It suddenly struck me, when replying to other people in the last couple of days, what America's real problem is- we have a Culture of Debt. It's so strong that economists are no longer bothered by such problems as trade deficits, the government deficit, or consumer debt; it's just assumed that we'll be able to grow our economy enough to take care of such trivialities.
Even after September 2008, I had somebody tell me that a trade deficit was a good thing because we're essentially keeping a high standard of living by printing paper.
Do economists not read newspapers? Do they never talk to people who are on unemployment? What's wrong with this picture?
I'm Outside the Autistic Asylum!
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Introduction to Wonko the Sane and Outside the Asylum, which this blog is named after.
4 comments:
Even if your country is in debt at flow economy, she's got millions of hinterland behind the debt so still very rich at stock economy.
The abundant land and natural resources as well as human assets stay as enchanting pawn for money lenders in other country.
Well, you see, that's the problem. It's estimated that the banks are now overextended- at a rate of 40:1 over assets. That means 39/40ths of the debt out there is NOT backed by the "abundant land and natural resources"- that land, natural resources, and human assets are only worth 1/40th what we have borrowed.
At least we're better off than England on that score- rumor has it (that I got on Technocrat before it went down) that banks there are overleveraged 200:1- they've lent out 200x more than they have in assets.
I go with the more conservative view (in the original sense of the word) that a country should NEVER borrow more than it can produce, and ideally, should never borrow more than 1/10th what it can produce.
Total US Government, Trade, and Consumer Debt now exceeds $650 Trillion- on a GDP of $13.5 Trillion.
Very few people have common sense to understand the financial hole we are in...some people, like you, are visionaries.
Note the original date on this- I had this figured out only 2 months into the Great Recession- and actually, had enough of it figured out that the year before, had re-financed my mortgage into a fixed rate.
That puts me WAY ahead of a great number of my generation- who are now struggling with foreclosure and homelessness.
Today, there are 27 empty houses for each homeless person in America- an awful statistic.
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