Tuesday, September 30, 2008

Debits and Credits

Can You Balance Your Checkbook? : NO QUARTER: "...Let’s resign ourselves to these facts–the United States government helped expand the mortgage market to people who should not have had a mortgage in the first place. Government and private companies piled on to this feeding trough and reaped benefits–politicians got re-elected and tossed some money to their buddies and the so-called private enterprises made a killing. Now the party is over.

Going forward, if you have too much debt, you’re not likely to get a loan. You need to figure out a way to pay off your debt. Some may go bankrupt. Sorry, but who put a gun to your head and told you to go on a spending spree.? Will this negatively affect the economy? Probably. Unemployment will go up and there will be some retrenchment.

But that beats the alternative–i.e., printing money and just giving it to people and companies in hopes that they’ll keep on spending. That will produce an inflationary spike that would ultimately destroy the wealth of Americans.

There is not a painless way out of this. That is the hard truth. Better we come to grips with that reality and suck it up rather than continue to delude ourselves that giving the Federal Government a blank check to print money and give it to select buddies will ultimately make us all better off. It won’t."

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