In 1929, more than eighty years ago, President Herbert Hoover supported (and Congress passed) a bill to appropriate $500 million to the Farm Board. The $500 million went to prop up the prices of crops raised by wheat and cotton farmers. The interest payment on that $500 million is about $25 million a year–or $80,000 a day every day since then, because the borrowed money was not really paid back. We just made interest payments and then borrowed more during the next decade for more giveaways.
For example, under the Silver Purchase Act during President Franklin Roosvelt’s New Deal, the federal government gave silver miners a subsidy of 64.5 cents an ounce for silver instead of the market price of about 40 cents an ounce. By the early days of World War II, the U.S. had stockpiled 42,000 tons of silver. My wife Anita and I discuss this mountain of over-priced silver in FDR Goes to War.
What is my point? Since the late 1920s, the U.S. has borrowed more money each year than it has paid back. Thus, we never really pay back the borrowed money; we just make interest payments on it and then borrow and spend more. The interest groups which beg for this money are unlimited: wheat farmers, cotton farmers, and silver miners won subsidies 75 and 80 years ago, and other groups ever since have been winning subsidies. We borrow the money, pay the interest each year on it, and then borrow more for new groups.
In other words, our generation today is still paying $80,000 a day every day so that wheat farmers and cotton farmers could get a subsidy in 1929, 1930, and 1931. When astute observers today talk about “generational theft” that is the reality of their argument: We borrow today to repay the subsidy given more than eighty years ago to wheat farmers. And our government continues to borrow each month to give subsidies to different interest groups.
The challenge for our generation is this: Who has enough wisdom and devotion to liberty to develop the political strategy to stop this Ponzi scheme from driving the U.S. into ultimate bankruptcy?