The Creature from Jekyll Island: A Second Look at the Federal Reserve

Griffin looks at what could happen in the future based on the patterns he finds in the past and the policies that were current when he wrote the book. The national debt has only risen since the 1950s, and there are no signs of the government slowing its borrowing. The interest on that debt is so large that it easily takes a third of all tax payments to keep up with it. If the government stopped borrowing and decreased its size sufficiently, Griffin asserts, it could, over time, become solvent enough to cut taxes across the board. However, government employment is at an all-time high, and politically popular entitlements require significant bureaucracy to keep them running. Griffin argues that various entitlements could be dissolved and that the contractually required ones, like Social Security and Medicare, could be outsourced to private companies.

The national debt comes from several sources: private US investors, foreign investors, and to some extent the government itself. Foreign investors, as of 2002, owned nearly half of the US government’s debt. In 2010, the markets had lost faith that the government could repay its debt, so it stopped purchasing Treasury bonds. The Fed picked up the slack, pumping more fiat money into the economy.