The destruction of the “American dream”

Posted by admin on Mar 25, 2009 in Issues & Ideas | 1 comment

Wealth, power and a dream. These three key motivating factors influence and drive the modern twenty-first century American society. It has been nearly a century since the founding fathers of the “American dream” wrote into the Constitution the founding freedoms every American should receive.

Today, people are engulfed in the rat race, striving for financial freedom to be on top of the world, a mindset that deeply affects students in North America and around the world. Ultimately, however, hyper-inflation and debt will disintegrate this new “American dream” by distracting our generation’s desire for financial freedom.

So what is the “American dream”? Is it being able to build up one’s RRSP’s or 401K to eventually retire with? Or is it winning the lottery? Typically, a lot of Americans believe that money or wealth is a serious contributing issue to their view of happiness.

However, there is a clash of values that occurs when a comparison is made between the 21st century view of the “American dream” and what the founding fathers of America believed in. According to James Adams, the founding fathers defined the “American dream” as a “dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement.”

Distortion of the American dream:
This simply is contradictory to what Americans today believe to be the “American dream.” Unfortunately, the freedoms that were given to Americans were abused and misused by everyone. As a result of massive opposition to the actual “American dream,” the next decade will undoubtedly be the hardest to survive financially.

Hyperinflation will be one of the two primary forces to contend with, as the buying power of the American dollar will collapse the hopes and dreams of many Americans. Hyperinflation is an economic environment where lots of money chases after only a few available resources or products. The key difference between inflation and hyperinflation is that hyperinflation usually consists of a period of time that has high volatile multiples and movements of inflation growth in terms of price fluctuation. On the other hand, inflation is an average during a period of time where there are only modest differences in price fluctuations. A key example of hyperinflation occurred during the 1980s, when inflation interest rates were used to combat high inflation rates.

Why should we be scared of hyperinflation now? A monumental change occurred during the 1980s, when the Federal Reserve in the United States changed the inflation calculation. The major influences such as food and energy prices were removed from the calculation, allowing for a less volatile inflation rate that could be monitored and controlled. Even though the current calculation says the inflation rate was at an average of 3.85 per cent last year, the inflation rate that includes food and energy prices is much more concerning. According to John Williams of Shadow Government Statistics, the inflation calculation for last year including food and energy was around 13 per cent. The inflation rate that includes food and energy prices is at even higher multiples in the current U.S. inflation calculated by the Federal Reserve. This leaves the most circulated currency ever in mankind with a huge problem.

The American debt load is the other huge contributing issue that will decimate the “American dream” through the continuous increasing of interest rates. Currently, the debt load has grown to $36,128.09 per American citizen. The United States has been attempting to counterbalance the government deficits by printing money to cover the rising costs. The U.S. government has also had to borrow money because printing money usually takes too long, even with the printing presses running constantly.

American citizens, on the other hand, have had to take out extra mortgages or have had to increase their credit lines to keep up with their consumerist and materialistic society. The past continuous years of growth by using borrowed money to stimulate growth have finally caught up with the American people. The American consumer and the American government have been getting borrowed money from many countries around the world especially from Asia. China is the only country that is currently lending money to the U.S., and they will eventually only allow the American people to borrow more money from them if they are guaranteed a higher rate of return in interest.

What you can do:
So what should Trinity Western University students do to counteract the destruction of the “American dream”? First, they should be aware that currencies can, over time, lose their buying power and that the American dollar in particular will lose most of its buying power in the next decade.

Secondly, students should pay off student loans as soon as possible. Canadian students especially need to be wary of this area because they may not be able to take out home mortgages or car loans even if they have a perfect credit rating.

Thirdly, students that are looking for moneymaking opportunities should look to the resource markets as an area to look for attractive future returns.

Finally, students should maintain a written budget that keeps track of monthly expenses. This not only allows for students to easily report their taxes, but it also allows students to identify where their spending habits need to be curbed.

Regrettably, the “American dream” has been shaped and formed into another form of idolatry. Ironically, our society has undermined key phrases such as commercialism, consumerism and materialism as just other excuses to maintain our happiness and lifestyle standards. It is this current “American dream” that will be destroyed through hyperinflation and debt. The large middle class in North America will be no more, as the class levels will spread drastically, grouping people either at the top or the bottom. Clearly, all Americans will need to make a moral change and reinstate the true meaning of the American Dream where “life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement.”

Quotes and statistics were taken from: http://www.financialsense.com/editorials/quinn/2008/1224.html, http://www.shadowstats.com, and http://www.brillig.com/debt_clock.

Vincent Webb is the author and editor of Counterbalance.