Politicians must think voters live in an alternate reality. Why else would they push fantastic fictions about the boogeymen they claim are responsible for inflation, when every morning they see the culprit staring back at them in the mirror?

The bill for years of unbounded spending and pandering for votes is coming due, and, as is often the case, it is being exacerbated by unanticipated events. This time those events include the pandemic, war and technology. So now it’s time for adults to step up and stop the rhetorical gymnastics from deflecting from the hard and intelligent conversations that must be had about the serious issues that threaten our nation’s future.

Our national debt unceremoniously hit $30 trillion dollars at the end of January — three years sooner than the Congressional Budget Office (CBO) had projected in 2020. That is the equivalent of a $92,000 debt incurred by every person in America. For some perspective, the national debt hovered in the $6 trillion range in 2000, and $14 trillion in 2010

Too much government debt is bad for many reasons, no matter how many times politicians try to portray it as government investment. Governments don’t invest, they spend, and that spending leads to higher interest rates and inflation when it gets out of control. Higher interest rates are a double whammy, making it more costly for the government to borrow to service its interest and principal obligations.

The CBO estimates that the country’s net interest costs will be a whopping $60 trillion over the next three decades. Left to its own devices, Congress would spend even more than the CBO can imagine. These are numbers that America simply cannot afford if it is to address its present and future domestic and international problems and maintain economic, technological and military superiority in a frighteningly dangerous world.

About the same time that the national debt hit $30 trillion, the Federal Reserve’s balance sheet reached $9 trillion. Again, for perspective, the assets on the Fed’s balance sheet totaled less than 10 percent of that – about $800 billion – just before the badly mishandled financial panic of 2008-10.

The additional amount on the Fed’s balance sheet represents the money that it has printed in response to the financial crises that we have faced since then. This tsunami of new dollars flooding into the economy should have been expected to be a shortcut to the inflation that we are now experiencing.

In addition to the two-headed monster of high interest rates and increasing inflation, the attack on the superiority of the dollar is occurring on multiple fronts. As a result of the deteriorating U.S./Saudi relationship, Saudi Arabia and China have accelerated negotiations that would allow China to pay for some portion of the oil it purchases each day with the yuan, rather than with dollars. If you are keeping score, that would be a huge win for the Chinese yuan, and another big loss for the U.S. dollar.

Whether the dollar remains the world’s principal currency is a very big deal. The United States emerged from World War II as the only superpower and the country with the most gold in its vaults. That allowed it to dictate the terms of the Bretton Woods Agreement in 1944 to cause the dollar to be designated as the global reserve currency (the currency held by monetary authorities like central banks), solidifying its place as the world’s “vehicle currency” (the one favored to settle global commercial transactions).

In 2000, the dollar represented 71 percent of global reserve currencies, with the euro at about 19 percent. Today, the dollar has slipped to just 59 percent. If the dollar loses its status as the primary global currency, which is plausible if we do not clean up our reckless government deficit spending, we will likely face a world in which the dollar could no longer be used to impose economic sanctions as a substitute for military actions or cyberwar.

The threat is not far-fetched, and it has happened to other nations before us (most recently the United Kingdom). Not only will the dollar no longer be available as an economic weapon, we will no longer be able to afford our military superiority. The question is how close are we to that precipice?

Finally, Russia’s invasion of Ukraine will significantly impact global economics and rearrange geopolitical relationships and strategies for years to come, creating significant economic consequences for the United States. Take, for example, the new financial ties Russia will necessarily forge with China as democracies turn their backs on Russia.

China is more than willing to buy as much oil as Russia can sell it, eventually turning Russia into a financial dependent of China. This is undoubtedly another tool that China will use to increase the stature of the yuan relative to the dollar.

The United States finds itself in the eye of a geopolitical hurricane being buffeted by high inflation, rising interest rates, increasing threats to the superiority of the dollar and new military and economic alliances. At the same time, we are seeing an increasing willingness of countries such as Russia, China, North Korea and Iran to act in ways that are inconsistent with the survival of the planet. Dealing with this is not a job for the faint of heart. It’s time for leaders to step forward who know how to create the future rather than waiting for it to happen and then looking for someone else to blame. And it’s time for us to elect them.

Thomas P. Vartanian is the author of “200 Years of American Financial Panics: Crashes, Recessions, Depressions And The Technology That Will Change It All” and executive director of the Financial Technology & Cybersecurity Center. William M. Isaac is former chairman of the FDIC and Fifth Third Bancorp and is chairman of the Secura|Isaac Group and Blue SaaS Solutions.  

THE HILL

BY THOMAS P. VARTANIAN AND WILLIAM M. ISAAC, OPINION CONTRIBUTORS — 03/21/22 03:30 PM EDT  355

THE VIEWS EXPRESSED BY CONTRIBUTORS ARE THEIR OWN AND NOT THE VIEW OF THE HILL

From economic sleight of hand to stark reality