Thursday, March 22, 2012

The End of the Road Documentary

Let me be clear: I think we are in deep trouble.  I have written about this before. Insert link.  What can one person do?  Will things get that bad?

I really don't know what to do since these really big problems are more than any one person can really understand. 

But this is simple, one of the top portions of our governments budget here in these Untied States is INTEREST on what we already owe. And if we continue to borrow this will get bigger and bigger.  As Einstein said "compound interest is one of the most powerful forces in the Universe". I do not buy this theory that this excessive spending will spur growth from which the increase in revenue the government will be able to pay off the debt and interest.

Namely, there was an opportunity in the late 90s- the economic growth spurred among other thing but mostly from the Internet the government actually had surpluses.  They response was only to spend more!  As I believe Milton Friedman said (and please forgive if it is not exact) "It is idiotic to judge a policy only by its intent and not include its result".  Since our current system only promotes spending (why save when inflation reduces money's value) the system must change.  It is not going to be without pains, the only question is how much control we give up.

I really could my rant here, but I want to give a personal example.  My parents taught me to save first and pay in full.  It has served me well.  Actually I have never leveraged my credit, probably to a fault.  However, this idea of "cash is king" is B$.  I purchased a new used car a few years ago and given my habit I could buy it in cash.  I tried to leverage the all cash for a price negotiation and not a single place cared.  In fact one dealer said "actually I prefer you go for a 0% loan, since I get a kick back from the bank, even if you pay it in full the first month".  This is a symptom of a broken system.  And I hope I am wrong, but things are only going to get worse.  We must change.

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