Friday, July 29, 2011

Stop Using The Analogy Of Balancing Your Checkbook Or Cutting Up Your Credit Cards As Being The Same As Raising The Debt Ceiling Dumbshits

Gee-whiz it sounds all warm and fussy and all American, but it's not even close. This tea party rhetoric is for economic simpletons and the ignorant.  Unfortunately, listening to C-Span phoned in comments proves that this comparison has taken hold with much of America's dumb and dumber. The US economy is a tiny bit more complex than balancing your fucking checkbook and paying down you credit card debt while sitting at the kitchen table.

Think about it please. Almost all businesses borrows money when needed. The money is lent based on the company's credit rating and promise to repay the money. Most Americans don't pay cash for everything. Most American wouldn't own a house, big screen or car unless they could use credit. So the availability of credit is part of the American Dream, it's the same for the nation. Buying things over time with credit when it wouldn't be possible if you had to pay cash for everything is what made America and its middle class the economic engine for the world. The real question is how you manage and use the debt.

The Treasury lends money to the country when needed to pay it's debts. If the government is required to pay cash for everything (the balance budget amendment) you'll also be saying goodbye to social programs that support millions of Americans. Because taxes are so low, especially for the wealthy, the government will not have the cash to pay as you go. The government underwrites the borrowing it does to pay for needed programs including such things as, war, protection of the environment, infrastructure by selling treasury securities, it's often called printing money. The much talked about 14th amendment to the constitution was put in place in part to assure that the government will always have a way to pay its debt even if it didn't have the cash by using its own credit backed up by government securities.
"The analogy about balancing your check book and getting your finances in order is wrong. The right analogy for not raising the debt ceiling is going out and having a spending spree on your credit card and then refusing to pay the bill. That's what not raising the debt limit is." Ben Bernanke

No comments:

Post a Comment