Regarding Our National Government and Our Fragile Financial Lives

August 3, 2011
By

There is a very real and compelling connection between our financial lives as individuals and families and that of the national government. In the modern age, we individuals are only as strong as our national government. If the national government is weak, we are weak. If it is in debt and nearly broke – we are sitting in the same boat whether we want to or not.

The recent wrangling by our national leaders over whether or not to allow the national debt to be increased has weakened us as a nation. No strength will be derived from the colossal cuts to follow from the national budget. No jobs will be created. No new businesses will come into being. No expansion of the economy in the real sense can take place if the government takes hundreds of billions of dollars out of circulation.

In short, the national government has become like the rest of us – we are only able to spend what we have and no more or we’ll cease to exist.

What we witnessed over the weekend as the clock to default kept ticking, is the rather ugly debate about what we don’t have went on and on.

Some of our national politicians believe nothing should be cut from entitlements even if the money isn’t going to be there to pay for them. That type of thinking among most of us trying to run our own family budgets went out the window when the national economy nearly collapsed in 2008.

Here we are, more than three years later, trying as we might to kill the recession that continues to grip us by throwing money at it when in reality the time has finally come for the national government to heed the advice of the 18th Century economist Adam Smith who wrote: “Governments who continually spend more than they take in doom themselves to inevitable bankruptcy.”

In our individual family lives, most clear thinking Americans have stopped using credit cards and those who can have begun saving again. Millions upon millions of Americans have stopped taking equity loans while the rush to buy as consumers has also fallen dramatically. At our level, we know that we cannot continue spending money that we borrow because it must be paid back. In addition, most Americans are shut out from the credit market because only large corporations can continue borrowing from large banks who were saved by the government when they almost defaulted three years ago.

The government is not going to save all of us. It can barely save itself as was proven with this nasty debate that has the appearance of ending with a deal to raise the debt ceiling and to cut spending.

Those of us with kids in college or private school understand the predicament of having to pay for tuitions we cannot afford – and yet we do what we can to make education happen for our children.

The government of the United States has done its best to pay for everything for everyone but now the time has come when the chickens have come home to roost.

We cannot spend what we don’t have. Belts must be tightened. Belts, it appears, will be tightened. We may even come close to balancing a national budget.

But the greater measure, the important measure about all of this is that everything about this debt ceiling expansion deal does nothing to create a single job and won’t.

The fight has just begun. None of us knows where it will lead.

We all fear the unknown – and with good reason.

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