Fiscal Responsibility

I've been thinking lately that perhaps our country is going down the tubes. Not necessarily morally or ethically, and not specifically because of anything any particular leader has done, but because as a whole we're just not a fiscally responsible bunch of human beings.

The problem is, it's at just about all levels. Starting at the lowest. Personal debt is at record rates in our country. The idea of waiting until you can afford a thing is gone, replaced with easy credit.

The average adult in this country has a mortgage, at least one car payment, several revolving lines of credit and credit cards, and very little savings. The average credit card user carries a balance month to month, if not every month, than certainly on a regular basis.

Most citizens are extended to (or beyond) their limits.

Growing a little bit larger, I live in a planned community. This doesn't mean much except that we have a separate yearly fee (over and above taxes) to pay for our community tennis courts, road maintenance, the golf course, and a number of other amenities. The Board of this particular community has put forth a plan to borrow several million dollars to make improvements, build a lot more amenities (ones that it doesn't appear the majority of residents really even want) and generally change a batch of stuff around. Last year, they started assessing a "property transfer" fee each time a house is sold, and we were told that this money was supposed to be to pay for these sorts of projects, but now that they have this new project, magically that money doesn't seem to exist, and we're being told how low the capital reserves are, and so may we please please borrow several million dollars.

Well, several million dollars spread across 1900 homes works out to be well over $1000 per home. Keep in mind that, if these people are typical of today's consumer, they're already in debt to their limit and haven't got a lot of spare resources.

Growing a little bit larger, our town recently borrowed money in order to build a new town hall building. Typical of government projects, it was supposed to be done "By the beginning of August" and here we are into December and it's still not done. But in the mean while, that money will ultimately come from somewhere. Thin air? Golden egg laying geese? Nope, the same citizens who have maxed out their personal resources and also will now owe $1000+ in our planned community will ultimately be responsible.

Growing a little bit larger, I know a number of the States are borrowing money in the same fashion. I don't honestly have any good examples about my own state right now, but it wouldn't surprise me. Who is ultimately responsible for that? Right. The citizens who already have their personal debt and local debts.

And then we have the Federal government, which could work hard to balance the budget but then couldn't keep it balanced for more than a year or two before returning to MASSIVE deficit spending. The Federal Government has increased the national debt by $7750 per citizen in the last five years. And who is ultimately responsible for that money? Do you think it's going to come from magical Federal Reserve elves? No, ultimately that money comes from taxes on the same people who already owe to their personal limit, then owe some local governmental debt, then some state debt, then a bit under $20,000 of National debt that we owed back when the budget was momentarily balanced.

So tell me what happens when the creditors come a-calling? Some of them are pretty well structured. My bank is not likely to come asking me to pay off my entire mortgage loan as long as I make my payments on time. But our whole economy, from the tiny to the huge runs on loans. What happens when the loans dry up, when our credit rating becomes so saturated by debt that no one will loan us money?

And what happens if, heaven forbid, China or one of our other major creditors tries to collect on that debt? The house of card comes tumbling down, that's what. Because those citizens who are that badly in debt at all levels are stones from which no blood can be squeezed. And those at the bottom, they're getting even more screwed. Going out and putting in the sweat of their labor for the pittance that is Minimum Wage, finding more and more companies are slipping out of paying for any kinds of medical or other benefits, they're getting deeper and deeper in the hole, and now they're having dirt shoveled onto their heads.

We're in deep fiscal poop, and I don't think most of us really know it yet.

Liam.