whether you have been around the block a few times or find yourself well down the road of life, the principles I am about to discuss may be familiar to you.

I am continually shocked, however, when I meet people who know these basic financial principles yet do not practice them. In that case, I hope this information will cause you to sit down and re-evaluate your finances and how you can become debt free and prosperous.

The second reason I believe the American dream is harder to achieve today than ever before is due to the ever-growing power and intrusion of both state and federal government.

While in San Antonio, Texas this year, my friend Steve Troxel, who is the senior pastor of large church there, shared this amusing story with me. It highlights the point I am trying to make.

A church had a stewardship drive, and one of the members sent the pastor the following letter: “Dear pastor, in reply to your request to send a check, I wish to inform you that the present condition of my bank account makes it almost impossible. My shattered financial condition is due to federal laws, state laws, county laws, corporation laws, mother-in-laws, brother-in-laws, and outlaws.

Through these laws, I am compelled to pay a business tax, amusement tax, head tax, school tax, gas tax, light tax, water tax, sales tax, even my brains are taxed. I am required to contribute to every organization or society that the genius of man is capable of bringing to life. Women’s relief, unemployment relief, every hospital and charitable institution in the city — including the Red Cross, the purple cross, and the double cross.

For my own safety I am required to carry life insurance, earthquake insurance, property insurance, liability insurance, accident insurance, burglar insurance, business insurance, tornado insurance, unemployment insurance, fire insurance. I am inspected, expected, respected, dejected, examined, reexamined, informed, reformed, summoned, fined, commanded, and compelled until I supply an inexhaustible supply of money for every known need, desire, or hope of the human race.

Simply because I refuse to donate something or other, I’m boycotted, talked about, lied about, held up, held down, robbed until I am ruined! I can tell you honestly, had not the unexpected happened I could not enclose this check. The wolf that comes to so many doors now-a-days just had pups in the kitchen, I sold them, and here’s the money.

Many entrepreneurs are finding it increasingly difficult to start and maintain a business because of all the red tape. You can hardly sneeze today unless you have a permit.

To make matters worse, the legal system is out of control. Every American has a good chance of being sued at least once in their lifetime. Owning a business today, however, puts you at even greater risk of finding yourself involved in a meritless law suit.

The law suits being filed against big and small business today is not simply the work of individuals but of state governments, the federal government, and extreme activist groups. Many ridiculous laws keep small, medium, and big businesses — and many families — from reaching their full productivity and potential.

I Want It Now!

On the road to achieving their dreams, most couples make the mistake of thinking that in order to achieve the American dream they must go into debt. This ultimately has led to many shattered dreams and worst of all many broken homes and marriages.

Americans are unaware that interest is eating them alive. Not only is the interest on our national debt threatening America’s future for generations to come, debt and compounding interest in personal finances has eliminated hope for many of ever having a secure future.

Most Americans will never enjoy true prosperity and financial security because they are in debt. Much of this debt is due to paying interest on the money they have borrowed to finance their desired standard of living.

Notice that I said “desired” standard of living and not “necessary” standard of living. Americans have a “I want it now” way of thinking and managing their finances that causes them to pay for an item two or three times over the real cost just so they can have it today.

John Cummuta in his book, Debt Free and Prosperous Living, gives this example of how buying an item on credit instead of waiting until you can pay cash for it can costs you dearly:

Suppose you bought $2,000 worth of furniture on a typical credit card, (a credit card that charges you 19.8% interest plus a $40 annual fee), and paid only the minimum monthly payments requested by the credit card company, it would take you 31 years and 2 months to pay it off. Plus — in addition to the original $2,000 cost for the furniture — you would have paid $8,202 in interest! Long after you had thrown the furniture out, you would be draining your wealth away paying for it. In this example, using a credit card would cause you to pay five times the furniture’s value!

Simply being willing to wait until you had the $2,000 would have saved you over $8,000. Most people can certainly live with their old furniture until they can save $2,000 even if that means waiting six months or even a year.

The more than $8,000 dollars you would have paid in interest could have been put toward paying off your house. By paying off your house earlier, through wise management of your resources, you can save literally thousands and thousands of dollars.

Because of mismanagement and the “I want it now” way of living, most Americans are paying thousands of dollars toward interest simply because they do not have enough self control to wait until they can pay cash.

Paying Three Times for a House

If Americans managed their resources correctly and waited until they were financially ready, most could either pay for their house with cash or put down a large sum of cash as a down payment. That would enable them to pay for their home in a few years as opposed to waiting 30 years.

You may be thinking, How much does he think I make a year? The problem is not with how much you make, but with how much you spend. Most people maintain a standard of living that is beyond what they can afford. In other words, most Americans spend what they make and more.

Maybe you could not buy a home that cost $185,000 and pay cash or even pay for half of it with cash. If you are in such a situation — and you were honest with yourself — you are probably wanting or living in a home that is beyond your means — at least beyond sound financial means.

Getting a 30-year mortgage and taking the entire 30 years to pay off your home is not the smart thing to do. If it will take you 30 years to pay for your home, you need to do a reality check. Should you really have bought and continue to live in a home that will take you 30 years to pay for?

Remember, the banks and credit card companies do not want you to face reality. Why? Because they make their money by selling you their money and the lie, “You can afford it.”

Author John Cummuta writes, “If you buy a home with a 30-year conventional or adjustable rate mortgage, you will pay for that loan about three times.”

That means that two-thirds of that total is interest. That’s 200 percent interest!

If you buy a $250,000 home, with a $200,000 mortgage, you will end up paying about $600,000 over 30 years. This means you will pay nearly a half million dollars in interest!”

In this very realistic example, you would have been working for many, many years in order to pay your bank $400,000 for loaning you $200,000. Instead of getting rich and becoming debt free, you would have been working to make your bank rich.

A Good Investment?

I am often intrigued when I hear someone say, “You should buy a house, It is such a good investment.” At one time, that was true. Today, it takes real planning for the average American to make money on the purchase of a house.

Most people think if they buy a house for a set price and sell it for a few thousand dollars more, they have turned a profit. Most forget that they had to pay interest on the money they borrowed. Add in the interest, and most people quickly find that they did not turn a profit on the purchase and selling of their home.

Don’t get me wrong, I am not trying to discourage anyone from buying a house. If you have done your homework and are buying within your means, and you are buying for the right reasons, then you will be happy in your new home. If, however, you are buying for an investment — unless you know exactly what you are doing and are very disciplined — you may be disappointed in the return on your investment.

In today’s economy, the value of homes in most cities is not increasing enough to counterbalance the investment with the cost of interest paid. In many cities, the housing market is not increasing at all but is, in fact, declining.

For many years, anyone hoping to buy a home in the Los Angeles area had to have a small fortune. Those who paid a high price for their house are now gritting their teeth as they see the value of their home decline. Those who bought homes before or during the time when the value of homes was rising and sold at the right time, walked away with a tidy profit.

In the 1990s, turning a profit on a home is not impossible, but to do so requires serious planning.

Many couples purchase a home and are not quick to pay off their mortgage because of the belief that it is a great tax shelter.

John Cummuta, however, explains away this myth:

If you have an accountant who tells you that you should never pay off your mortgage, “Because it is the last tax shelter for the average consumer,” get a new accountant. Think about what they’re saying. Let me translate it for you. They’re really saying, “Keep on paying a dollar of interest to get back 28 cents in tax deductions.”¹²

The $500,000 House

Money is most certainly just a medium of exchange. A house that you can eventually call your own can bring great satisfaction. Money is simply the means by which you acquire that desired house. By applying sound financial principles based on common sense, you can own that home and not pay two to three times the asking price.

Do you know anyone who wants to pay $300,000 for a $100,000 home because of interest? If you can have the $100,000 home and only pay $150,000 for it, with interest, then why not do so? If you plan ahead, it is actually possible to pay no interest or very little.

Remember, the bank or mortgage company wants you to take years to pay off your house because they make their money by charging you interest.

John Cummuta puts it all in perspective with this example. If you borrow $100,000 from your local bank to purchase that house, over the course of 30 years you will pay your bank around $200,000 in interest plus the initial $100,000 you borrowed. Just how long would it take you to earn $300,000?

If you make $25,000 a year, it would take you 12 years to make $300,000 right? Wrong. Remember you have to pay taxes on that $25,000 dollars. That $25,000 is your gross salary before taxes.

In order to pay your bank $300,000, you would have to make around $500,000 before taxes. If you make $25,000 a year, it would take you 20 years to make $500,000 before taxes. From that $500,000 you will have to pay taxes. After taxes you would have just enough left over to pay your bank the $200,000 in interest you owe, plus the initial $100,000 you borrowed.

If you fall into a low tax bracket, you may have to earn just $400,000 to pay $200,000 in interest and to pay back the initial $100,000 you borrowed. Either way, you are going to have to make around half a million dollars before taxes in order to pay your bank $300,000.

How to Pay Off Your Debts

The social engineers in our country have done so much damage that I believe, as do many, that a severe economic downturn or collapse is inevitable.

By practicing sound financial concepts, you can find yourself out of debt and with a cost of living that is next to nothing. Remember, in a free society no one can take away from you what you own. If an economic downturn means you loose your job, it does not mean you have to loose your home and car.

Most people spend their entire lives in debt because they simple do not know how to manage money. The next time you go to purchase an item, ask yourself, “Do I need this or do I just want it?”

Unless you are buying a house or a car, a good rule to follow is: If you cannot pay cash for it, then you don’t need it.

You and I both know people who will get a pre-approved credit card in the mail and go right out and charge up the full limit. If a large part of your budget every month goes to paying off debts and credit cards, the majority of your monthly budget is going to pay for interest you are being charged on the money you borrowed.

Let’s say you have two credit cards. One is a department store credit card and one is a national credit card. You owe $1,000 dollars on your department store card and $2,500 on your national credit card. For sometime now, you have simply been paying the minimum required on both cards.

I challenge you to look at your budget and find $200 you can cut from your budget. That may mean you don’t go golfing for awhile or to the movies and out to eat. Make some sacrifices and cut $200 from your monthly budget. Maybe you will need to put in a little overtime at work or develop a little business on the side. Even that is probably not necessary if you are willing to make the needed sacrifices.

Take your smallest debt — or the one that has the lowest interest rate — which in this example is your department store credit card. Let’s say the minimum monthly payment is $75. Take the $200 you cut from your monthly budget and begin paying $275 each month on your department store credit card until you have the entire balance paid off.

What about your national credit card? Let’s assume your minimum monthly payment on that credit card has been $100. Take the $275 you were spending each month to pay off your department store credit card and combine that with the minimum payment of $100 that you have been paying on your national credit card and begin paying $375 each month on the balance you owe on your national credit card until the balance is paid in full.

Now take the $375 you were spending to pay off your national credit card and add that to your monthly car payment of $250. You are now paying back $625 each month instead of $250. Before long you will have your car paid for, and save hundreds of dollars on interest for the money you were borrowing from your bank, local department store, and national credit card company.

Once your car is paid off, take that $625 a month and add that to your monthly mortgage, which is let’s say, $600. You are now paying $1,225 each month on your mortgage.

In not too many years, you will be debt free. Over the course of a few years, you will have easily saved yourself thousands of dollars. I am talking about real dollars that you would have been sending to your credit card companies and bank, most of which were simply interest payments.

Once all these debts are paid off, you can take that $1,225 each month and put it in sound investments. In just two years, you will have put away in an interest bearing account $29,400. Remember this does not include the interest that has been accruing on your account over the past 24 months.

The next time you need to purchase a car, you can simply pay cash. But, be sure you use good sense and buy a vehicle that suits your needs and at the best price possible. Do not take your $29,400 and spend it all on a new car if you can pick up a nice used car a year or two old for $10,000.

Protect Yourself

We have just barely scratched the surface in how to best manage your finances. I would highly suggest you order the entire cassette tape, video, and manual series by John Cummuta titled, The Debt-Free and Prosperous Living Basic Course. (See the list of recommended resources in Chapter 12, “The Revolutionary’s Survival Guide.”)

You can have the American dream without obtaining it through the most common American way — debt. Don’t let those who make their money by taking yours convince you there is no other way. There is another way. It is the common sense way that is so uncommon in today’s “I want it now” society.

By planning ahead and using wisdom, you can protect your family’s future and well-being no matter what America’s social engineers do to our economy. Yes, it will affect you, but you do not have to be ruined and find yourself and your family on the street standing in a soup line.

Wake up and take action now before you discover your American dream has turned into a financial nightmare.

Notes

¹ Larry Burkett, The Coming Economic Earthquake, (Chicago, Il: Moody Press, 1991, 1994), p. 11.

² Harry E. Figgie, Jr., Bankruptcy 1995, The Coming Collapse of America and How to Stop It, (Boston, MA: Little Brown and Company, 1992), front page.

³ Ibid;, p. 22.

⁴ Larry Burkett, The Coming Economic Earthquake, (Chicago, Il: Moody Press, 1991, 1994), p. 149.

⁵ David Barton, The Myth of Separation, (Aledo, TX: Wallbuider Press, 1992).

⁶ Ibid;, p. 22.

⁷ “The Phyllis Schlafly Report,” October 1004, Vol 28, No. 3

⁸ IBid;, p. 9.

⁹ Ibid;, p. 84.

¹⁰ Harry Figgie Jr., Bankruptcy 1995, (Little Brown and Company, Boston, Mass., 1992), p. 189.

¹¹ Larry Burkett, The Coming Ecomomic Earthquake (Chicago: Moody Press, 1991, 1994), p. 159.

¹² John Cummuta, Debt Free and Prosperous Living, (Marketline Press, Algonquin, IL., 1991-1994), p. 3.