Tuesday, January 15, 2013

The Real Message Of The Latest U.S. Government Debt Crisis

With the U.S. government debt ceiling of $16.4 trillion approaching between mid-February and early March, depending upon the rate of borrowing, the brinkmanship among U.S. politicians has begun yet again.

Meanwhile economists, pundits and politicians blanket the news media, adding to the accusations. But actually the underlying problem is pretty simple. The U.S. government brings in only 60 cents for every dollar it spends, a ratio that has continued for years as the government sinks in its own debt.

Some economists claim the government must spend more money to get out of this mess but that's like your financially floundering neighbor Charlie coming to you for financial advice and you say, "Charlie, what you need is more debt. If you've maxed out your credit cards, get new credit cards and keep borrowing. This way you can still pay your bills and eventually spend your way out of this mess."

As you can see, that doesn't work, and all we do as a nation is move from financial crisis to financial crisis.

Said another way, the U.S. government is used to living in a Beverly Hills mansion, and spends accordingly, but its finances only allow it to live in a Pasadena apartment. It is going to have to downsize to that apartment, or like your neighbor Charlie, it will eventually go bankrupt.

The sooner we as Americans accept the financial reality, the sooner we can pressure our politicians to get out of our wars, slash our military spending and address the rest of our spending and our income. Until then, those politicians will keep speaking as if there really is something for nothing available to us.


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