The Breaking Point…we’ve reached it. I finished my book, poignantly titled Until Collapse around this time last year saying that we were on a slow steady decline. Sadly, I didn’t realize we’d hit a big decline so soon.
Let me be frank: Americans are out of control, and I’m not just talking about the government. Yes, government officials think they need to be careful because we’re only about 15 months away from an election, but in the same right, they need to make sure that they’re not deadlocked either. Doing so would be the final blow to the United States of America as we know it and the absolute worst possible thing for the economy.
Something tells me that you’ve heard about the U.S. Credit Rating being lowered from AAA to AA+. News travels fast, but panic travels faster. We have social networking to thank for that. Stock market losses will effectively be magnified and compounded as a result of instantaneous news sources. But don’t be mistaken, the credit rating drop is not the reason that the Stock Market has dropped significantly today.
Questions like “who do we blame?” have been uttered by many all day and definitively been answered by no one. But let’s take a step back for a minute before we place the blame somewhere that it should not go, as many have done all day. I’ll say it again:
Americans are out of control. If you don’t believe me, ask yourself why the housing market has dropped about 30% and could drop another 20%. Ask yourself why 40 cents out of every dollar the government spends is borrowed. Ask yourself why we chose to raise the debt ceiling knowing full well that borrowing is not the answer. Ask yourself why we haven’t learned our lesson about greed, why we continue to choose to leverage ourselves to the hilt. Ask yourself whether greed has become the new standard for American economics, and whether apathy has commensurately joined greed to help aid our new policy of disillusionment.
Americans are out of control, so we must blame someone other than ourselves. This should be Uncle Sam’s new marketing plan for debates about taxes, elections, army recruitment, and the opening to any Congressional or Presidential speech from now on. Wait, it already is the unofficial one.
You can’t handle the truth. Possibly the saddest part of this ongoing political and economic debacle is the simple truth that the American people and the American government have failed to realize: we created this mess because of fiscal irresponsibility. Why are we still lying to ourselves? Are Americans really that oblivious that we can’t see the truth with what’s going on with Washington? To put it bluntly, Americans need to start taking responsibility, something we haven’t done in decades. We need to stop thinking that a glamorous lifestyle is something that we’ll fall into down the road.
Let’s improve our vocabularies. Disillusion. Folly. Responsibility. Honesty. Farsightedness. Americans could benefit from understanding the truth about their government: it’s a whirlwind of bluster circling the drain. Moreover, Americans could benefit from learning another truth: we spent and borrowed to the point of no return, and now we’re trying to blame others for our problems. Unfortunately, this sentiment disguised as blame has become a cop out for our problems while it has simultaneously become the reason we keep making the same mistakes.
Where do we go from here? More spending is not the answer. Here’s some truth about the stimulus from 2008: it wasn’t helpful at all. In fact, it probably hurt us more than it helped us, despite the fact that it provided some temporary relief from doomsday. By artificially stimulating the economy with temporary spending efforts, we allowed ourselves to be lied to once again and are now seeing the gloomy results.
The P-word. Is it panic? No. It’s penny-pinching. Save your money. Figure out a budget and stick to it. Americans have been notoriously bad at budgeting or even agreeing on ways to budget properly. Here are some basic guidelines that both private citizens and government officials should use when trying to balance and maintain a proper budget:
-Stop spending more than you earn
-Decide on a savings rate that makes sense
-Avoid paying interest and avoid borrowing out of control
Generally speaking, it’s that simple. Really, that’s it. Mix in some semblance of honesty and we have a very loose, simplified outline of what we should be trying to do. In reality, we have done the exact opposite. Think about the logic of trying to spend ourselves out of a situation where the root cause is too much reckless spending and then go hit yourself in the head with a tire iron about 4-5 times. These are the people running (albeit officially) our country. Moreover, as private citizens, we cite the behavior of government officials as an example and then do the same damage in the private sector.
We are all to blame. The United States has become an institution of excuses, a creative agency that dances around the fault line of many difficult issues by putting off important issues for short-term perceptions of calmness in a society where calamity seems to be the overarching theme. We can blame government officials, but we voted for them. Do you earn income? If so, you are one of many compensating them with your tax dollars.
Checks and Balances. For a system built on this principle, it is remarkable to see that the budget is the one place where we practice avoidance. John Q. Taxpayer & Co. gives these officials trillions of dollars per year, yet they manage to spend nearly over 1.4x what we’ve given them. It’s our fault for supporting this system for so long, and under no circumstances should we have allowed the debt ceiling to be raised any higher.
Inflated Commodities. The next bubble? I wouldn’t bet against anything at this point. Buy and sell has replaced buy and hold. Commodities are unlikely to be a bubble, but they are likely to be overvalued, which will eventually lead to a sharp drop if and when everyone takes their money out of the market and starts purchasing precious metals and oil. One thing is for sure, however: uncertainty is the hot commodity at the moment, and it will continue to dominate the marketplace.
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