Wednesday, October 01, 2008

Weird Presidential candidate pleas about economy

Both presidential candidates and many in Congress are pleading to pass the $700 billion bailout to enable Americans to get more credit to keep the economy going. In their next breath they bemoan the fact of our excessive national and personal debt. Isn't there a disconnect here?

Am I the only one confused by this?

From Wikipedia: "As of September 2008, the total U.S. federal debt was approximately $9.7 trillion[2], about $31,700 per capita (that is, per U.S. resident). Of this amount, debt held by the public was roughly $5.3 trillion.[3] Adding unfunded Medicaid, Social Security, Medicare, and similar obligations, this figure rises to a total of $59.1 trillion, or $516,348 per household.[4] In 2007, the public debt was 36.9 percent of GDP [5], with a total debt of 65.5 percent of GDP.[6]"

Consumer debt alone is nearly $2.6 trillion dollars. This is about $8,500 in debt for every man, woman and child - not including mortgage debt.

We have been warned for decades that this magnitude of national and consumer debt is excessive and will come back to bite us some day. While that debt is in the midst of biting us (it is the root cause for the current failure of our financial system), our leaders are in the process of getting us $700,000,000,000 MORE in debt so that that consumers can get themselves more in debt.

What am I missing here. I know there are two theories of national fiscal policy. One is that we ought to avoid "excessive" quantities of national and personal debt. The other, and the one that we are told we need to follow to "survive" is that national and personal debt are essential (without limit?) to maintain our national and personal prosperity.

Have we, as a nation, passed the fiscal "point of no return" whereby we have no choice but continue to embrace suicidal economic policies to prolong the agony? Or does someone really know what they are doing and things are not as bad as they seem?

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