Bank of China Credit Card: America’s Love/Hate Relationship with Borrowing and Spending10.22.10
Why is it such a huge, vital, cut-all-spending-now situation with regard to our nation’s economic woes?
I get it: being in debt is bad. You end up paying a fortune for something because of all the interest that you then owe to your lender. (Trust me: I have credit cards, I know how it works.)
And there’s a lot of talk about how we’re “running up the credit card” with regard to the Iraq and Afghanistan Wars, the bailouts, and TARP. But it’s not really on a credit card. Right? We don’t have creditors actually knocking down the doors of the Capitol Building.
I’m being snarky here on purpose because people (myself included) talk about the debt as if we know to whom this debt is owed — China, right? My point is that the way our government spends money it doesn’t have is different from how you or I spend money we don’t have. And the repercussions are different. I don’t imagine that Hu Jintao is on the phone every month calling up President Obama saying, “Yo, Barry, you didn’t make the minimum payment last month of $233,588,838.35. Do you know when you’ll be able to pay that?”
Also – we’re in a society that is based on borrowing. The reason our economy is still sluggish is because there isn’t much lending going on to small businesses (some banks being very tight with their lending practices and people not wanting to borrow money to expand/start their businesses at this point in time), therefore not many new hires. (Well, it’s a reason.)
But, it’s rather bipolar to want the economy to get going through increased spending and borrowing while at the same time blaming spending and borrowing as the reason why we’re in this whole mess to begin with. So spending and borrowing is both good and bad — but right now, all we hear about how bad it is to spend, how bad it is to keep borrowing. No wonder the economy is still moving at a snail’s pace!
I have no answers. I’m merely positing issues that I’m seeing and issues that I’m dealing with in my head. I would love some clarity on the economics of this because that’s one subject on which I’m not very knowledgeable.