If citizens of this country are deep in debt, then why do they expect the Federal Government to be any different?
It’s really a crazy thing. The biggest consumer economy in the world is the United States of America. We consume for lifestyle, reward, fun and entertainment, excitement, and a whole slew of reasons. The fact that we are consumers is also the basis for why the Dollar has value. Our ability to consume allows us to be competitive internationally. If we did not consume as much the dollar would be worth less, just like the Japanese Yen. Instead, we create a very high dollar “velocity”. The faster the dollar travels from one person to another or one entity to another, the faster our economy expands. This brings us to the crux of the current problem.
Just like the economy before the Great Depression, there has been a wild increase in credit and credit-based spending. When credit expands too rapidly then we end up in a situation in which there is not enough cash or velocity of cash to keep up with the debt load. In order to re-set the economy back to a normal credit balance, some loans must be called in.
Example: It’s ironic that some Hollywood movie stars will complain about spending and excess, what they believe to be a high debt load in the deficit numbers, and all along it is the consumer who makes them wealthy in the first place. It is the military fighting for freedom which allows our ability to live our lifestyle in which we can afford such entertainment. But movie stars then seem to be mad at us for it. It’s crazy! lol
Copyright 2008 Michael P Arnold, MPArnold