Debt – Is a huge problem for America and Americans

April 25, 2008 at 6:30 pm Leave a comment

American has become addicted to debt and borrowing.  We have trained ourselves to ignore this problem and it has now become a pending disaster.

The facts do not lie in this regard.  The national debt is now at $9 trillion and we add another $1.6 billion each day and we borrow the money from the Chinese and the Saudis among others we should fear.  China and Saudis Arabia are both dictatorships. While the two countries are not alike in many regards they share the realities of no freedom of speech, press, political action, religion and they are not democratic.  Each and every American, man, women and child now owes $31,000 of the national debt.  This costs us $250 billion per year for the interest alone.  If we didn’t owe the debt that money could be spent on schools or health care for the 10 million American children with no health insurance.   

 

America has been transformed in my lifetime from a country that made things and sold them to the world into a country that buys things from China on credit.  The things we buy are mostly made in third world countries and more and more in China.  I tried to find a pair of shoes to buy last week that were not made in China and I found it is impossible.  I like Clarks and they too are made in China.  Even expensive shoes like ECCO are made in China. 

 

The consumer debt in America has now reached $2.5 trillion and each and every man, women and child now owes $8,200.  If you are a family of four your family consumer debt on average is $33,000 and you share of the national debt is $120,000.   The consumer debt is 133% of disposable income.  Americans are spending 33% more than their disposable income.  None of this borrowing, by our federal government and by individuals can go on forever.  In fact we are reaching a point where our entire economy is at risk.  The other side of the ledger is income and we all know income is not growing to accommodate the bad borrowing habits we have become addicted to.

 

This is an area we can all address.  We can’t do much about the Iraq War, the price of gas at the pump or government waste, but we can stop borrowing money.  Ben Franklin said, “A penny saved is a penny earned”, and he was correct.  We need to start asking some basic questions about our spending.  We can start by asking is this an item I need or just something that would be nice to have?  If we don’t need it, don’t buy it.  We need to teach our children to save and not to spend on items they can’t afford and they do not need.  I have a friend who buys shirts when ever he is under stress.  He likes shirts and he now has so many he can’t wear them all.  He has some he hasn’t taken the tags off and still in the Nordstrom bags.  My advice to him is to take up running, walking or tennis.  Stop buying to alleviate your stress.

 

Our American culture is about things and getting more things.  We need to rethink this idea of an economy based on consumer spending.  The economy is now 70% consumer spending and we as a nation spend little or no money on investment in infrastructure.  Our roads, bridges, trains and buses and other infrastructure are old and failing.  Jobs to fix the infrastructure actually pay a living wage as opposed to the jobs in retail where 70% of our money goes.  My friend with all the shirts just came back from Europe and he was amazed at their roads, mass transit, buses and trains and their internet.  The internet speeds are 5 times faster than anything in America and it is free and everywhere.  The EU is investing in infrastructure and they are not burdened with the national debt or high consumer debt we have in America.  They have less disposable income but they have good roads and social services unknown in this country.  I know this is heresy.  No American dare say anything good about the Europeans.  My friend is a right wing Republican and he doesn’t understand how the Europeans can have such great services and America does have the same things.

 

American needs to demand that our elected officials (the President and the US Congress) pay as we go for our federal budget.  No more deficit financing and no more borrowing from the Chinese and the Saudis.  This means we need to raise taxes or cut spending or both.  You heard me right, raise taxes or cut spending down so there is no deficit spending.  This will not eliminate the $9 trillion we already owe but it will stop the bleeding.  Borrowing $1.6 billion per day and pretending there is no problem is insanity.  Step one is admitting we have a problem.  We need to act responsibility ourselves and stop our credit card borrowing.  We need to start paying off our balance each month and not running a balance at 29% interest.

 

Ben Franklin also said, “Neither a borrower nor lender be.”  We all need to start reading more Ben Franklin.

 

                            

 

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Entry filed under: Rants.

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