Today, President Bush and congress announced that they have tentatively reached an agreement to borrow $150 billion dollars from foreign countries to prop up the ailing
This is not the headline that has been reported elsewhere, but it should be. US consumers have spent beyond their means. They took on too much debt, got used to lifestyles they could not afford. Eventually, the credit spigot ran out, and they pleaded to their government for help.
Now here comes our government to save us, suffering from a similar ailment. Like many consumers, our government spends more money that it takes it. Passing tax increases (revenue generating measures for the government) is political suicide. Decreasing spending (decreasing expenditure) is political suicide.
Let’s look at the
Entities that spend more money than they take in eventually face a day of reckoning. We have once again chosen a short term solution that will exacerbate the inevitable day when we must balance our budget. When the
How long will people take that investment for? What happens if the interest rate rises (note: mortgage rates are tied to treasury rates, not fed fund rates)? What happens when people no longer buy the worthless paper our government is issuing?
We have made a choice as a society. Rather than face the consequences of our poor choices, we continue to make more poor choices that raise the stakes on the eventual pain higher and higher. This is insanity, and it will not last.