Now I’m not an “economist,” but I have studied accounting and I know how to balance a checkbook, so I think I’m qualified to make a comment (or two).
Here in the so-called Real World, debt is generally considered to be a Bad Thing. Having a lot of credit debt, in simplest terms, means that you can wind up paying triple the amount that the original item cost in interest rates.
And then, if you lose your means of income, you wind up in over your head, unable to pay the monthly minimum. Eventually you default and either lose the car or house or you declare bankruptcy.
I remember the excitement I felt when I was in my 20s and got my first credit card from the Broadway department store in Los Angeles. I had hit the big-time grown-up world and was then able to apply for more credit cards that had higher limits and could be used just about anywhere to buy just about anything.
The thing about credit cards though is that if you don’t pay-off the full amount charged each month, you wind-up paying interest on the balance due.
So even though banks try to entice consumers to use their credit cards as if they are “free money” or “fun money,” they are not anything of the sort.
Banks send people countless applications for new cards and packets of credit card “checks” to use as if there will be no consequences to taking that otherwise unaffordable 2-week vacation to Hawaii.
Because, you see, the 2-week trip to Hawaii at the 5- Star hotel is STILL going to be unaffordable a month after you get home and the statement comes in the mail.
Unfortunately, some of us get a little carried away with credit cards and/or are a bit slow about figuring out the consequences of the spend-debt-interest cycle from hell.
Credit cards are a privilege, not a right. The use of them requires responsibility and common sense.
And if the “cents” outweigh the “sense,” we pay the price big-time.
So when I hear people say that the government needs to keep spending to save our country’s economy, I don’t get it.
We’re talking about *borrowed* money here, people. We’re talking about China basically owning the United States. We’re talking about a sinister (and misunderstood) “Federal Reserve” that prints out tons of money with nothing behind it to back up its value.
The national debt (as of a minute ago) is $14, 294, 000, 000, 000. That’s an incredible chunk of change.
If you or I miss ONE payment on a credit card bill, a ton of interest and a late fee shows up on the next statement. Sometimes banks will even raise your interest rate if you’re late paying. I guess this is some kind of “punishment” for falling prey to a bank’s questionable marketing strategies.
So yeh, right…let the government spend away. I don’t have kids, but SOMEBODY’s children and grandchildren are going to have to pickup the tab for all the “free” stuff that their parents want today.
Just like that fun-filled trip to Hawaii charged-up on plastic, the bill IS going to eventually come due.
And it ain’t gonna be pretty.
©August 2011 by Phyllis J. Hanniver
The National Debt Clock: http://www.usdebtclock.org/