Spending yourself rich

One of the better techniques of preventing yourself from being bamboozled by Washington New-Speak is to apply to Washington the same standards you apply to yourself and your family.

An example of this is the growing catastrophe of a potential economic collapse. Washington insiders will try to weave a story about how the collapse will be caused by gigantic, complex problems that only geniuses with advanced doctorate degrees can even understand, let alone deal with.

But such is not the case. I submit that there is nothing in the basic laws of economics that is so complex that an average person cannot understand it. Most of us deal with such basic laws every day, in trying to balance our own family budgets and provide for our loved ones.

A lesson most of learn relatively early in life is that you can’t “spend yourself rich.” That is, you cannot achieve authentic wealth and well-being by simply running up balances on your credit cards to get whatever material things your heart desires. This iron-clad law against “spending yourself rich” applies whether you are a single individual, a family, a neighborhood, a state, or an entire country.

Most of learn, early on, that we can seem to alleviate the privation brought on by excessive spending by taking out yet another credit card account, and running up a few thousand dollars more in debt. But eventually, the bill comes due.

Now, the US government lives, in the long run, under the same set of rules. The only difference is that the US government can get away with such irresponsible behavior much longer than you or I could, as individuals. After all, they don’t have to earn their money; they can simply tax it by force from the rest of us, or they can nudge their pirate friends over at the Federal Reserve to create money out of thin air. The US government can inflate the currency, spreading their irresponsibility over the entire population; we cannot.

But even the US government eventually has to face reality. That moment of reckoning is very close now. There really is no easy, painless way out of the current economic crisis. We could raise taxes and start a revolution. Or, we could inflate some more, and devalue the currency to near worthlessness. Or we could try to sell government bonds, but only suckers will be takers on that one. The Chinese, already holding almost three quarters of a trillion dollars in US debt instruments, are now in a position to dictate to us how to be responsible, lest they dump our debt on the open market, collapsing our currency.

The US government is now in the same position as a twenty-something couple who have just discovered that–yes–they really do have to pay off their credit cards. In principle, the US government situation is no different, although they do have a lot more tools for avoiding reality just a little longer.

If the US government could be even one-tenth as responsible as that young, twenty-something couple, we would be in for some belt-tightening, but we would come out of it stronger. As it is, the US government is much more infantile. And that twenty-something couple has to endure their belt-tightening on their own. The government can inflict the pain of their irresponsibility on all of us.

And they can only do so, because we let them get away with it.