We, the people..............

As the wise men say," what can't go on forever won't", and "debt, like freedom, is a sword that cuts two ways."  The funny thing about borrowed money is that it either needs to eventually be paid back, or it needs to have created additional wealth that allows for the interest carry to be a very light burden to tote around.  Financing a "lifestyle" with a binge of debt comes nowhere near the creation of additional wealth (unless, of course, you are among those providing and selling said lifestyle).  Hangovers usually follow binges.  The worse the binge, the worse the hangover.  

Henry Blodgett offers an essay on the subject along with this graph, showing the total of all private and public debt in the U.S. of A. in ratio to the Gross Domestic Product.   While one can disagree with his political conclusions, it is hard to disagree with this:

"The trouble is that our current problems cannot be solved with a simple fix. They also cannot be solved quickly. It took 25 years for us to get to this point, and it will likely take us at least a decade or two to work our way out of it, even if we make the right decisions.

"So it is time that we began to face reality."

"Our unfettered borrowing and spending beyond our means--all of us, not just the government--fueled a quarter-century-long boom that, unfortunately, was partly an illusion. It's easy to seem prosperous when you're spending more than you make.

"That 25-year debt-fueled boom of 1982-2007 has ended, and it has left the country with a stagnant economy, massive debts, high unemployment, huge wealth inequality, an enormous budget deficit, and a sense of entitlement engendered by a half-century of prosperity.

"After decades of instant gratification, Americans have also come to believe that all problems can be solved instantly, if only the right leaders are put in charge and the right decisions are made. And so our government has devolved into a permanent election campaign, in which incumbents blame each other for the current mess, and challengers promise change."

I suspect it is that "instant gratification" thing that has, and is, causing most of our economic problems.  A change in our psychology might be highly beneficial.


Full post is here.