"As far as this $700 billion bailout is concerned, they keep saying 'we have to act now, we have to act now.' It's like a bad TV offer. Just ten easy payments of $70 billion each, operators are standing by, but you have to act now!" –Jay Leno
I want to spout off on my opinions, but I do have to give a big disclaimer here - I haven't watched the news much in the past, and I don't really know a lot about politics or economics. So, why am I writing this post? I guess I just wanted to rant a little bit. :) With that said...
I've been watching the news the past couple weeks about the economic disaster we're in right now, and, frankly, I'm astounded. Did you know our country is in debt $9.6 trillion dollars?
I also read an article that says the deficit for 2009 is almost 1/2 a trillion dollars. And that number doesn't include tens of billions of dollars in Iraqi war costs. It also, obviously, doesn't include the $700 billion bailout. So, the debt is going to be - what? $11 trillion this time next year? Something is wrong with this picture.
Today's generation has an entitlement mentality. We want what we want and we want it when we want it. I know, that's hard to make out, but I liked saying it that way. And since I wanted to, I did it. I'm entitled to that right as the blog owner. :D
So, the government wants to buy something, they buy it. They don't have to worry about where the money's coming from. They just say, "Put it on our tab." Now, in the olden days, if you went to a store and had them put something "on your tab" and you went in day after day after day, racking up your tab and never paying a penny back, they'd come to the point where they'd refuse to put anything else on your tab! What happens when everybody realizes they're never going to get paid back? Wait, maybe they already have. That might explain why the dollar is losing value faster than the government can say, "Here's 700 billion dollars!"
I've been thinking about this a lot lately and something occurred to me. I remember hearing a lot about WWII, and how everyone in the country was expected to sacrifice to help fund the war and keep supplies going to the troops. Here's a good article I found that talks about it. Sugar rationing, recycling, scrap drives, etc. were some of the means the government used to fund the war. Here's a quote from the article: "While life during the war meant daily sacrifice, few complained because they knew it was the men and women in uniform who were making the greater sacrifice."
Now, fast-forward to the war on terror. What have we been called on to sacrifice in order to support our troops in the middle east? How have the American people banded together to make sure they have the supplies they need? Oh, that's right. We don't have to sacrifice anything because the government just uses its big, giant credit card with no credit limit on it to pay for the war so we don't have to sacrifice anything. In fact, they've been cutting taxes to help stimulate the economy. What financial adviser would tell you to cut your income and increase your spending at the same time? It makes absolutely no economic sense whatsoever.
When the economy slows down, the government goes to great lengths to stimulate it. Lower taxes! Lower interest rates! They want the American people to spend money, so that there will be more revenue, jobs will be created, the government will collect more taxes. When people slow down on their spending, the government "stimulates the economy" again. We've got to get those Americans to buy more stuff! Let's lower the interest rates and get them buying more houses and cars and boats... And here we are, with tons of people foreclosing on their houses because they spent more than they could afford. Maybe the whole "get people to spend as much money as we possibly can" mentality is part of the problem.
There's this whole idea that if you cut taxes to stimulate the economy, then businesses will make more money, there will be more jobs, people will make more money and spend more money, and in the end, the government will get more taxes because of all this. Does it work??? That would be a big no. Just look at the rate at which the debt is rising for the answer to that question.
Here is a pretty cool article about who and what caused the economic crisis we're in right now. I'd recommend scrolling down to the bottom of the page. There's a little section called "The Real Deal" that lists the problems that led up to this mess and I found it interesting. I certainly don't know what the answers are, but I'm pretty sure of what they aren't. And if I hear another politician telling me we need to go into debt to "stimulate the economy," I'm going to lose my lunch.
As far as what we can do as citizens to help our own financial situations, and in turn help America, I wanted to recommend a book I read a few years ago - Debt-Free on Any Income. It has a debt-payoff system that accelerates over time to help you pay off all your debt, including your house, in a very short time (we're talking, 10 years short). The thing I really loved about it is it comes with a CD-ROM you put in your computer and it helps you track all your debt payoff, income, spending, etc.
So, there you have it. This is my $.02 worth. Although I think I deserve more than $.02 when the government can throw around $700,000,000,000! :D