The past century has witnessed the welcome demise of fascism, totalitarianism and communism. These forms of government fell into what Ronald Reagan described as "the ash heap of history." But now another but far more desirable form of government is on the chopping block — democracy.

The democratic form of government in this country and much of the developed world is facing perhaps its greatest test.

The debt problems in the world's greatest democracies have reached epic proportions. The United States is in the process of going broke. The consequences of bankruptcy and default across the developed world could permanently reshape the world order — for the worse.

Economies could collapse. Depression and social unrest would likely ensue. The collapse of the most free and tolerant form of government the world has ever known amidst a brutal world could have huge negative ramifications for the human experience across the planet.

The debt bomb

Here in the United States the public debt is near $16 trillion. The increase in the debt over the last four years is larger than the debt accumulated from the country's founding until the year 2000. Monthly deficits are now larger than yearly deficits were less than 10 years ago. But that's just public debt. Overall debt, which includes entitlement obligations, is estimated to be over $100 trillion. Things are quickly spiraling out of control.

Europe and Japan are in similar perilous predicaments. Europe's problems have obviously been in the news recently. Several countries in the EU have grown their government beyond what the private sector tax base can afford and the EU is struggling to stay united. Japan, in terms of debt to GDP, is the most indebted nation of all.

Political ineptitude

Yet, at a time when finding solutions is most crucial, the United States and other developed world governments seem incapable of taking on even much smaller problems.

It appears that technological advancements and economic growth and sophistication across the globe have surpassed, at least temporarily, the ability of large democratic governments to govern. Bloated and inefficient political bureaucracies aren't cutting it in the 21st century. To keep pace with a rapidly changing world, large governments need to be smaller, quicker and more efficient. But that isn't happening. Reaction time is too slow and the politics is too polarized.

Last summer's debt ceiling debate exhibited a lack of political will to make tough choices, and the world noticed. The U.S. suffered its first credit downgrade.

The political class in this country and others too often serve their own interests rather than those of the country. As a result, they have made promises in the form of entitlements to citizens that can't be delivered and left the problem for future Congresses to deal with, long after they have left office.

Now, the U.S. government, through the actions of the Fed, is printing money to compensate for the lack of political will on the part of the legislators to make fundament reforms. This money printing is further jeopardizing our longer term financial health. It also puts on display the political class's preference for easy but harmful short term fixes over more politically difficult long term solutions.

While the country desperately needs solutions, the political debate seems to be deteriorating. Elections are seldom about honest debates. Too often the winning party is the one with the best media strategy that can hype their own side and trash the other side to greater effect.

This has to stop.

The U.S. faces a crucial test for its very survival. The well being of the entire world and the democratic form of government is at stake. Just like during the Civil War, the Great Depression, the World Wars and the Cold War, our Democracy is again being tested by tremendous adversity. This could be the toughest adversary so far.

It is imperative to the future of this country and the world that the U.S. can get a handle on this fiscal time bomb. Somehow, we as a nation need to muster the character and political will to right this fiscal ship – fast. The stakes are astronomical. And the world is watching.

If we can conquer this problem, our greatest days could be ahead. If we can't, God help us.

About the Author: Tom Hutchinson Tom Hutchinson is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of The High Income Factor. Discover more by Clicking Here Now.