As I write this, the federal government’s “official” debt has now reached $14 trillion! Google Treasury’s debt website to see the magic of compound interest at work – against us: we’re skyrocketing to national bankruptcy and extinction. Because when it comes to debt, no one, including America, is “too big to fail.” How we got here is a major story, but how we fix it is far more important; and make no mistake, fixing it is essential to our survival as a sovereign nation. (And as you’ll see, it’s at least a matter of morals and ethics as of economics.)
As with most problems, the solution starts, not at the top (politicians, by their very nature, are unwilling and unable to clean up behind themselves) but at the bottom (we the people must provide the adult supervision that politicians so desperately need – in this and other matters). So, how and where to start? First, let’s admit that debt is addictive: charge-now-and-pay-later is so seductive that we all do it. And for most of us, when it’s time to pay up, we do. Politicians, not so much; they’d rather “kick the can down the road,” and pass their obligations on to their successors (and to us and our not-yet-voting posterity.)
Next, let’s also recognize that enabling addicts (any addict, to any habit) just does not work! We must deprive him of his “fix.” Greed, being part of human nature, can’t be cured; it can only be controlled. Debt, on the other hand, is a manufactured condition. Debt is not only bad, it’s also a form of economic enslavement – a tool that both the political class and the financier class use, first to entice, then control, then own us. Doubt it? Step outside yourself, and take a good, hard look. For example:
1) Home ownership may be The Great American Dream – but the total interest on the life of your home mortgage is typically 3-4 times the note itself;
2) The federal government partially funds Medicaid – then calls all the shots;
3) The federal and State governments build the Interstates – and we pay gasoline taxes, tolls, highway user fees, etc., etc., etc., forever and ever, amen;
4) Our city or county builds schools and hires teachers – and we pay, and pay, and pay (through property taxes) long after our kids are out of school and are now paying property taxes to pay for their kids’ schools!
5) And the litany goes on, and on, and on.
Here are 5 principles which can help us all be better off, both short- and long-term:
1. “Neither a borrower nor a lender be.” (Always good advice; today, a necessity.)
2. “The love of money is the root of all evil.” (Especially among politicians and financiers.)
3. “Power corrupts, and absolute power corrupts absolutely.” (See 2., above.)
4. “There’s no free lunch.” (Personal greed/laziness; making vs taking.)
5. “Use it up, wear it out; make do, or do without.” (i.e., do I need it, or do I just want it?)
These principles hold the key to fixing not only our personal (and business) financial problems, but Government’s as well. Look again: there’s nothing here that we can’t do individually – then demand that our political “leaders” do also. Make no mistake, they’re totally addicted to debt, and won’t change until we force them – nor will they listen until we ourselves are no longer debt-addicted. As for the financier class, debt is their trade and greed their addiction; in many ways, they need even stronger supervision than do politicians: reinstating Glass-Stegall would be a good first step.)
Let’s look at the root causes of the “Great Recession, i.e., greed and debt. To link Wall Street with greed, and Government with debt, would be accurate, but incomplete; they are equally culpable of intentionally and mutually fleecing the American public. One must admit, it was a cool scam: to “earn” political donations, government obligated trillions of (taxpayer) dollars out through Wall Street’s bond brokers; those “earned” donations came out of the brokers’ commissions (to be ultimately paid by the taxpayers, of course); and, when Government wanted even more “earned” donations, it used the Community Reinvestment Act to force the mortgage industry to fabricate toxic mortgages to “sub-prime” high-risk borrowers – again, through the Wall Street bond houses – generating yet more kickback to Washington. Then, to cap the trifecta, Washington bailed out Wall Street – on our dime – thus generating yet more Wall Street profits and kickbacks to Washington. A cool scam, indeed.
(It’s not just Washington; government at every level plays exactly the same game – and we pay! The primary difference is merely one of scale: when a State, e.g., California, New York, Michigan or an Orange County, CA, or a small town goes belly-up, the pain is marginally more localized, but no less real. And it’s always the taxpayer who’s swindled.)
Fact: Debt feeds greed; solvency defeats it. That truth applies to households and governments alike. And it starts at the bottom, not the top. Take a good hard look at how much your household loses via interest payments, and ask yourself whether that money wouldn’t be better used in your own household: by reducing, then eliminating that debt load – for good. The best time to start is right now, and the best way to start is on the credit cards. Pick one, and start making double payments. Then go after the next one – pretty soon, you’re seeing results, and actually enjoying the process. And the more progress you make, the easier it gets; trust me: been there, done that, earned the T-shirt. And now you’ve earned the right to demand that Government “go, Thou, and do likewise.” It’s Econ 101.
But can’t the government simply print more money? Yes, but… The con game of just printing more money makes every dollar worth less than it was yesterday. In 1913, Congress and the financier class colluded to create the Federal Reserve – and have since run the value of the dollar down to about 1½¢! (No, there’s not a lot of value left in our dollar. Next step: Weimar?) Now they’re destroying what was once the most solid and secure part of the financial market, i.e., debt (government bonds, and residential and commercial mortgages) creating the “Great Recession,” and with it a more-or-less permanent true unemployment rate of 18-20%. Plus, our world-highest corporate tax rate is driving jobs overseas in record numbers – thus perpetuating high unemployment.
Both Thomas Jefferson and Martin Luther King warned us about living in debt rather than in liberty, as free people, not in servitude. America is at a crossroads, and each of us is part of the decision on which way we go. Which legacy do you choose to leave to your children and grandchildren?
Get Out Of Debt.
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